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IJPDLM
45,1/2
138
Received 15 May 2013
Revised 24 March 2014
19 June 2014
30 October 2014
Accepted 30 October 2014
International Journal of Physical
Distribution & Logistics
Management
Vol. 45 No. 1/2, 2015
pp. 138-158
© Emerald Group Publishing Limited
0960-0035
DOI 10.1108/IJPDLM-05-2013-0131
Design of global production and
distribution networks
A literature review and research agenda
Jan Olhager and Sebastian Pashaei
Department of Industrial Management and Logistics, Lund University,
Lund, Sweden, and
Henrik Sternberg
Department of Design Sciences, Lund University, Lund, Sweden
Abstract
Purpose – The purpose of this paper is to systematically and critically review the extant literature on
the design of global production and distribution networks to identify gaps in the literature and identify
future research opportunities. The design aspects deal with strategic and structural decisions such as:
opening or closing of manufacturing plants or distribution centres, selection of locations for manufacturing
or warehousing, and making substantial capacity changes in manufacturing or distribution.
Design/methodology/approach – The authors examine the peer-reviewed literature on global
production and distribution networks written in English. The search strategy is based on selected
keywords and databases. The authors identify 109 articles from 1974 to 2012.
Findings – The authors categorize the literature according to research methodology: case studies,
conceptual modelling, surveys, and mathematical modelling. The amount of literature up to 2,000 is
rather sparse, while there is a positive trend from 2,000 and onwards. The content analysis shows that
different research methodologies focus on different but complementary aspects. The authors propose a
research agenda for further research on design of global production and distribution networks.
Research limitations/implications – The authors identify research opportunities related to
complementary actor perspectives, extended supply chains that explicitly include transportation
and suppliers, contingency factors, and new perspectives such as facility roles within production and
distribution networks.
Originality/value – This paper is to the author’s knowledge the first broad review that investigates
the design aspects of the interrelationships between production and distribution facilities as well as
transportation in global production and distribution networks across multiple research methodologies.
Keywords Location, Transportation, Manufacturing, Capacity, Facility, Systematic review
Paper type Literature review
Introduction
In today’s competitive and rapidly changing environment manufacturing firms face an
increased challenge to design, produce and distribute products for a global market and
simultaneously manage its global network of operations as efficiently as possible. As the
manufacturing footprints of these firms become more global, the firm has to take
successively more aspects into account when designing, managing, and improving the
global production and distribution network. Consequently, the design of such networks
becomes critical for the competitiveness of the firm. The focus of the firm is first and
foremost on its own manufacturing network, i.e. the manufacturing plants of the firm, the
distribution system that is owned by the firm, and all transportation within this network.
In addition, markets and important suppliers need to be incorporated in an extended view
on the manufacturing network (Cheng et al., 2011). Thus, a network includes suppliers,
facilities for production and distribution, customers, and all transportation between these
nodes. Figure 1 displays a general and extended production and distribution network.
 Previous reviews have been concerned with different aspects of the design of global Design of
production and distribution networks. Thomas and Griffin (1996) reviewed the global
coordinated planning aspects of the production and distribution system with attention
to models covering the total supply chain. Cohen and Mallik (1997) presented
production
a review of mathematical models concerning the management of the intra-firm
global supply chains. Vidal and Goetschalckx (1997) reviewed selected mixed integer
programming models with attention to the strategic design of the global supply chain, 139
while Goetschalckx et al. (2002) updated this review with a focus on international
characteristics. Sarmiento and Nagi (1999) reviewed production and distribution
models that explicitly consider the transportation system. Schmidt and Wilhelm (2000)
and Bilgen and Ozkarahan (2004) reviewed the literature that deals with strategic,
tactical, and operational decisions related to multi-national production and distribution
networks. Lastly, Meixell and Gargeya (2005) presented decision support models for
the design of global supply chains and concluded that few models cover the practical
supply chain design problem entirely. Thus, previous reviews have focused primarily
on mathematical models, while other research methodologies are not covered. Also, the
last review dates back to 2005. Therefore, an updated review that also includes other
research methodologies than mathematical modelling is required for both researchers
and managers with an interest in global production and distribution networks.
This is to our knowledge the first broad systematic review of the literature on the
design of global production and distribution networks that investigates: the
interrelationship between on the one hand production and manufacturing facilities
and on the other hand distribution and transportation activities for global networks;
and acknowledges that multiple research methodologies can be applied to provide
complementary perspectives.
The remainder of this paper is organized as follow. First, we present the
methodology of the review in terms of search strategy, followed by the distribution
of articles across journals and over time. Then, we categorize the literature based on
the research methodology, covering case studies, conceptual modelling, surveys, and
mathematical modelling. We investigate the perspectives and key aspects that each
research methodology can provide on the design of global production and distribution
networks. Finally, we synthesize the findings and develop a research agenda. We hope
that this systematic literature review will contribute to the understanding of global
production and distribution network design and that it can encourage new research on
this interesting and important topic, with relevance and implications for managers in
manufacturing firms as well as in logistics service providers (LSP).

