Quantitative assessment of the profitability of next shoring strategy in global supply chains

Next shoring is emerging as a strategy for global supply chains to meet evolving market requirements on flexibility, customization, and fast delivery. Next shoring can be defined as a relocation adopted by the companies in order to be close to both demand and innovation, integrating the efficiency of highly digitized and automated supply chains with the flexibility to respond to an ever-changing and differentiated customer demand. This paper investigates different perspectives of next shoring, by understanding the variables behind the operations-related decisions and the benefits in the short- and long-term. Then, a specific focus is placed on capturing the characteristics of a supply chain that mostly impact on the profitability of a next shoring strategy. There is a significant gap in the literature regarding the assessment of a comprehensive quantitative model for estimating the possible economic benefits of next shoring strategy. The methodologies adopted are an in-depth literature review and an explorative empirical study followed by a simulation-based experimental campaign. According to the findings, ‘product positioning’ results to be the main variable of the economic performance of next shoring strategy while ‘supply chain digitalization’ highly influences the profitability of the next shoring when technologies are strategic for companies.