A reshoring decision framework

Abstract: Background An increasing number of companies in Europe are interested in reshoring the production to their home country. Advantages in other countries, such as low direct wages, do not seem to play the major role anymore. Companies start to reassess their manufacturing location decision and start to see advantages in having production facilities in their home country and closer to the market. Nevertheless, reshoring is a long-term decision and comes with many factors that must be taken into consideration. Purpose The purpose of this thesis is to show learnings from shortcomings of outsourcing and offshoring decisions, so the shortcomings can be avoided when making reshoring decisions. Based on this together with a deep research of the literature, factors to consider when deciding to reshore should be proposed. These factors should be compared to the results of the empirical research to see their validity and if possible, they should be developed and complemented. Method To answer the research questions, a thorough literature review was crafted and a qualitative case study in form of semi-structured interviews with highly experienced employees of different companies in Sweden, Germany and Switzerland was conducted. The companies were picked based on their location, their industry and their experiences with manufacturing location decisions. The collected data was summarized, discussed and analyzed based on common themes. Conclusion After reviewing a vast amount of literature and empirical material concerning the topic of reshoring, the nature of the reshoring decision became a lot clearer. It is a very complex decision which requires the companies to take a close look at many different factors, as shown in figure 2. This framework allows companies to have a better overview of the factors influencing their reshoring decision. Since the reshoring decision itself varies quite substantially depending on the company, it is important that companies adapt these factors to their specific needs. Only when considering this step, a correct decision can be ensured.