Suppliers Manufacturing Distribution Markets

Supplier Distribution Customer

Plant A
Zone 1 Centre A Zone 1

Supplier Distribution Customer

Plant B
Zone 2 Centre B Zone 2

. . . . Figure 1.
. . . . A global production
. . . .
and distribution
Supplier
Plant l
Distribution Customer network
Zone k Centre m Zone n
IJPDLM Methodology
45,1/2 The purpose of the literature review is to summarize the state-of-the-art of research on
the design of global production and distribution networks published in peer-reviewed
journals. Rowley and Slack (2004) stated that literature reviews are important in:
supporting the identification of a research topic, question or hypothesis; identifying
the literature to which the research will make a contribution, and contextualizing the
140 research within that literature; building an understanding of theoretical concepts and
terminology; facilitating the building of a bibliography or list of the sources that have
been consulted; suggesting research methods that might be useful; and analysing and
interpreting results.
In conducting this systematic literature review, we follow the guidelines in, e.g.
Denyer and Tranfield (2009), Rousseau et al. (2008), Rowley and Slack (2004), and
Seuring and Gold (2012): locate existing studies; select and evaluate contributions;
analyse and synthesize data; and report on the findings in terms of a research agenda
proposal. The research team, consisting of three researchers (two senior researchers
and one doctoral student) have collaborated and interacted on all aspects of this
literature review. By comparing interpretations and findings between reviewers, it is
possible to minimize errors and produce a more robust data set, wherefore it
is recommended to employ two or more independent reviewers in systematic reviews
(Denyer and Tranfield, 2009).

Search strategy
The search strategy is based on selected keywords and the ISI Web of Science
database. We used this database since it is based on citation activities and focuses on
higher quality journals. The keywords were grouped in three areas and all
combinations were used. The three groups were:
(1) “global”, “international”, or “network”;
(2) in combination with “production”, “manufacturing”, or “operations”; and
(3) in combination with “distribution”, “logistics”, “supply chain”, or “transport”.
For example, one such combination was “global” + “production” + “distribution”.
The search combinations were applied at the title, abstract, and keywords levels. Since
the focus in this review is on design aspects, we excluded papers that did not treat the
design or structure of the global production and distribution network. Design and
structural elements include: opening or closing of manufacturing plants or distribution
centres, selection of locations for production or warehousing, and making substantial
capacity changes concerning manufacturing, distribution, or transportation that affects
the structural properties of the production and distribution network. We also used
back-tracking to find earlier relevant sources, and forward-tracking to find articles that
referred to the central sources. Based on this list, the research team made individual
content analyses and evaluations as to which papers to include in the review, with an
inter-rater agreement of 90 per cent. The final list of papers that are included in the
literature review contains 109 articles from 1974 to 2012.

Literature across journals

The 109 articles we reviewed are distributed among 47 different international scientific
journals. In total, ten journals account for 59 articles (see Table I), while the other 50
articles are from 37 different journals. The highest numbers of articles are found in the
Journal Case Conceptual Survey Math. model Total %
Design of
global
IJ of Physical Distribution & Logistics Mgt 4 2 2 1 9 8.2
IJ of Production Research – 2 2 5 9 8.2 production
IJ of Production Economics 1 – 1 6 8 7.3
IJ of Operations & Production Mgt 2 – 3 1 6 5.5
Interfaces – – – 5 5 4.6
IJ of Logistics Management 2 2 1 – 5 4.6 141
Omega – 1 – 4 5 4.6
European J. of Operational Research – – – 4 4 3.7
Computers & Industrial Engineering – – – 4 4 3.7 Table I.
Production Planning & Control 2 – 1 1 4 3.7 Distribution of
Total of top 10 journals 11 7 10 31 59 54.1 articles across
37 other journals 9 9 9 23 50 45.9 journals with
Total 20 16 19 54 109 100 respect to research
% 18 15 17 50 100 – methodology

International Journal of Physical Distribution & Logistics Management, the International

Journal of Production Research, and the International Journal of Production Economics.
Table I shows that this research area is treated in logistics management journals, in
operations management journals, as well as in operations research journals. Logistics
management research has largely focused on the links between the nodes in a network,
while operations management research has primarily focused on the nodes (Rudberg
and Olhager, 2003). By considering both perspectives it should be possible to obtain
complementary aspects on global production and distribution networks.

Literature over time

The origin of the literature on the design of production and distribution networks can
be traced back to the paper by Geoffrion and Graves (1974) on “Multicommodity
distribution system design by Benders decomposition”. This paper focused on the
location of distribution centres between manufacturing sites and customer zones.
Cohen and Lee (1988) added the explicit perspective of plant locations in “Strategic
analysis of integrated production-distribution systems: models and methods”.
Since then, there has been a slow growth in the number of papers addressing the
design of production and distribution networks. From 2000 and onwards, the trend is
more visible, leading up to 13 publications in 2012; cf. Figure 2.

