Just-in-Time manufacturing systems, subcontracting and geographic proximity

Abstract

The paper studies the spatial extent of subcontracting linkages for a sample of medium-sized and large Spanish manufacturing firms operating in the automotive and electronics industries. In particular, it analyses how Just-in-Time (JIT) organization of production is related to the spatial pattern of these sourcing relationships when contractors' structural and organizational characteristics, as well as contract characteristics, are taken into account. It is found that firms that implement new technologies and manufacturing systems at the plant level tend to prefer regional to extra-regional outsourcing. This is consistent with Just-in-Time's reliance on flexibility in ordering and quick and frequent deliveries, as well as reliable arrival times, to guarantee the disruption-free production which proximity can facilitate. The results support the view that Just-in-Time, in the context of production subcontracting, increases the importance of proximity.