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Exploring Supply Chain Reshoring And Domestic Sourcing Strategies

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Resource-intensive supply chain disruptions: Reshoring and nearshoring are strategies to make supply chains more resilient and sustainable

Evs Help Fuel Reshoring And Fdi Growth

Author: Andrés Fernández-Miguel Andrés Fernández-Miguel Scilit Preprints.org Google Scholar 1. Maria Pia Riccardi Maria Pia Riccardi Scilit Preprints.org Google Scholar 2. Valerio Veglio Valerio Veglio Scilit Preprints.org Scholar 3. Fernando E. Fernando E. Muiña Scilit Preprints.org Google Scholar 4, Alfonso P. Fernández del Hoyo Alfonso P. Fernández del Hoyo Scilit Preprints.org Google Scholar 1 and Davide Settembre-Blundo Davide Settembre-Blundo. 4, *

Received: 2 August 2022/Revised: 30 August 2022/Accepted: 30 August 2022/Published: 31 August 2022

(This article belongs to the special issue “From Global to Local Global: Digital Transformation to Create More Agile, Resilient, and More Sustainable Supply Chains”)

Reshore, Nearshore Or Offshore?

The disruption of many supply chains due to the simultaneous impact of epidemics and geopolitical crises shows the vulnerability of global supply networks, especially resource-intensive supply networks. Reshoring and nearshoring strategies are responses that manufacturing companies can take to disruptions to adapt to unexpected events. This study examines the supply chain of the Italian ceramic industry, an industry characterized by the intensity of natural resources and energy consumption and high geopolitical risk in the procurement system. Supply chains are analyzed using functional decomposition techniques; then, three scenarios are developed as potential remedies to stop the unexpected supply of plastic clay to Ukraine. The study also showed that complex problems require a diverse approach to analysis, so an interdisciplinary approach was chosen. Furthermore, analysis of the ceramic industry shows that nearshoring and reshoring strategies can reduce supply risks and have a positive impact on the environment. The study also shows how moving the extraction source closer to the plant can significantly reduce CO2

Pollutants emitted into the atmosphere during transportation. The main contribution of this paper is to analyze the complexity of the supply chain in the event of a disruption, through the configuration of reshoring and nearshoring options between sectors.

The impact of the epidemic crisis and global geopolitical tensions [1] have disrupted supply chains, led governments to adopt various forms of protectionism, and slowed the economy and international trade after decades of integration [2]. In an environment of global crisis and disruption in natural resources and energy sources, manufacturers must optimize the use of production parts and use reshoring and nearshoring strategies to reconfigure the supply chain [3]. The system of value creation and acquisition has undergone tremendous changes, which requires the industry to work on processes, organizational models, products and business models from a sustainable perspective [4] [5]. Therefore, to deal with unexpected market shocks, it is very important to diversify supply sources, create new supply chains that are more flexible, agile, flexible [6, 7] and green [8] and reduce the carbon footprint of the supply chain[ 9] . The use of appropriate design tools and an interdisciplinary innovation approach [10], i.e. not only the overlap of technical and management expertise, but a successful integration, can help manage this transition effectively [11].

Thinking Of Re Shoring Your Supply Chain? Think Again!

In manufacturing, industrial sites refer to locations where businesses choose to purchase raw materials (inputs), process them, and transform them into finished products (outputs) for sale to consumers [12]. It can be seen that localization plays an important role in the process of companies formulating strategic plans and defining competitive strategies [13]. Finding an ideal factory location requires considering the requirements of all company departments, not just the manufacturing department, as it relates to the type of business that the company develops [14]. Manufacturing companies have tended, especially since the end of the 20th century, to move production from mature countries to emerging or developing countries in order to reduce costs or take advantage of the sales prospects offered by rapidly developing markets. Offshoring is a phenomenon associated with globalization, economic integration, and the openness of countries to international trade [15]. In other words, offshore manufacturing is a technology for companies to adapt to changes in the competitive environment and gain new comparative advantages to increase competitiveness [16]. Offshoring can reduce production costs in the short term, but in the long term it increases the loss of operational control due to distance from the parent company, cultural and legal differences, language barriers that make communication more challenging, and even geopolitical conditions. this sometimes hinders performance [17].

However, the factors that initially led to the relocation of manufacturing are no longer strong. In fact, over time, the gap in labor costs between Western countries and developing countries has decreased, and the country’s labor and environmental protection laws are increasingly similar to those of more advanced industrialized countries [18]. Due to these factors, the practice of “reshoring” (which involves reconsidering the location of existing industries offshore) is increasingly popular [19, 20]. In this operating model, manufacturing companies return to domestic production to meet the needs of reindustrialization in advanced economies to reduce supply chain risks and vulnerabilities [ 21 , 22 ]. However, bringing the business back home is not always possible. This happens in some industries because the raw materials needed are not available domestically, and in others because it is too expensive to replicate manufacturing facilities. In this context, moving industrial operations to countries that are friendly but have similar value systems and political alliances (even if distant) is known as “friendly shore support” [23]. Therefore, the manufacturing industry faces less geopolitical risk. If there is no choice, the company can turn to nearshoring[24]. This form of offshoring requires manufacturing companies to move (or move away) operating procedures to a country close to the company’s headquarters [25]. Furthermore, starting in 2020, the outbreak of COVID-19 and the subsequent geopolitical instability caused by local conflicts disrupted many supply lines, exposing vulnerabilities and increasing the possibility of a paradigm shift in globalization [26]. All this leads to the phenomenon of nearshoring or reshoring of production by many companies in developed countries [27].

The literature on reshoring and nearshoring strategies for manufacturing processes is extensive [28], but researchers have not studied alternatives to the same strategy for input procurement practices [3] and green supplier selection [29]. One of the most important components in the manufacturing process of natural resource intensive industries such as construction, concrete, glass, ceramics, and metals is the raw material supply network [30]. In the past three decades, the process of globalization [31] and sustainable development [32] have opened new markets for natural raw materials, and procurement outsourcing has become the best option for manufacturing companies with high-quality resources in sufficient quantity. price [33]. However, the complexity of supply logistics becomes apparent during the pandemic and shows the need for manufacturing companies to be equipped with appropriate systems to optimally manage distributed resources from an operational perspective [34] and a circular economy [35]. Therefore, managing increasingly complex value chains in disruptive times requires the coexistence of diverse technical and socioeconomic expertise. However, a single interdisciplinary strategy that allows multiple disciplines to work together and only integrate knowledge with additional logic without encouraging communication between other fields does not solve the problem of complexity [36].

Webinar: The Right Covid 19 Supply Chain & Manufacturing Response

An integrative approach to define interdisciplinarity, which is between areas of knowledge that can combine concepts, techniques or tools between disciplines, can be the first step for a more effective problem solution [37]. However, this kind of information pollution only occurs between culturally similar and interconnected fields. this

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