Categorization of research methodology

A variety of research methodologies have been employed to study the design
of global production and distribution networks. Fundamentally, these approaches
can be categorized into four groups, i.e. case studies, conceptual papers, surveys, and
mathematical models. Table I displays the number of papers that have been published
in the top ten journals using different research methodologies. The table shows that the
coverage of different journals in terms of research methodologies differs, such that
some journals focus on a particular research approach, while others allow for a variety
of methodologies on this topic.
The number of publications for specific research methodologies exhibits different
patterns over time; cf. Figure 2. Case studies, conceptual modelling and surveys exhibit
stable patterns, while the growth in publications is due to an increase in mathematical
modelling papers. This indicates that mathematical models are increasingly being
IJPDLM 14
Conceptual modeling
45,1/2 12 Survey
Case studies
10
Mathematical modeling
8
142
6

Figure 2. 4
Distribution of
articles over time 2
with respect
to research
0
methodology
74

88

90

91

92

93

94

95

97

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12
19

19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20

20

20

20
applied to the problem of designing production and distribution networks. It has
become possible to formulate and solve large-scale optimization problems that can
model the complexities of real-life global operations, e.g. taking duties and exchange
rates into account.

Results of the content analysis

The key areas that the extant literature address, related to the design or structure of the
production and distribution network, are mainly concerned with location, capacity, and
opening/closing facilities. This problem has been approached differently depending
upon the type of research methodology that has been employed. Since some papers
deal with two or even three of the aspects of location, capacity, and facility changes,
while other papers use one research methodology only, we choose to present the
content analysis of the papers included in this literature review according to research
methodology. The appropriate sequence of gradually gaining more knowledge
concerning the phenomenon at hand is: case studies; conceptual models developing
principles, propositions, and testable hypotheses; surveys with statistical analysis
of large data sets; and mathematical models (cf. Fisher, 2007, p. 379). Accordingly, we
present the content analysis in this order.

Case studies
Case study research on the design of global production and distribution networks
are predominantly taking the perspective of the manufacturer of the goods; cf. Table II.
Only four case studies incorporate several perspectives, providing a wider view on the
design of production and distribution networks. These are highlighted below.
Rao and Young (1994) included manufacturer of goods, LSPs, port operators,
telecommunications, and information providers in their study of factors influencing the
outsourcing of global logistics functions. By incorporating several perspectives, they
identified product, process, and network complexity as key drivers for the outsourcing
of logistics activities.
Bhatnagar and Viswanathan (2000) studied the determinants of success of a
strategic partnership between a multi-national electronics manufacturer and a global
LSP, concerning reconfiguration of their supply chain. After partnering with a single
Focal perspective of
Design of
the case studies Papers global
Goods manufacturer Abrahamsson and Brege (1997), Bhatnagar and Viswanathan (2000), production
Engelhardt-Nowitzki (2012), Fredriksson et al. (2010), Hameri and Paatela
(2005), Koskinen (2009), Meijboom and Voordijk (2003), Nassimbeni and Sartor
(2005), Rao and Young (1994), Salvador et al. (2004), Seitz and Peattie (2004),
van Hoek (1998), Vereecke et al. (2006), Vos (1991), 143
Vos (1997), Yu et al. (2012), van Hoek et al. (1999), Wang and Lee (2007),
Woxenius (2006)
LSP (incl. transport Bhatnagar and Viswanathan (2000), Meijboom and Voordijk (2003),
operator) Rao and Young (1994), Woxenius (2006)
Infrastructure Hesse (2006), Rao and Young (1994) Table II.
(port/terminal, GPN) Distribution of
Wholesaler/retailer Meijboom and Voordijk (2003) articles across
Multiple perspectives Bhatnagar and Viswanathan (2000), Meijboom and Voordijk (2003), perspective of the
Rao and Young (1994), Woxenius (2006) case study

