What do we know about manufacturing reshoring?

The pros and cons of reshoring to address the problems of shortages in global pharmaceutical value chains: the case of antibiotics

Purpose

Antibiotics shortages have become an increasingly common problem in Europe because of several reasons, including the offshoring of the production of active pharmaceutical ingredients for many of these products to low production cost countries, such as China and India. The problem has deteriorated because of the Covid-19 crisis that has put most global value chains (GVCs) under great stress. This situation has boosted extensive discussions among academics, practitioners and policymakers on possible changes to the configuration of GVCs. This paper aims to focus specifically on antibiotics supply chains from the perspective of a small country (Sweden), and analyse the pros and cons of backshoring and nearshoring alternatives, as a means to reduce drug shortages.

Design/methodology/approach

This work adopts a systemic perspective to capture the implications of reshoring for the different stakeholders involved in the antibiotics field. The present meso-analysis, focusing at the industry level, is based on multiple sources of primary data collected between 2014 and 2021, including participation in policy-related projects and interviews with over 100 representatives of key stakeholders in the antibiotics field.

Findings

This paper shows how reshoring can address the problems of drug shortages and reduce availability risk in antibiotics’ GVCs. However, the authors show that no simple and best solution exists because both alternatives of reshoring, i.e. backshoring and nearshoring, entail pros and cons for different stakeholders. The authors conclude with implications for policymakers and managers.

Research limitations/implications

The analysis of pros and cons of both backshoring and nearshoring for various stakeholders offers relevant implications for research on operations and supply management, international business and economics/political science.

Originality/value

This paper looks at reshoring as a policy-driven decision and provides an innovative systemic perspective to analyse the implications for different stakeholders of two reshoring options concerning the antibiotics supply chain.

Paradoxical tensions impacting small-series production implementation in high-cost contexts: insights from the EU apparel industry

Purpose

While localized small-series production is a significant opportunity, various tensions challenge implementation in high-cost contexts. This paper explores how managers view and respond to different tensions in small-series production implementation by adopting a paradox-based perspective.

Design/methodology/approach

The paper presents a multiple case study addressing small-series production within EU's apparel industry, as key context to address managerial awareness, and responses to tensions regarding location and supply network configuration decisions. Seven cases were selected for variation in customization and implementation (early/established), ownership, location and company size, to identity commonalities.

Findings

The study highlights performing tensions related to sustainability, and risk, in addition to confirming traditional goal-related tensions predominantly impacting small volume production. With on-demand/custom production, tensions include costs in conflict with process scale, and several process-related tensions (flexibility, expansion/development, risk management). Identified multidimensional responses do not include location or structural decisions, instead focusing on synthesis, through product-operations efficiency, knowledge development and process innovation and supply chain collaboration. Temporal separation is found with customization, including reducing product/process complexity short-term with enhancing process development, which suggests latent learning tensions and limited awareness.

Research limitations/implications

Future research should address the extent to which tensions can be resolved or remain paradoxical, as well as dynamic decision-making and latent tensions.

Originality/value

The paper shows how paradox theory facilitates a deeper understanding of complex network configuration decisions, including reshoring/localization. The findings identify organizing tensions/elements and elaborate upon performing/performing-organizing tensions suggested with small-series production, location decisions and supply chain management.

Setbacks, interruptions and turnarounds in the internationalization process: a bibliometric and literature review of de-internationalization

The paper presents a comprehensive review of research on de-internationalization, encompassing the themes of export withdrawal, subsidiary divestment, and backshoring or reshoring. A bibliometric technique (co-word analysis) on keywords from articles and book chapters published from 1980 to 2020 was initially used to confirm the main strands related to de-internationalization. Then, the study employed a bibliometric coupling analysis to identify the recent trends within each theme. The literature was divided into three clusters, which, using different but related terms, addressed the same phenomenon of firms’ decrease in foreign commitment. The ramifications of research on de-internationalization were examined for each of the clusters, mapping the issues deserving of further investigation and making recommendations for future research. The study uses an unprecedented method for understanding the de-internationalization phenomenon more broadly, delimiting its conceptual boundaries and mapping the different manifestations within a single theoretical domain.

