OPERATIONS & SUPPLY CHAIN

Reshoring for sustainability: do Industry 4.0 technologies matters?

ROBERTO VONA - SILVIA COSIMATO

Objectives. For several decades, production fragmentation and globalization pushed manufacturing to low-cost countries (Wiesmann et al., 2017). This process known as ‘offshoring’ is not new, but still blurred because it has been differently approached and defined, even though it generally deals with competitive strategic phenomena in both the domestic and international marketplaces (Ishizaka et al. 2018; Pereira et al., 2020). One of the most accepted and punctual definition of offshoring comes from Levine (2012), according to which it is “the process of sourcing and coordinating tasks and business functions across national borders” (p.902).

Recently, the global economic downturn, the growing attention to sustainability, the increasing expectation of customers for flexibility, and the improved cost performance led several companies to re-thing their “shoring” decisions (Tate, 2014; Boffelli et al., 2020). It follows that many of them decided to reshoring manufacturing or to “bring back to the home country production activities earlier offshored” (Barbieri et al., 2018, p. 81) or, in other words, to reverse previous offshoring activities. In this sense, the dilemma of offshoring or reshoring generated a lively debate among scholars, practitioners and even policy makers (Ellram et al., 2013). It follows that the growing practice to (wholly or partially) bring manufacturing back home is one of the current imperatives for research (Fratocchi et al., 2016), which is still calling for better understanding the phenomenon per se as well as the related backshoring (or the relocation back to the home country of the firm) and nearshoring (or the relocation to a closer neighboring country) processes (Di Mauro et al., 2018; Piatanesi et al., 2019; Vona and Cosimato, 2021).

 In the literature, one of the major questions to be answered is related to what kind of relationship links together reshoring and sustainability. Choosing “where” manufacturing activities have to be made plays a massive influence on sustainability both at firms and global level (Cosimato and Troisi, 2015; Orzes and Sarkis, 2019). Moreover, this question is not an easy one, even though it has been inspired by the growing and clear effect of manufacturing not only on environmental, but also on social sphere of sustainability (Fratocchi and Di Stefano, 2019). In this direction it is worth noting that sustainability goals and especially environmental ones represent one of the current competitive priorities, which is often related to the integration of advanced digital technologies for environmental protection into integrated manufacturing systems and technologies (de Sousa et al., 2018). It follows that the decision about the location of manufacturing has been also influenced by another key driver, that is Industry 4.0 conceptualized as the fourth industrial revolution, boosted by digital innovations (applied to industrial processes and engineering applications), the most recent communication technologies, a clear service-orientation (servitisation), a knowledge-based integrated and automated manufacturing systems, and an everchanging digitally offering, based both on products and services commercialized through new forms of markets and exchanges (Roblek et al., 2016, Yao et al., 2017). As stated, the recent and advanced technologies connected to the Industry 4.0 paradigm, such as Internet of think, real-time data collection, predictive analytics, big data analytics, block chain technologies, cloud manufacturing, robotics or Artificial Intelligence (AI) (Agostini and Filippini, 2019). This paradigm is characterized by “the adoption by industry of techniques and processes allowed by digitization, cloud computing, the internet of things and big data to gain competitive advantages in domestic and global markets” (Tiwari and Khan, 2020, p. 731). In this sense, the Industry 4.0 has been also led to emergence of the so-called “smart manufacturing”, based on the integration of manufacturing systems with the most advanced digital, automated and smart systems or applications (Roblek et al., 2016). These systems and technological application have deeply changed manufacturing and its processes, also influencing location selection and pushing to choose those geo-political areas in which these technologies are more accessible (Kinkel et al., 2021) and, therefore, able to improve local quality, productivity and flexibility (Di Paola and Vona, 2023; Ancarani et al., 2019; Dachs et al., 2019). This positive effect is often due to the potential of some countries (e.g., Germany and Italy) in exploiting the home-based resources (included technological ones) as well as local quality, productivity and flexibility (Ancarani et al., 2019; Dachs et al., 2019). Thus, this paper aims to provide an interpretative framework for recognizing the key drivers and the possible barriers to reshoring, highlighting the influence that sustainability issues and the Industry 4.0 technologies can have on the related decisions (Elteto, 2020).

#Industry 4.0 technologies #Localization #Offshoring #Reshoring #Sustainability