LSP, the goods from the production sites were consolidated at the Asian air-hub of the
LSP. Here, custom clearance took place and the goods were shipped via the North
American hub of the LSP to the customers. By taking a holistic production and
distribution network perspective and the objectives of both actors into account, a
considerable reduction in lead time for the manufacturer was obtained.
Meijboom and Voordijk (2003) included manufacturers, LSP as well as wholesalers
when discussing the strategic role and localization drivers for production and
distribution facilities. They extended the Ferdows (1997) model on plant roles to
include distribution as well as service facilities. They added factors such as
product-life-cycle, responsiveness within the region, transportation, and logistics.
In their case study, the wholesaler located facilities close to its markets because
of low-value density of the products and high transportation costs. The wholesaler
perspective provided an extra dimension to the set of localization drivers for production
and distribution facilities.
Woxenius (2006) analysed the consequences of extending production networks from
mature economic regions to low-cost regions, taking into consideration the perspectives
of global manufacturers and LSPs. He concluded that trading with adjacent regions
generally requires better planning and involvement of LSPs, and adaptation of the
logistics practice.
Many case studies have treated particular aspects of reconfiguration of supply
chains, such as postponement of manufacturing activities (van Hoek, 1998; van
Hoek et al., 1999), consolidation of distribution centres (Abrahamsson and Brege,
1997; Bhatnagar and Viswanathan, 2000), and outsourcing (Rao and Young, 1994;
Fredriksson et al., 2010).
We find that all case studies on the design of global production and distribution
networks have considered not only a structural element, such as facility location and/or
capacity, but also a human element, e.g. organizational and/or managerial decision
making. This emphasizes the complexity of the topic area as well as the complexity of
conducting and analysing case study research on the design of global production and
distribution networks. The case studies in this area have generally been able to identify
key factors, both from a structural and a human point of view, link them together, as
well as explain these relationships.
IJPDLM Conceptual modelling
45,1/2 The conceptual papers can be divided into two major groups:
(1) papers taking a supply chain management or operations management
approach; and
(2) papers applying a geographical perspective on production and distribution
networks.
144
In total, 16 papers were categorized as “conceptual papers”, i.e. applying a desk
qualitative approach presenting conceptual models and archival studies. Due to the
conceptual nature of the papers in this section, Table III is an approximate assessment
of scope covered rather than an exact categorization. It is notable that only two papers
explicitly include multiple perspectives, such as goods manufacturers as well as
logistics providers or transport infrastructure, i.e. Fawcett (1992) and Rodrigue (2012).
In the first group, a large part of the conceptual papers, e.g. Braithwaite and
Christopher (1991), Ferdows (1997, 2009), and Stock et al. (1999) addressed the change
in the way of thinking that global production networks and customer zones represent.
Early papers by Braithwaite and Christopher (1991) and Fawcett (1992) presented high-
level conceptual overviews of how global manufacturing and distribution strategies
can be used to achieve competitive advantage. They also addressed some of the trade-
offs in the choices of strategy depending on the degree of localization vs globalization.
Fawcett (1992) discussed global supply chain management from two perspectives:
logistics (inventory, order processing, packaging, transportation, and warehousing),
and manufacturing (labour cost, machine utilization, production control, productivity,
and training), highlighting the need to integrate these perspectives in global supply
chain strategies. Some papers have used empirical sample companies, typically
corporations with brands that have a high consumer visibility, e.g. Hewlett-Packard,
NCR, and Sony (Ferdows, 1997), and IKEA, Intel, Lego, Sony, and Zara (Ferdows, 2009).
In the second category, e.g. Hesse (2007), Hesse and Rodrigue (2004), and Rodrigue
(2004, 2006a, b, 2012) have mainly focused on the dynamics of global production
networks and how geographical factors affect supply chain decision making.
In particular, Rodrigue (2012) discussed “geography of production”, “geography of
distribution”, as well as “geography of consumption”, and found that using multiple
perspectives (suppliers, 3PLs, and customers) gives insights into how different types of
companies structure their outsourcing activities.
Typically, conceptual models address the global strategy of the firm. Several papers
propose conceptual frameworks aimed at describing and analysing operations
strategies, using a particular perspective.

Focal perspective of the

conceptual papers Papers
Goods manufacturer Braithwaite and Christopher (1991), Fawcett (1992), Ferdows (1997),
Ferdows (2009), MacCormack et al. (1994), Pontrandolfo and Okogbaa
(1999), Rudberg and Olhager (2003), Stavrulaki and Davis (2010),
Table III. Stock et al. (1999)
Distribution of LSP (incl. transport operator) Fawcett (1992), Rodrigue (2012)
articles with Infrastructure (port/terminal, Hesse (2007), Hesse and Rodrigue (2004), Rodrigue (2004, 2006a, b,
respect to conceptual GPN) 2012), Rodrigues et al. (2008)
perspectives Multiple perspectives Fawcett (1992), Rodrigue (2012)
Surveys Design of
Survey-based research on the design of global production and distribution networks global
typically include aspects of sourcing, manufacturing, and distribution. Table IV
displays the distribution of respondents in terms of firm type and geographical region.
production
Most surveys report on the perspective of the manufacturing firm. Only two papers
deal with other perspectives, one targeted shipping lines (Notteboom and Merckx, 2006)
while the other is concerned with LSPs (Hameri and Hintsa, 2009). The Delphi study 145
by Hameri and Hintsa (2009) is also the only survey-type research that utilizes
respondents from different actors (however, these actors do not belong to the same
supply chain or network). Consequently, we have been unable to find any survey that
captures two or more successive stages along the supply chain or in a network, with
respondents from each stage.
Notteboom and Merckx (2006) included major shipping lines in their sample when
studying freight integration in the context of global production networks, and
concluded that freight integration capabilities for shipping lines are crucial when
serving global production networks. Hameri and Hintsa (2009) focused on the drivers of
change and implications for supply chain management in the future. They included
a broad range of industries in their Delphi expert panel, such as manufacturing,
logistics, and insurance, as well as the EU commission, management consultants, and
academics. They found a diversity of change drivers, such as new technology, security,
environmental, and energy concerns, and identified two trends: increased level of
focused factories serving global markets with a narrow set of products, and increased
level of near-sourcing to meet energy price increases.
Most surveys have focused on a specific region when targeting respondents; cf.
Table IV. Even though the respondents may reside in a certain region, the supplier
and customer zones are typically global. The respondents are typically managers,
such as CEO/top management (e.g. Bhatnagar et al., 2003; Lin, 2004), supply chain and
logistics managers (e.g. Fawcett et al., 1993; Hameri and Hintsa, 2009), and production,