A hybrid fuzzy-AHP-TOPSIS model for evaluation of manufacturing relocation decisions

Manufacturing relocation decisions are complex because they involve combinations of location modes like offshoring or reshoring, and governance modes like insourcing or outsourcing. Furthermore, the uncertainty involved in the decision-making process makes it challenging to reach a right-shoring decision. This study presents a hybrid fuzzy-AHP-TOPSIS model to support generic relocation decisions. Industry experts were involved in a pairwise comparison of the competitive priorities’ decision criteria. A meta-synthesis of empirical studies is used to generate theoretical relocation scenarios. The presented hybrid model is used to rank the relocation scenarios in order to identify the most pertinent alternative. The resiliency of the solution is presented through a sensitivity analysis. The results indicate that the proposed hybrid model can simultaneously handle all the main relocation options involving governance modes. Based on the input data in this study, the competitive priorities criteria quality, time and cost are shown to have a strong impact, whereas the sustainability criterion has a weak impact on the choice of relocation option. The research presented in this paper contributes to the research field of manufacturing relocation by demonstrating the suitability of the hybrid fuzzy-AHP-TOPSIS model for relocation decisions and the resilience of the results. Furthermore, the research contributes to practice by providing managers with a generic relocation decision-support model that is capable of simultaneously handling and evaluating various relocation alternatives.

Digital Innovation for the Sustainability of Reshoring Strategies: A Literature Review

Recently, some critical events (e.g., the economic decline, the growing socio-ecologic burden, even more demanding customers, etc.) have led several companies to re-think their “shoring” decisions. Therefore, many of them decided to reshore manufacturing or to bring back home production activities previously offshored. This phenomenon represents one of the current imperatives for research. In fact, the location where manufacturing takes place has a massive influence on the sustainability of firms on a local and global level. Therefore, to better understand what makes reshoring strategies sustainable as well as to identify the drivers that can boost it, further research is still needed. The explorative nature of this paper recognizes some motivations or drivers for making reshoring strategies sustainable. To this end, a structured and narrative literature review has been conducted to grasp and describe the main motivations and implementation characteristics that can make reshoring decisions sustainable. The achieved results better define reshoring and the influence that some drivers, especially digital innovation, can play on the related strategies and on their sustainability. In doing so, this work is one of the first contributions that jointly approaches reshoring, sustainability, and digital innovation.

Onshoring Through Automation; Perpetuating Inequality?

Many analyses of the ethical, legal and societal impacts of robotics are focussed on Europe and the United States. In this article I discuss the impacts of robotics on developing nations in a connected world, and make the case that international equity demands that we extend the scope of our discussions around these impacts. Offshoring has been instrumental in the economic development of a series of nations. As technology advances and wage share increases, less labour is required to achieve the same task, and more job functions move to new areas with lower labour costs. This cascade results in a ladder of economic betterment that is footed in a succession of countries, and has improved standards of living and human flourishing. The recent international crisis precipitated by COVID-19 has underlined the vulnerability of many industries to disruptions in global supply chains. As a response to this, “onshoring” of functions which had been moved to other nations decreases risk, but would increase labour costs if it were not for automation. Robotics, by facilitating onshoring, risks pulling up the ladder, and suppressing the drivers for economic development. The roots of the economic disparities that motivate these international shifts lie in many cases in colonialism and its effects on colonised societies. As we discuss the colonial legacy, and being mindful of the justifications and rationale for distributive justice, we should consider how robotics impacts international development.

AHP-based support tools for initial screening of manufacturing reshoring decisions

Purpose

The existing literature expresses a strong need to develop tools that support the manufacturing reshoring decision-making process. This paper aims to examine the suitability of analytical hierarchy process (AHP)-based tools for initial screening of manufacturing reshoring decisions.

Design/methodology/approach

Two AHP-based tools for the initial screening of manufacturing reshoring decisions are developed. The first tool is based on traditional AHP, while the second is based on fuzzy-AHP. Six high-level and holistic reshoring criteria based on competitive priorities were identified through a literature review. Next, a panel of experts from a Swedish manufacturing company was involved in the overall comparison of the criteria. Based on this comparison, priority weights of the criteria were obtained through a pairwise analysis. Subsequently, the priority weights were used in a weighted-sum manner to evaluate 20 reshoring scenarios. Afterwards, the outputs from the traditional AHP and fuzzy-AHP tools were compared to the opinions of the experts. Finally, a sensitivity analysis was performed to evaluate the stability of the developed decision support tools.

