Local sourcing and fashion quick response system: The impacts of carbon footprint tax

Tsan-Ming Choi

Transportation Research Part E: Logistics and Transportation Review, 2013, vol. 55, issue C, 43-54

Abstract: Quick response (QR) system is a well-established industrial practice in fashion apparel. It aims at enhancing inventory management by reducing lead time. In addition to employing a faster delivery mode, QR can be achieved by local sourcing (instead of offshore sourcing). This paper analytically studies how a properly designed carbon footprint taxation scheme can be imposed on a QR system to enhance environmental sustainability via employing a local manufacturer by offsetting the probable higher total logistics and production costs. By examining both the single-ordering and the dual-ordering QR systems, we illustrate how the carbon footprint taxation scheme affects the optimal choice of sourcing decision. Our analytical findings reveal that a properly designed carbon footprint taxation scheme by governing body not only can successfully entice the fashion retailer to source from a local manufacturer, but it can also lead to a lower level of risk for the fashion retailer. A mean-risk improving scenario hence results and it provides a significant incentive to convince the fashion retailer to support the idea of joining QR when the carbon footprint tax is in place.

Keywords: Local sourcing; Quick response system; Carbon footprint tax; Sustainability (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (73)

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DOI: 10.1016/j.tre.2013.03.006

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