Expected and Achieved Outcomes of Reshoring: A Swedish Perspective

Abstract: Purpose: Over the last couple of decades, globalization has impacted market competition. This results in that companies heavily offshore to low-wage countries to enhance its competitiveness through lower costs. Offshoring constitutes relocation of manufacturing activities to other existing manufacturing sites in foreign countries. In recent years, low-wage countries have grown and developed. Studies show that low cost environments are increasing in cost, eliminating the benefits of offshoring. This phenomenon has sparked a new trend, ‘reshoring’- to bring back manufacturing to the home country, which has been acknowledged by both researchers and practitioners. The trend has become more distinct due to the increasing numbers of cases where companies that previously offshored manufacturing activities are returning them to the home country. The research done on reshoring focuses mainly on a “why” perspective, with drivers that cause reshoring and barriers that prevent them. However, research concerning the outcomes of what a company expected from reshoring and what they achieved afterwards is limited, especially in the high cost environment of Sweden. The purpose of this study is to explore the expected and achieved outcomes of the reshoring process through a multiple case study including four companies from Sweden that have reshored manufacturing back to Sweden. Method: The method used in this thesis was a systematic literature review to gain knowledge of the phenomenon. With the help of the systematic literature review an interview guide was created to assist in the data collection. This thesis used a multiple case study, the data was collected through semi-structured interviews and documents. The findings were analyzed within each case, cross-case, and in comparison to literature. Findings: To analyze the outcomes on the same premises, the researcher had to create a framework. All the outcomes from the literature were categorized based on firms’ operational and competitive capabilities namely cost, quality, delivery, flexibility, service, innovation, environment, culture, risk mitigation, reputation and trust, and government legislations. It was found that all the case companies had a successful reshoring process and all their expected outcomes were achieved. However, in comparison to the expected outcomes found in the literature, the companies expected less from reshoring. The companies were unaware of the full extent of reshoring, since their expectations were limited. The most expected outcome of reshoring, found in all the cases and in theory were: to decrease total cost, increase delivery speed, increase reputation and trust, and use the comfort of the home culture. A thorough analysis of achieved outcomes, in case and in literature, showed that all the case companies have achieved lower total cost, increased delivery speeds and higher reputation and trust. On comparing all the achieved outcomes in case and in literature it is evident that researchers have studied the process of reshoring from a why and theoretical perspective, aside from the effects after the reshoring, which this thesis has accomplished. A comparison between expected and achieved outcomes of all the case companies collectively, showed that they have achieved lower costs, higher quality, better service and higher reputation and trust, beyond what they expected. Implications: Reshoring back to Sweden would bring back more manufacturing jobs and encourage further local sourcing within the country. Strategical collaboration within the supply chain in the home country would make companies more responsive to customer demand. Geographically, the literature lacks case studies from Sweden, therefore, this thesis will contribute to theory by presenting successful reshoring case studies from Sweden