Backshoring readiness

Abstract

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.

What do we want to know about reshoring? Towards a comprehensive framework based on a meta-synthesis

“…Re-outsourcing activities to the same supplier in the future could be problematic because of the damaged trust between partners (Engström et al 2018;Nujen et al 2018b).…”

“…This is a new aspect compared to existing frameworks. As part of the preparation, the assessment of the organizational readiness for reshoring is of a crucial importance (Nujen et al 2018b). In fact, over time, the previous knowledge base in the home country might be diminished, and neglecting to evaluate the access to skills and knowledge can turn out to be a fatal error for reshoring implementation (Nujen and Halse 2017).…”

“…For reshoring, negative events at the offshore site (e.g. quality issues or IP violation) (Benstead et al 2017;Gray et al 2017), diminished cost differentials (Gylling et al 2015;Benstead et al 2017), free capacity at the domestic site (Nujen et al 2018b), and a new business model (Robinson and Hsieh 2016) triggered the decision. In all of these cases the firms had more than one reason to relocate manufacturing.…”

“…In fact, many studies have indicated that changes at the plants in terms of manufacturing technologies, availability of skilled workers or capacity utilization etc. may have an influence on the location decision (see e.g Gylling et al 2015;Nujen et al 2018b)…”

What can we learn about reshoring after Covid-19?

“…Second, the time perspective ( When ) appears to be extremely relevant, given that factors evolve and differentiating a short-term and long-term perspectives can even enable better understanding of the outcome of the decision (Ancarani et al 2015 ). Third, concerning How the process occurs, a preliminary stage of Preparation is found as a predecessor of the actual implementation (Nujen et al 2018 ).…”