Making the Global Supply Base

Timothy Sturgeon, John Humphrey and Gary Gereffi

in The Market Makers

Published in print February 2011 | ISBN: 9780199590179
Published online May 2011 | e-ISBN: 9780191724893 | DOI:
Making the Global Supply Base

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In this chapter, Timothy Sturgeon, John Humphrey, and Gary Gereffi analyze the co-evolutionary character of market making, in which the initial trials with global sourcing in the 1970s and 1980s by a few retailers helped spur the development of an increasingly competent group of contract manufacturers mainly located in East Asia. These contractors acquired the capabilities necessary to produce products to the specifications of leading firms in the West. Some of the early deals were made directly with Asian manufacturers, whereas others relied on Asian intermediaries (for example, trading firms) to organize and coordinate production in Asia. These early moves provided both an example and a ready-made supply base for other retailers and branded marketers not yet engaged in global sourcing. The increasing competence of these contract manufacturers also dovetailed with a trend toward outsourcing by manufacturing firms in the USA, including leading companies in technology-intensive sectors such as electronics, accelerating the creation of a global supply base of contract manufacturers. In the 1990s, as retailers and brand-name merchandisers passed more responsibility on to contract manufacturers for process development, material sourcing, and even some aspects of product design, the global supply base began to be populated by large, “full-package” contractors with a full range of capabilities. Today, the depth and breadth of the global manufacturing supply base, along with new internet-based tools for buyer–supplier matchmaking and operational coordination, may be opening a new stage in the development of global sourcing.

Keywords: contract manufacturers; supplier markets; global sourcing; full-package suppliers; motor vehicle industry; South Korean FDI; Li & Fung; Beyonics; Taiwanese entrepreneurs; value chain modularity

Chapter.  10152 words.  Illustrated.

Subjects: International Business

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