Aspects Papers
Firm type of respondents
Goods manufacturer Bhatnagar et al. (2003), Bhatnagar and Sohal (2005), Cagliano et al. (2008),
Chia and Feng (2002), Fawcett (1993), Fawcett et al. (1993), Fawcett and
Closs (1993), Feldmann et al. (2009), Hameri and Hintsa (2009),
Kisperska-Moron and Swierczek (2011), Lin (2004), Lorentz et al. (2012),
Myers et al. (2012), Pla-Barber (2001), Scully and Fawcett (1993),
Sum et al. (2001), Vastag et al. (1994), Zinn and Grosse (1990)
LSP (incl. transport Hameri and Hintsa (2009), Notteboom and Merckx (2006)
operator)
Respondents from Hameri and Hintsa (2009) (Delphi panel)
multiple firm types
Regions of respondents
Asia Bhatnagar et al. (2003), Bhatnagar and Sohal (2005), Chia and Feng (2002),
Lin (2004), Sum et al. (2001)
North America Fawcett (1993), Fawcett et al. (1993), Fawcett and Closs (1993), Myers et al. (2012),
Scully and Fawcett (1993), Vastag et al. (1994), Zinn and Grosse (1990)
Europe Feldmann et al. (2009), Lorentz et al. (2012), Pla-Barber (2001) Table IV.
Global Cagliano et al. (2008), Hameri and Hintsa (2009), Kisperska-Moron and Distribution of
Swierczek (2011), Notteboom and Merckx (2006) survey respondents
IJPDLM operations, and plant managers (e.g. Myers et al., 2012; Feldmann et al., 2009).
45,1/2 The response rates range from Bhatnagar and Sohal (2005) with 7.7 per cent and
420 responses out of 5,427 companies to Notteboom and Merckx (2006) with 44 per cent
and 15 responses out of 34 shipping lines, which highlights the diversity in the
relationship between response rate and the number of respondents.
Surveys generally include a wide range of industries and countries. Having a broad
146 range of respondents may be good for general aspects of production and distribution
network, e.g. in terms of improved generalizability and a high level of overview, but it is
a restriction if the sample includes companies with different production, product, or
distribution structures. It limits the possibility for advising individual companies on
how to design their networks with respect to their particular characteristics, unless the
sample can be divided into specific sub-samples with homogenous respondents in each
group. Very few of these survey studies have used control variables, such as firm size,
industry, product type, process type, and customer order decoupling point. Only two
papers have explicitly based their studies on well-recognized theoretical frameworks,
such as contingency theory (Fawcett and Closs, 1993) and transaction cost theory
(Pla-Barber, 2001).
We also note that no replication study has been carried out yet, which indicates
that surveys are still looking for new aspects on the study object, rather than
confirming previous survey models by testing them in new settings. Bookbinder (2013)
studied global logistics in different regional settings, illustrating how differences in
location, manufacturing, trade, and economic policy influence the set-up of logistics,
manufacturing, and transportation, and arguing that the particular industrial setting
is an important issue when analysing global production and distribution systems.
Thus, the particular industrial setting is an important issue when analysing global
production and distribution systems.

