Advantage analysis of the global supply network configuration using air-cargo logistics center in the free trade zone

Free Trade Zone (FTZ) is a special economic region wherein the enterprise could have the advantages of free tariff, simplified custom process as well as efficient logistics service. There are more than six hundreds FTZ in the world and many global enterprises locate their local manufacturing centers, service centers, distribution centers there. For a global enterprise, the application of FTZ involves its strategic supply network planning and many economic factors should be considered. This paper develops a decision support for the economic analysis of global manufacturing enterprise using air-cargo FTZ. In it, the configuration of global manufacturing supply networks using FTZ is identified to be four alternative basic types and then a LP-based optimization model is developed to evaluate their economic benefits under different planning objectives. In this developed model the factors in terms of components suppliers, inbound logistics, final assembly as well as outbound logistics are considered. An example of computer manufacturing company from Taiwan with 6 main module suppliers, 2 front-end, 2 backend factories and 3 marketing-channels is performed. The result shows that considering different business goal, tariff and percentage of offshore business, an enterprise will have different optimal supply network configuration. Copyright