What can we learn about reshoring after COVID-19?

Author: Albachiara Boffelli

Right after the pandemic outbreak, many rumours started to spread about a new trend of deglobalization, and multiple “experts” forecasted the renaissance of the reshoring trend in a short time. Luckily enough, starting by 2019, I entered a group of Italian scholars with a passion for the reshoring phenomenon. Besides me, this group include Professors Paolo Barbieri (University of Bologna), Stefano Elia (Politecnico di Milano), Luciano Fratocchi (University of L’Aquila) and Matteo Kalchschmidt (University of Bergamo). As reshoring researchers, of course, we kept the situation monitored and made our own hypotheses about the phenomenon’s evolution.

Photo by fauxels on Pexels.com

During last summer, we managed to publish, together with the co-editor-in-chief Daniel Samson, an editorial on Operations Management Research where we shared our main thoughts at that time, namely right after the first wave of the pandemic in Italy, with the scientific audience.

The editorial was titled precisely like this article (“What can we learn about reshoring after Covid-19”). We divided it into three sections dealing with the past, the present and the future of reshoring. Concerning the history of this phenomenon, we summarized the significant contributions published in Operations Management Research, the leading journal for the reshoring debate. We were asking ourselves, can everything that had already been said in literature still be considered as valid? From previous research, we gained many insights on what reshoring is, why companies decide to reshore (the famous drivers) when the decision is made, where activities are moved and where from, and how companies decide and implement a reshoring initiative.

At present, companies have been and still are dealing with a global pandemic, and some new reshoring decisions have been made in a short time. By starting from what we already know about reshoring, we recognized COVID-19 as a trigger of the phenomenon. This means, that only if companies were previously considering the reshoring decision, COVID-19 might induce them to make the final decision and to relocate activities back to the home country. Instead, it would be almost impossible for companies that never considered this option to set everything up in such a short time. Of course, Covid-19 could also trigger companies to consider reshoring as an option, but the effects would be visible only in the long-term. Early this summer, we had already identified some reshoring initiatives or discussion in the news, as reported in the article more in detail. We found it interesting to include a new actor within these hypothetical reshoring initiatives, namely the supply chain. In fact, differently from every case studied before, even entire supply chains, supported by industrial associations, were considering a collective relocation. Besides, the time horizon appeared to be a relevant element since these collective relocations could be foreseeable only on the long-term. All our thoughts were summarized in the following figure.

Source: Barbieri et al., 2020

In the end, in the future, we expect COVID-19 impacting reshoring from different perspectives. From the companies perspective, both reactive and preventive actions can be envisaged at the individual level. Instead, a joint reactive reshoring may be challenging to implement at the supply chain level because of the time needed to set up a reshoring initiative. In contrast, joint preventive reshoring remains an opportunity. From the political perspective, policymakers may be expected to act at all the considered levels, with time being a parameter to be optimized. Finally, from the academic perspective, COVID-19 offers an excellent opportunity to assess old theories in new normality. However, we should not forget that COVID-19 is not the phenomenon under study, it is just a new, maybe unforeseeable, element among many others influencing old and new phenomena.

In case you are interested in knowing more about this topic, the full article is available here: https://link.springer.com/article/10.1007/s12063-020-00160-1

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