On Supply Chain Integration to Free Trade Zones: The Case of the United States of America

Abstract

The interdependence of resources in a global marketplace, the advancement of technology and rising national economic constraints have compelled companies to excel in their supply chain performance. To that end, Free Trade Zones (FTZs) may help supply chains improve their bottom line while generating economic development to their geographical regions. The shift of manufacturing to overseas and recent changes in global trends, regulations and procedures call for a renewed understanding of FTZs from the perspective of the extended enterprise. Although having significant potential impact on the efficiencies of global supply chains, FTZs in such a context have not been studied in depth in academic literature. With this paper, we aim to modestly draw attention to that gap while providing an overview of the contemporary state of FTZs with a special focus on the USA and the application process therein. We propose a practical decision framework that considers the cost of imported goods and the level of business maturity to help companies make better decisions when they want to integrate with a FTZ.