Mathematical modelling
Many mathematical modelling papers are explicitly addressing global networks, and
include aspects such as tariffs, duties, and exchange rates, while some papers are more
regional. However, all mathematical modelling papers in this review include
manufacturing as well as transportation issues in a supply chain or in a manufacturing
network for a goods manufacturer, and can be applied in a global setting.
The first mathematical model of global production and distribution systems,
containing both manufacturing and transportation elements, was presented in
Geoffrion and Graves (1974). They studied the optimal location of intermediate
distribution facilities between plants and customers for Hunt-Wesson Foods, a major
food firm with 17 commodity classes, 14 plants, 45 possible distribution centre sites,
and 121 customer zones. Thus, the problem was quite large. Such a three-stage
model with production, distribution centres, and customer zones with transportation
in between is still the typical set-up for mathematical models. Table V shows the
distribution of papers with respect to the number of stages: two, three, or four, with six,
29, and 19 papers, respectively. The average model contains 3.2 supply chain stages.
The overall objective of most mathematical models is cost minimization, and
the cost elements are typically concerned with production, transportation, and
warehousing. Some papers explicitly include suppliers in the model, while some include
two production stages (intermediate production and assembly), and others two
distribution stages (e.g. warehouses and cross-docking facilities). Thus, a global supply
chain model could potentially consist of six stages: supplier, two production stages,
Aspects Papers
Design of
global
Number of SC stages
2 Chakravarty (2005), Francas and Minner (2009), Liu and Papageorgiou (2012), production
Ozsen et al. (2009), Sourirajan et al. (2007), Taylor (1997)
3 Amaro and Barbosa-Póvoa (2009), Amiri (2006), Amrani et al. (2011), Camm et al.
(1997), Chen et al. (2007), Cintron et al. (2010), Cohen and Lee (1988), Conceição
et al. (2012), Ding et al. (2009), Easwaran and Üster (2009), Easwaran and Üster 147
(2010), Elmaraghy and Mahmoudi (2009), Eskigun et al. (2005), Fleischmann et al.
(2006), Gebennini et al. (2009), Geoffrion and Graves (1974), Jang et al. (2002),
Jayaraman and Ross (2003), Katayama (1999), Kulkarni et al. (2004), Ma and Suo
(2006), Melachrinoudis et al. (2005), Min and Melachrinoudis (1999), Paquet et al.
(2008), Ross and Jayaraman (2008), Sadjady and Davoudpour (2012), Sheu (2003),
Tsiakis and Papageorgiou (2008), Yuan et al. (2012)
4 Amaral and Kuettner (2008), Arntzen et al. (1995), Bashiri et al. (2012), Bowling
et al. (2011), Carle et al. (2012), Cheong et al. (2007), Georgiadis et al. (2011),
Guericke et al. (2012), Gupta et al. (2002), Manzini and Bindi (2009), Manzini and
Gebennini (2008), Shankar et al. (2012), Singh et al. (2012), Sousa et al. (2008),
Syarif et al. (2002), Thanh et al. (2008), Tsiakis et al. (2001), Vidal and
Goetschalckx (2000), Vila et al. (2006)
Explicit considerations
Suppliers Amaral and Kuettner (2008), Arntzen et al. (1995), Bashiri et al. (2012), Bowling
et al. (2011), Carle et al. (2012), Cheong et al. (2007), Elmaraghy and Mahmoudi
(2009), Fleischmann et al. (2006), Gupta et al. (2002), Jang et al. (2002), Min and
Melachrinoudis (1999), Paquet et al. (2008), Shankar et al. (2012), Sheu (2003),
Singh et al. (2012), Syarif et al. (2002), Thanh et al. (2008), Vidal and Goetschalckx
(2000), Vila et al. (2006)
2 production stages Bowling et al. (2011), Katayama (1999), Kulkarni et al. (2004), Sousa et al. (2008)
2 distribution stages Georgiadis et al. (2011), Guericke et al. (2012), Jayaraman and Ross (2003),
Manzini and Bindi (2009), Manzini and Gebennini (2008), Ross and Jayaraman
(2008), Tsiakis et al. (2001)
Transportation Amaral and Kuettner (2008), Amaro and Barbosa-Póvoa (2009), Arntzen et al.
mode (1995), Carle et al. (2012), Cintron et al. (2010), Eskigun et al. (2005), Gupta et al. Table V.
(2002), Manzini and Bindi (2009), Min and Melachrinoudis (1999), Sadjady and Some key aspects of
Davoudpour (2012), Vidal and Goetschalckx (2000) mathematical models

two distribution stages, and customer zones. Still, the highest number of stages in any
of these papers is four. Another notable feature is that some papers consider alternative
modes of transportation. For example, Carle et al. (2012) considered both
alternative transportation modes such as air, ocean, railway, driveway, and
intermodal, as well as different transportation options such as internal fleet, long-
term 3PL contract, and short term for-hire transportation. However, most papers only
assume one type of transportation mode between pairs of facilities (suppliers,
production, and distribution).
About half of the papers include specific cases where the models have been
developed, tested and in some cases even implemented, while the other half only
includes “illustrative examples”. In particular, some papers test or implement the model
in specific companies, such as BMW (Fleischmann et al., 2006), DEC (Arntzen et al.,
1995), HP (Amaral and Kuettner, 2008), Pfizer/Warner-Lambert (Gupta et al., 2002), and
Procter & Gamble (Camm et al., 1997). These models can include many factors, such as
tariffs/duties, non-tariff trade barriers, currency exchange rate, corporate income tax,
and worker skills and availability; see Meixell and Gargeya (2005) for an overview
of such factors.
IJPDLM In general, optimization approaches, typically cost minimization, are used for
45,1/2 finding optimal facility locations, optimal capacity levels, and optimal sets of plants
and warehouses at sites that can be opened and closed.