Findings

The research demonstrates that AHP-based support tools are suitable for the initial screening of manufacturing reshoring decisions. With regard to the presented set of criteria and reshoring scenarios, both traditional AHP and fuzzy-AHP are shown to be consistent with the experts' decisions. Moreover, fuzzy-AHP is shown to be marginally more reliable than traditional AHP. According to the sensitivity analysis, the order of importance of the six criteria is stable for high values of weights of cost and quality criteria.

Research limitations/implications

The limitation of the developed AHP-based tools is that they currently only include a limited number of high-level decision criteria. Therefore, future research should focus on adding low-level criteria to the tools using a multi-level architecture. The current research contributes to the body of literature on the manufacturing reshoring decision-making process by addressing decision-making issues in general and by demonstrating the suitability of two decision support tools applied to the manufacturing reshoring field in particular.

Practical implications

This research provides practitioners with two decision support tools for the initial screening of manufacturing reshoring decisions, which will help managers optimize their time and resources on the most promising reshoring alternatives. Given the complex nature of reshoring decisions, the results from the fuzzy-AHP are shown to be slightly closer to those of the experts than traditional AHP for initial screening of manufacturing relocation decisions.

Originality/value

This paper describes two decision support tools that can be applied for the initial screening of manufacturing reshoring decisions while considering six high-level and holistic criteria. Both support tools are applied to evaluate 20 identical manufacturing reshoring scenarios, allowing a comparison of their output. The sensitivity analysis demonstrates the relative importance of the reshoring criteria.

Reshoring Decisions for Adjusting Supply Chains in a Changing World: A Case Study from the Apparel Industry

Global conditions for manufacturing are evolving rapidly and the myopic financial factors that once made overseas locations attractive for offshoring are now in favor of revising it. Besides, the COVID-19 pandemic has highlighted the need for restoring the previously offshored competencies. As a strategic decision, reshoring requires a balance of short- and long-term financial and non-financial considerations. This study extends the reshoring literature by exploring the underpinnings of the decision. For this purpose, the extended fuzzy Decision-Making Trial and Evaluation Laboratory (DEMATEL) is used to study the interrelationship among the decision criteria and explore the sequential effect of the prominent criteria on reshoring decisions. Data from the UK apparel industry is used as a baseline to provide insights for other industry situations. Findings are supportive of the supply process complexity as the prominent considerations with the highest potential impact on the financial criterion. Along with supply process complexity, environmental sustainability appears to have had the highest influence on cost-efficiency as the major driver of past offshoring decisions. Overall, the research findings provide insights for deeper analysis of the manufacturing location decisions for a globalized setting.

Doing the right thing or doing things right: what is better for a successful manufacturing reshoring?

The article concerns the revision of earlier decisions to offshore production activities (so called “relocation of second degree”); more specifically it is focused on the “reshoring” (also referred as “relocation to the home country”, “back-reshoring” or “back-shoring”). The research aims are to investigate what types of mistakes occur along the decision-making and implementation process and how they affect the outcome, in terms of success or failure, of a relocation strategy. A multiple case study involving four companies in the fashion industry from Portugal and Italy was conducted. The cross-case analysis allowed to differentiate decision-making mistakes from implementation ones and to assess differences and similarities among the cases in terms of content of the relocation, drivers and outcomes. The research contributes to previous literature on reshoring by bringing evidence of different types of mistakes to be considered, thus requiring further conceptualization of the reshoring process. Managers and entrepreneurs should consider the importance of doing the things right also during the implementation, too often underestimated. The present article is the first one in the reshoring literature bringing evidence of cases of failure in the relocation decisions and discriminating among different kinds of mistakes.

