Does Reshoring Affect the Resilience and Sustainability of Supply Chain Networks? The Cases of Apple and Jaguar Land Rover

Abstract

Extending the notion that reshoring can have a significant impact on a firm's supply network owing to the associated location decisions, we explore how reshoring influences the resilience and sustainability of a focal firm's supply network. While reshoring is triggered by aspects related to both the home (domestic) and the host (foreign) country, frequently more favourable aspects in the home country lead to the reshoring decision. To investigate these dynamics, we construct two large-scale networks consisting of 2066 and 1283 firms, respectively, capturing the supply networks of Apple and Jaguar Land Rover. Both networks have been experiencing the reshoring of previously foreign suppliers to domestic locations. Our investigation captures the network dynamics created by this relocation of tier 1 suppliers for the overall supply chain network, that is, also for higher-tier/subtier suppliers. The results reveal, contrary to our expectations, that indirect (sub-tier) foreign suppliers positively influence the network's resilience, with this impact, however, being negatively moderated by their degree centrality, that is, the number of ties a node possesses. In addition, existing indirect (sub-tier) domestic suppliers do not have a significant influence on the resilience of the network. No evidence was found for the impact of reshoring on sustainability. Overall, our study contributes to the reshoring literature by delineating its influence on both the resilience and the sustainability of a focal firm's supply chain network.

Heading Home? Reshoring and Sustainability Connectedness from a Home‐Country Consumer Perspective

“…Extant consumer research on reshoring has witnessed a constrained use of theories, and there is a lack of studies examining consumers' perceptions towards reshoring and sustainability through a complementary theoretical perspective. Organisations' reshoring decisions have been traditionally explicated through the cost-benefit factors rooted in transaction cost economics, focusing on the role of economic factors such as labour costs or overseas supplier dependence (Choudhary et al, 2022;McIvor and Bals, 2021). In contrast, we adopt a unique theoretical perspective to examine consumer perspective regarding reshoring and sustainability -the connectedness concept, which hinges on attachment theory.…”

An empirical analysis of the profitability of backshoring initiatives to Europe

“…, 2017) but may be intrinsically cost-intensive. In fact, it requires not only the relocation of manufacturing closer to customers but also the re-configuration of the supply chain to achieve fast and reliable delivery and more efficient and effective interactions with suppliers (Choudhary et al. , 2022; Ketokivi et al.…”

“…This may reflect specific trade-offs, because responsiveness increases customer satisfaction on the one hand (Moradlou et al, 2017) but may be intrinsically cost-intensive. In fact, it requires not only the relocation of manufacturing closer to customers but also the re-configuration of the supply chain to achieve fast and reliable delivery and more efficient and effective interactions with suppliers (Choudhary et al, 2022;Ketokivi et al, 2017). The trade-off may result in contrasting effects on profitability especially in the short term because customers may be slow to recognize the value added by responsiveness vis-a-vis immediate costs of reconfiguration for the company (Anderson et al, 1997).…”

“…Jensen et al (2013) highlight the problems of "reintegrating" relocated activities with the remaining organizational activities, so that coordinated action may be achieved. For instance, previous research suggests that electronics manufacturing is unlikely to relocate to Europe and the United States, since offshoring has created effective and efficient hubs in Asia that are difficult and costly to reproduce (Choudhary et al, 2022). In this perspective, the robustness of the estimated relations should be assessed using a longer time span to account for short-term reintegration processes.…”

Reshoring: A Road to Industry 4.0 Transformation

“…, 2022; Gillani, Kutaula and Budhwar, 2022) and various factors influencing the reshoring of manufacturing operations (Choudhary et al. , 2022; Fjellström et al. , 2023; Zhang et al.…”