Synthesis of the findings

In this paper, we review the literature on global production and distribution
148 networks. We categorize the articles according to research methodology and
examine the perspectives that each research methodology can provide. The content
analysis shows that different research methodologies provide opportunities for
different and complementary perspectives on network design. We find that two
areas have reached a maturity stage in terms of research in general: location selection
criteria and mathematical modelling. The existing literature on location selection criteria
contains a large variety of factors that potentially can be considered; the issue that
remains is to tailor the decision support to the specific situation. Most mathematical
models focus on the material flow, incorporating multiple stages along the
supply chain and can easily be extended to even more complex supply chains
or networks.
Table VI summarizes the frequency of key aspects in the literature, i.e. location,
capacity, and new facility. These can be considered structural elements in network
design. Changes in site location, the consideration of alternative locations for a facility
and the opening or closing of facilities all affect the network structure. Capacity
investments as well as strategic reductions in capacity also affect the structural balance
in the network. One may argue that location and capacity are the two key aspects,
and that opening and closing facilities are special cases of location and capacity
combinations as a type of 0/1 variable in terms of location and capacity. We find that
the location decision is the dominating aspect for structural network design changes,
and that the opening and closing of facilities are easily captured by mathematical
models, whereas other research methodologies rarely consider this aspect. The average
article includes 1.6 aspects, but there are differences between research methodologies.
Case studies and mathematical models often include two of these aspects, since all
relevant aspects can be incorporated in such research if needed. On the other hand,
conceptual models and surveys are typically concerned with one aspect, but for
different reasons. Conceptual models aim for simplicity in the relationships that
are modelled such that the model can be generalized and have wide applicability.
Surveys either explore a phenomenon or test a theoretical or conceptual model and
typically bring in environmental and performance factors rather than alternative or
complementary aspects.
Table VII takes a supply chain perspective and summarizes the frequency of
including various actors and transportation into account, across the four research
methodologies. “Transport” between two actors denotes transport operations between

Table VI.
New facility Average no. of
A summary of key
Aspects Location (%) Capacity (%) (open/close) (%) aspects/paper
aspects – location,
capacity, and new Case studies (20) 85 55 40 1.8
facilities, and their Conceptual models (16) 69 31 13 1.1
relative explicit Surveys (19) 68 32 21 1.2
inclusion in Mathematical modelling (54) 70 41 76 1.9
existent literature Weighted average (109) 72 40 51 1.6
these, i.e. transport between supplier and manufacturer, manufacturer and warehouse, Design of
or between warehouse and customer. We find that external suppliers and global
transportation from suppliers are in general not given the same consideration as
internal manufacturing and distribution stages along the supply chain and
production
transportation among these and to customers, and that mathematical modelling
can typically capture longer supply chains than other methodologies; most
mathematical models include production – transportation – distribution centre – 149
transportation – customer. However, suppliers and transport from these to
manufacturing sites are seldom included in the mathematical models, but are
accounted for in case studies.
In summary, we can conclude the following. First, most literature focuses on the
manufacturing firm as the focal firm, and its perspective on how to relate to suppliers
and customers to improve its operations. Models are concerned with design or
reconfiguration of networks, and include aspects such as outsourcing, strategic
alliances, consolidation of facilities, and postponement. In particular, the issue of
facility location is well researched using all types of research methodologies.
Second, different research methodologies provide different perspectives on global
production and distribution networks. Case studies provide insights concerning new
aspects and relationships, e.g. how collaboration with LSP can improve overall
performance. Conceptual modelling develops generalizable models that can guide decision
makers in different situations; e.g. that networks need to be designed differently for
different products, customer types, or some other contingency factor. Surveys provide
empirical evidence of significant relationships, e.g. such that particular designs lead to
better performance than others in a particular context. Mathematical models have been
implemented in large corporation and have shown to be a useful tool in the design of
global production and distribution networks. However, these models are typically
confined to the border of the company and its relationships with suppliers and customers.
Third, we find that global production and distribution networks are attracting
increasing attention from a variety of areas: operations management, operations
research, logistics management, and transportation geography. Hopefully, these areas
can become integrated over time to provide a more comprehensive view on how to
design competitive networks.
Fourth, some recent research has been concerned with other aspects than those
related to the material flow. Instead, there is a growth in research on plant
and distributor roles in networks and relationships among plants, acknowledging
softer aspects of the network, such as site competences and responsibilities of tasks
from the network perspective. Also, aspects concerning flexibility and risk are
gaining recognition.

Supplier Transport Manufacturer Transport Distribution Transport Customer

Aspects (%) (%) (%) (%) centre (%) (%) (%)

Case studies (20) 55 45 90 75 60 55 85 Table VII.