Back-shoring vs near-shoring: a comparative exploratory study in the footwear industry

After decades of off-shoring strategies, companies are often critically re-evaluating their earlier location decisions; in doing so, sometimes they implement the so-called relocation of second degree. Among them, back-shoring (i.e., relocation to the home country) and near-shoring (relocation to the home region) are two of the alternatives attracting growing interest from scholars. This paper aims to shed new light on the variables influencing the choice made between these two alternatives. As requested in the extant literature, a contingency approach is adopted, focusing attention on the footwear industry. Given the exploratory nature of the paper, evidence from 41 back-shoring and near-shoring strategies are analysed, comparing data from Spanish and Italian companies. Collected data are adapted to test hypotheses concerning three sets of variables: firms’ characteristics, motivations for the second degree relocation and its barriers. Collected data show that firm’s size directly influences the chosen alternative since larger companies prefer to near-shore instead of back-shore. When considering motivations, while the “made in” effect does not influence the firm’s choice, availability of skilled contractors and/or government aids induces companies to relocate to the home country instead of the home region. Finally, companies fearing encountering barriers, in terms of skilled contractors’ availability and/or (re-)development of internal manufacturing competences, will prefer the back-shoring rather than the near-shoring option. The study is focused on two countries (Spain and Italy) where the manufacturing sector (and the footwear industry within it) is still relevant to the local economy. Findings cannot be generalized to countries/industries where the local industry has been totally dismantled, without a previous in-depth analysis. The findings obtained offer managers useful insights on the elements that should be carefully evaluated when considering back- and near-shore alternatives. Additionally, valuable insights are provided for policy makers that plan to design industrial policies supporting back-reshoring policy initiatives. To the best of our knowledge, this is the first paper in the extant literature addressing variables influencing the choice between back- and near-shoring alternatives.

Impact of Resources on the Development of Local Entrepreneurship in Industry 4.0

The development of Industry 4.0 has a significant impact not only on production processes but also on the functioning and future of regions. It is crucial to understand the phenomena taking place in the social and economic space both from the cognitive and practical point of view. The article is based on research which investigates the prospect of communes in the context of Industry 4.0 development. The aim of the article is to show possible consequences of the development of Industry 4.0 from the local perspective. The basic assumption is a positive impact of entrepreneurship on ensuring sustainable regional development. The model adopted is built on a resource-based view and includes both invariable, external and independent resources such as location, as well as those which are variable in the longer term, such as human and social capital. To verify most of the hypotheses, a linear regression model has been created. The results of the research show that there is a strong correlation between human capital, social capital, proximity of an agglomeration and tourist attractiveness of a region, and regional development operationalised by the number of enterprises. The article presents possible directions of changes in the profiles of local units, as well as the conditions which have to be met in order to enable such a transformation.

‘Manufacturing is coming home’: does reshoring improve perceived product quality?

Purpose

Recently, many firms have reshored manufacturing activities back to their home countries to increase customer perceptions of product quality. However, there is no evidence that relocating production to the home country improves customer-perceived quality. This study intends to address this gap by assessing the variations between pre- and post-reshoring product quality, as perceived by domestic customers.

Design/methodology/approach

Data were collected through a questionnaire, which used the case of an Italian fashion brand that had reshored its manufacturing from Romania to Italy as the stimulus. Two analyses of the collected data (n = 399) were conducted, applying both 2 × 2 × 2 factorial design and partial least squares–structural equation modelling (PLS–SEM) multigroup analysis.

Findings

Reshoring increased the level of perceived product quality only for customers that both were aware of the firm's past offshoring decision and had high levels of affective ethnocentrism. For all other customers, no significant variations between pre- and post-reshoring product quality were observed.

Research limitations/implications

This study challenges previous findings, revealing that only a minor share of customers perceived products to be of higher quality after reshoring.

Practical implications

Increasing customer-perceived quality may not be a sufficient motivation to select the reshoring strategy. In addition, when announcing reshoring strategies, producers should appeal to customers' emotions and not use rational arguments about objective product quality.

Originality/value

This is the first study to assess variations between pre- and post-reshoring customer-perceived quality and to identify factors that explain such variations.

