This chapter gives an insight to the definitions and theory of reshoring and operations capabilities.
Reshoring is a decision of location that is identified by two traits: the rectifying of preceding decision to offshore and the back-shoring or near-shoring of production to the firm’s country of origin (Bellego, 2014; Ellram, 2013). It is a concept that spans over several areas as it addresses issues in international business and operations management (Srai & Ané, 2016). The motivators for location decision are divided into four factors, four contexts that drive the reshoring decision: (1) the country context, whether that be political or economic incentives; peculiarities of the firms investing; (3) the characteristics of the industry and the activity that adds value; (4) and motive of the investment, whether it is driven by demand, supply, seeking to protect assets or rationalization (Dunning, 2000). Location decisions should be viewed as dynamic and not static, as the growth of the seeking of internalization of assets and the knowledge seeking nature of the global economy will compel this view (Dunning, 2000).
The phenomena have been rationalized to be a reaction to the changes of labor cost in traditionally low wage countries and unsatisfactory levels of quality (Srai & Ané, 2016). As the spatial profile of the global economy is likely to continue to change, it is important to carefully examine which locations decisions yield perceived advantages that might turn out to be short-term (Ancarani et. al., 2015). Location decision should not only be based on traditional incentives such as skilled labor among the others but also on the strategic value of the whole business (Martinez-Mora & Merino, 2014). Additionally, the choice of location decision should not only be motivated by short-term trends but must be driven by long-term ones as different aspects such as labor cost are likely to change within couple of years or a decade (Zhai et al., 2016). Moving beyond total cost of ownership (TCO), it is important that the reshoring decision is accompanied with information about the engineering design and the complexity supply chain and manufacturing processes, otherwise uncertainty whether the location decision will give the outcomes that the investing firm desires will remain (Hartman et. al., 2017).
Strategy is defined as the deciding of the fundamental long-term objectives of a firm, and the subsequent implementation of actions and delegation of resources to carry out said goals (Gong, 2013). Three principal levels, in the hierarchy of strategy have been identified: corporate strategy, business strategy and functional strategy (Hofer & Schendel, 1978). One of the functional strategies is manufacturing strategy (Gong, 2013). However, some authors use the term operations strategy (Badri et. al., 2000; Ward et. al., 1995). The relationship between operations strategy and firm competitiveness has long been addressed in literature (e.g. Hayes Wheelwright, 1984; Skinner, 1974). Hayes and Wheelwright (1984) classified manufacturing strategy into four stages: internally neutral (the output of manufacturing is only products), externally neutral (the output only matches the specifications of the competitors), internally supportive (the manufacturing should distinguish itself from the competition) and externally supportive (the manufacturing should aim to become world leading and unique). Operations strategy at times has been viewed from the resource-based view of the firm (RBV) (Slack & Lewis, 2002). This view strategy explains firms to be a collective of resources and examines how these resources can be utilized to live up to the manufacturing objectives along with the operation capabilities of the firm (Slack & Lewis, 2002).
The recognition of competitive priorities is seen as crucial part of drawing potent manufacturing strategies that connects the manufacturing strategies with the competitive strategy (Lui & Liang, 2014). Firms often have operational capability that sets them apart from competition and an effective manufacturing strategy should transform this distinctive skill into gains in the functional areas (Gong, 2013). Drawing from the literature five major competitivepriorities have been part of the consensus in operations strategy: cost, quality, delivery, flexibility and innovation (Ferdows & De Meyer, 1990; Boyer & Lewis, 2002; Peng et. al., 2011). However, other competitive capabilities have been added to the list, such as sustainability (Avella et. al., 2011: Da Silva et. al., 2009).
Cost is the first competitive priority dimension that is worth to be recognized as it is the topic in focus in a multitude of articles and is constantly increasing in numbers of publications (Sayem et.al., 2019). This dimension is referred to as the ability to offer products and/or services at the lowest price possible (Jitpaiboon et al., 2016). The next competitive dimension that literature has revealed is quality (Kruger, 2012). The definition of quality is quite broad as it consists of a number of different abilities such as the ability to make an organization achieve high performance; to offer products and/or services which differ from the offerings of the competitors; to provide with suitable assistance with regards to technical matters; and to improve and maintain products and organizations image (Jitpaiboon et al., 2016). Delivery can be referred to as producing goods with agility (Prajogo and McDermott, 2011; being reliable in terms of delivery deadlines (Kruger, 2012); and making sure that assistance services of a technical nature are available (Jitpaiboon et al., 2016). The next dimension is flexibility, it is about changes and introductions of new offerings at a fast pace and focuses on making the company’s’ offer broad regarding product mix (Saarijärvi et al., 2012). The fifth capability – innovation is seen as an important factor because it gives the company the ability to offer products which are new or improved and because it allows to change and improve processes and therefore companies can distinguish themselves from its competitors and as a result create a competitive advantage over its competitors (Distanont & Khongmalati, 2018). The last capability is sustainability, which purpose is to make sure that companies maintain a long-term success contributing towards the environment and future generations (Longoni and Cagliano, 2015).