Conceptual A summary of key
modelling (16) 38 19 81 63 50 56 81 aspects along the
Surveys (19) 32 11 95 58 53 37 68 supply chain, and
Mathematical their relative explicit
modelling (54) 33 35 93 96 94 80 98 inclusion in
Weighted average (109) 38 30 92 81 75 65 89 existent literature
IJPDLM Research agenda
45,1/2 Based on the content analysis of the extant literature on the design of global production
and distribution networks, we can identify some gaps in the literature and opportunities
for further research. In particular, we propose the following research agenda, which we
hope can stimulate further research.

150 Complementary actor perspectives

More research is needed on complementary perspectives from different types of actors.
Only four case studies and two conceptual papers explicitly include both goods
manufacturers and LSPs. These studies, particularly the case studies, show that
benefits can be gained through collaborative efforts. We have yet to see complementary
actor perspectives in surveys – through pairs (or triads) of respondents – or in
mathematical models – which typically optimizes the operations for the focal actor.
Combining the perspectives of goods manufacturers, LSP, and transport operators is
likely to provide new insights and lead to more competitive networks, by strengthening
the production-transportation link and reducing the risk of sub-optimization.

Multiple supply chain stages

Global production and distribution networks need to include multiple stages that
explicitly consider external suppliers and transportation. The manufacturing firm may
not own all facilities in their networks, but aim to achieve a well-designed network. For
example, outsourcing of operations requires that the firm remains a competent buyer,
wherefore such operations should be included in the network design; particularly if these
contribute to the overall value-added of the network. Also, transportation between actors
in the network, including aspects of transportation modes, need to be strengthened in
future research. Mathematical modelling and case studies can incorporate as many
stages as the modeller or decision maker sees fit, and there are examples of complex
models that have been implemented in practical cases and found useful. However,
multiple stages need to be considered in conceptual models and surveys. Conceptual
models are typically not explicit about the supply chain stages and often generalize the
supply chain as one entity. For surveys, the issue is similar to that for complementary
actor perspectives, in collecting data from successive supply chain stages.

Contingency factors
We conclude that contingency factors need to be considered to a larger extent. In order
to be able to provide specific insights and recommendations for specific types of
situations, contingency factors need to be identified, e.g. through explicit consideration
in multiple case studies. In survey research, potential contingency factors need
to be included in order to be able to identify different patterns for different situations.
Such factors can include firm size, industry, core competencies, corporate strategy,
product type, product architecture, process type, and decoupling point, which may lead
to different designs of global production and distribution networks. The underlying
assumption is that contingency factors influence the network design. For example,
a network for high volume, standardized commodity products should most likely be
designed very differently from a network for low-volume customized products.

New perspectives
Finally, we argue that new perspectives on network design are needed. Location,
capacity, and opening or closing facilities dominate the literature on the network design.
A plant or distribution centre can take on different roles and responsibilities for different Design of
products or product types. Thus, softer issues such as site competences, relationships global
between facilities, flexibility, risk, and power dynamics can help to differentiate network
designs, for example concerning the balance between global efficiency and local
production
responsiveness, and provide new insights besides those concerning material and
information flows. Here, case studies are needed to identify and explore new phenomena.
151
Concluding remarks
In this systematic literature review, we find that the design of global production and
distribution networks is gaining interest as a research area. A limitation of this study is
that our search strategy may have missed some references that are related to the area.
However, as a counter-measure we used back-tracking and forward-tracking to identify
additional relevant papers. Different research methodologies as well as different areas
provide complementary perspectives and insights. We identify some important and
interesting avenues for further research, and we strongly encourage new integrated
research approaches. We hope that this review can stimulate further research on this
interesting and important topic.

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About the authors

Jan Olhager is a Professor in Supply Chain Strategy at the Lund University. He received a Master
of Engineering in industrial engineering and operations research from the University of
California at Berkeley, USA, and a PhD in production economics from the Linköping University.
He has authored two books; one on operations management, and one on manufacturing planning
and control. He is an Editor-in-Chief of Operations Management Research, an Associate Editor of
Decision Sciences, and serves on the editorial boards of Journal of Operations Management, and
Production and Operations Management. He has published more than 50 papers in international
scientific journals. His research interests include global operations networks, operations strategy,
supply chain design, flexibility, and manufacturing planning and control systems. Professor
Jan Olhager is the corresponding author and can be contacted at: jan.olhager@tlog.lth.se
Sebastian Pashaei is a PhD Student at the Lund University. He received an MSc in industrial
engineering and management from the Luleå University of Technology, and has three years
working experience at A.P. Moller-Maersk Group. His research interests are supply chain
management, with a particular focus on the interrelationship between product design and
global supply chains.
Dr Henrik Sternberg is a Postdoctoral Researcher at the Lund University. He received a PhD
from the Chalmers University of Technology. His research has been published in Scientific Supply
Chain Management, logistics and computer science journals, such as Journal of Business
Logistics, International Journal of Logistics and Computers in Industry. His research interests are
freight transport operations and ICT, international transport networks, and supply chain
information sharing.

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