Reshoring: the influences on decision making process for fashion retailer

Blog 3/3

Here comes my third and last blog. Last couple of days, I have been fully engaged with my research. From different formats of papers, I choose to write research papers. After going through all the peer reviewed articles, I summarize my findings that work as an influence for fashion retailers to move their production facility back to the home country. 

Cost is the primary measure as the trend of offshoring started back in the 1960s to prevail the low labor cost of developing countries. Later other costs related with offshoring come into considerations like transportation cost to long distance, travel cost, increasing communication cost in two different geographical locations, cost of long inventory to support delivery delay. Bringing back production in a near proximity location helps to reduce these costs incurred for offshoring. In the meantime, in some previously offshored locations for example in China labor cost increases to a significant level that bounds retailers to rethink about the location choice. Development and innovation work can progress more smoothly when both design and production facility co-locates as sometimes it’s difficult to coordinate it from long distance. Also, communication challenge in two different locations hampers the progress of product and process innovation. Time to market i.e. lead time reduces significantly when firms reshore. Thus it becomes more flexible to react with customer preference. Manufacturing location to a long distance makes the supply chain more complex, less flexible with asymmetric flow of information and high level of inventory. Reshoring helps to adopt the trend of fast fashion that requires small batch production within shorter lead time. Besides, long distance transportation increases CO2 emission and unsustainable practices. Sustainability performance of a firm is badly impacted by the location decision where the manufacturing will take place. As a result, growing emphasis on sustainability encourages firms to reconsider their production location.

The findings of my research shed the light on the area of reshoring that will help future practitioners for further exploration. Firms offshore previously, now show the tendency to bring back the production facility by analyzing the benefits of reshoring. Most of the research papers in this area are conceptual and explore why firms reshore. So, future research can focus more on how firms reshore. I find the topic most interesting to invest my time in the last two months. Hope you guys also enjoy your time to find some new insight of your research area. 

Have a nice summer!!