Reshoring of Labor-Intensive Production with Special Focus on Apparel Supply Chains

Abstract

The aim of this thesis is to find possible outcomes and enabling factors for reshoring in the context of apparel supply chains through an extensive literature review. During the last decades, most labor-intensive production has been moved to low-cost countries. A reverse movement called reshoring has recently been observed. Companies have brought back some or all of their production from offshore locations. There are many possible reasons behind this phenomenon. Companies have experienced problems such as quality issues, uncertainty, long lead times, large inventories and hidden costs with offshore production. The most important reasons for reshoring cited in academic literature reviewed for the thesis are quality, flexibility, responsiveness, cost advantage changes, labor costs, transportation costs, control, monitoring and coordinating. The cost gap between low-cost country and developed country manufacturing has decreased. A long lead time can create mismatch costs originating from over-stock or lost sales. Supply and demand can be better balanced with a shorter lead time. The location of target markets is a key factor for achieving flexibility from reshoring. Reshoring is especially fit for time-sensitive products, which have a short selling season. However, as quality is cited as the most important reason for reshoring, there is also potential for reshoring the manufacturing of products that are not time-sensitive. The research in this thesis indicates that there is potential for increasing profitability, quality and customer satisfaction in the reshoring of labor-intensive apparel production.