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Sustainability 2016, 8(3), 234; doi:10.3390/su8030234

A Sustainable Outsourcing Strategy Regarding Cost, Capacity Flexibility, and Risk in a Textile Supply Chain

Department of Industrial & Management Engineering, Hanyang University, Ansan 15588, Korea
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Author to whom correspondence should be addressed.
Academic Editor: Giuseppe Ioppolo
Received: 8 January 2016 / Revised: 23 February 2016 / Accepted: 29 February 2016 / Published: 3 March 2016
(This article belongs to the Special Issue Sustainability in Supply Chain Management)
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Abstract

The textile industry achieves economic benefits through outsourcing to low cost markets. Today, reshoring is an emerging trend due to rising cost and unemployment concerns. This problem is primarily due to an industry-wide focus on economic benefits only. Cost saving is a basic reason for international outsourcing while domestic outsourcing provides capacity flexibility. Moreover, outsourcing risk has a major impact on strategic location of the production destinations. Therefore, the merging of capacity flexibility and outsourcing risk comprises a sustainable outsourcing strategy. This paper suggests a sustainable outsourcing strategy in which a textile manufacturer outsources to international markets for cost savings and outsources to the domestic market for capacity flexibility. The manufacturer reserves some capacity with domestic suppliers, and pays a unit penalty cost if this capacity flexibility is not utilized. The manufacturer seeks minimum risk in international markets. Operational cost, penalty cost, and outsourcing risk are considered to be objective functions. Decisions include the assignment of contracts to suitable facilities, the quantity of each contract, and allocation of reserved capacity flexibility among domestic suppliers. Multi-objective problem of this research was solved using three variants of goal programming. Several insights are proposed for outsourcing decision making in the current global environment. View Full-Text
Keywords: textile supply chain; outsourcing; cost; capacity flexibility; risk; goal programming textile supply chain; outsourcing; cost; capacity flexibility; risk; goal programming
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Sardar, S.; Lee, Y.H.; Memon, M.S. A Sustainable Outsourcing Strategy Regarding Cost, Capacity Flexibility, and Risk in a Textile Supply Chain. Sustainability 2016, 8, 234.

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