This chapter presents the research process, the data collection and how the analysis of the data gathered is conducted.
To extract the state of the art of the area of reshoring and its connection to operations capabilities within operations strategy, this paper has conducted a systematic literature review in order to probe into this supply chain movement. Systematic literature reviews provide the benefit of examining the body of work that has been gathered within a certain area to answer pre-formulated research questions, allowing for identification of future research opportunities (Seuring & Gold, 2012). This form of literature review relies on pre-specified methods to find and critically appraise research and finally collection and analysis of the chosen data (Petticrew Roberts, 2006). When well conducted, a systematic literature review provides transparency and explicit protocol for how the search was conducted, selected and assessed of the specific research area, which can be reproduced (Tranfield et al., 2003).
By revealing the review procedures, the knowledge available is advanced, through honest display of the reviews limitation that might have an impact on the papers results (Okoli, 2015). This paper aims to synthesize current research within this reshoring movement within the field of supply chain. Systematic literature review is the considered golden standard for aggregating the previous documentation within a certain field (Riesenberg & Justice, 2014). Okoli (2015) describes this approach in four phases: planning, where the identification of the purpose is drafted as well as the protocol; the selection phase, where screening is applied and the search for literature begins; the extraction phase, where data is extracted, either quantitative or qualitative, and also appraised; and lastly the execution phase, where the studies are synthesized and the review is written on the final selection of studies.
For a literature review to be of high quality, a clearly defined protocol that has been created beforehand is essential, as this will define the scope of the literature review, whether it is broad or narrow (Okoli, 2015; Petticrew & Roberts, 2006). It should outline the location of the literature search, and the various screening that the papers should go through depending on the inclusion and exclusion criterions. Turner, Kitchenham, Bugden and Bereton (2008) advice to create a protocol prior to the actual literature search to guide the review process, as overlooking to do this proved to be one of the mistakes in their own literature search.
This papers literature search is conducted on the database SCOPUS, that is a citation database that contains peer-reviewed literature, inter alia, in the scientific and technical field and Web of Science, a text resource that offers research from thousands scholarly journals. These databases were used to search for solely peer-reviewed journal articles in English. For the literature review of reshoring both mentioned databases were used. However, for literature review on operations capabilities only Scopus was used because operations capabilities is an already well researched topic and one database would give a sufficient amount of data to analyze. For reshoring there was no year limit set, as the phenomena is relatively and in order to have a bigger sample to choose from, so the search included papers published from all years. The year limit for the operations capabilities search was set to 2015 to 2019. This is due to operations capabilities being a well-researched area, so to narrow it down to the latest published papers on the topic and to yield a reasonable size of sample to go through, a year limit was set. Table 1 shows the search string used for the literature search for reshoring, both in SCOPUS and Web of Science. Table 2 shows the search string used for operations capabilities in the database SCOPUS.
1.2 PROBLEM FORMULATION
1.3 PURPOSE AND RESEARCH QUESTIONS
2 Theoretical framework
2.2 OPERATIONS CAPABILITIES
3 Research methodology
3.1 RESEARCH STRATEGY
3.2 DATA COLLECTION
3.3 CONTENT ANALYSIS
3.4 RESEARCH QUALITY
3.5 DESCRIPTIVE ANALYSIS FOR RESHORING
3.6 DESCRIPTIVE ANALYSIS FOR OPERATIONS CAPABILITIES
4 Results and analysis
4.1 DESCRIPTIVE ANALYSIS FOR RESHORING
4.2 CONTENT ANALYSIS FOR RESHORING
5 Results and analysis
5.1 DESCRIPTIVE ANALYSIS FOR OPERATIONS CAPABILITIES
5.2 CONTENT ANALYSIS FOR OPERATIONS CAPABILITIES
6 Concluding discussion
6.1 ANSWERING THE RESEARCH QUESTIONS
6.2 CONTRIBUTION AND IMPLICATIONS
6.4 LIMITATIONS AND FUTURE RESEARCH
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