The future of manufacturing: A Delphi-based scenario analysis on Industry 4.0

Industry 4.0 is expected to impart profound changes to the configuration of manufacturing companies with regards to what their value proposition will be and how their production network, supplier base and customer interfaces will develop. The literature on the topic is still fragmented; the features of the emerging paradigm appear to be a contested territory among different academic disciplines. This study assumes a value chain perspective to analyze the evolutionary trajectories of manufacturing companies. We developed a Delphi-based scenario analysis involving 76 experts from academia and practice. The results highlight the most common expectations as well as controversial issues in terms of emerging business models, size, barriers to entry, vertical integration, rent distribution, and geographical location of activities. Eight scenarios provide a concise outlook on the range of possible futures. These scenarios are based on four main drivers which stem from the experts' comments: demand characteristics, transparency of data among value chain participants, maturity of additive manufacturing and advanced robotics, and penetration of smart products. Researchers can derive from our study a series of hypotheses and opportunities for future research on Industry 4.0. Managers and policymakers can leverage the scenarios in long-term strategic planning.

Does sustainability matter for reshoring strategies? A literature review

Purpose

Production activities affect environmental and social pillars of firm’s sustainability. Therefore, decisions regarding where products are manufactured have a tremendous impact on a firm’s sustainability. However, until now, interdependencies among back-shoring decisions and sustainability issues have been rarely addressed. This paper aims to fill this research gap and develop avenues for future research.

Design/methodology/approach

The paper adopts an explorative approach based on a two-steps desk research strategy. In the first one, a structured literature review is implemented analysing 105 Scopus documents published up to August 2018. In the second step, empirical evidence of manufacturing back-shoring decisions coming from secondary sources is analysed and discussed.

Findings

The investigated research questions shed new light on the “how” back-shoring decisions are taken and implemented. The structured review and the empirical evidence show that environmental and social sustainability issues are increasingly assuming certain relevance for the academic debate and managerial decisions.

Research limitations/implications

The structured analysis of the selected literature and the empirical evidence sorted by the UnivAQ Manufacturing Reshoring Dataset clearly shows that neither scholars nor firms’ managers and entrepreneurs considered the environmental and social pillars of sustainability as the most relevant in terms of back-shoring drivers/motivation, outcome/benefit and/or barrier/enabler.

Practical implications

The paper suggests policymakers that sustainability-based legislations may influence – and support – the firm’s decision to backshore. At the same time, policymakers should carefully reflect on the role of market labour laws and ensure that relocations are not based on “informal subcontracting and informal employment”. At the same time, the paper suggest managers to adopt a “progressive” and/or a “selective” approach when implementing reshoring decisions based (also) on sustainability issues.

Originality/value

Even if other authors suggest that sustainability issues may be relevant for the reshoring decisions, this is the first attempt to define the base of knowledge on this topic and to suggest avenues for further research.

Backshoring readiness

Purpose

The purpose of this study is to delineate key aspects of backshoring readiness and discuss how such aspects contribute to a smooth shift-back from global sourcing operations. It aims to answer the following questions: which factors constitute backshoring readiness and how these factors affect the backshoring transition.

Design/methodology/approach

Based on theory departure from the organizational readiness field and the emerging field on backshoring, a conceptual model is developed. A multiple qualitative case study is then conducted to exemplify the backshoring readiness factors delineated in the study.

Findings

The study indicates that due to previous outsourcing, limitations concerning the availability of firms’ capabilities are affected by ownership structures and that backshoring appears to be time-sensitive. The study delineates three key aspects of backshoring readiness and proposes a comprehensive understanding of readiness as an important construct to enhance successful backshoring.

Research limitations/implications

The findings are limited by the nature of this conceptual study, the restriction to a high-cost context and the small number of cases. Therefore, conclusions and proposed recommendations need to be further investigated in preferably larger samples of case studies.

Practical implications

By introducing contextual variables that go beyond traditional cost considerations, this work should be of special interest for both practitioners and academics, because the absorptive capacity for the exploitation of cutting-edge knowledge is globally scarce and hence rather expensive in Western countries compared with traditionally low-cost countries. Another practical contribution of this study is the conceptual backshoring readiness framework itself, as it can guide firms acquainting themselves with the resource availability in their home environment.

Originality/value

The research defines key resources needed to facilitate backshoring readiness in a conceptual framework developed from literature, which is then exemplified by a case study. This framework conceptualizes backshoring readiness as aspects of requirements to knowledge, technology and supplier infrastructures. Furthermore, the readiness framework developed provides firms and their managers with six recommendations that can enable a rigorous evaluation of a firm’s readiness to embark on backshoring and reflect on the aspect of fitness of its current strategies.