Economic and Environmental Sustainability Through Reshoring: A Case Study

TL;DR

This paper presents a model using the Reshorability Index and Total Cost of Ownership to guide companies in reshoring decisions, demonstrating economic benefits and reductions in greenhouse gas emissions.

Contribution

It introduces a new model for evaluating reshoring decisions based on cost and environmental impact, addressing challenges of offshoring and supply chain disruptions.

Findings

Reshoring can be economically profitable.

Reshoring reduces greenhouse gas emissions.

Heavy products benefit most from reshoring.

Abstract

Not too long ago, offshoring was considered a panacea for many U.S. companies to achieve economic sustainability. Offshoring also created an unnecessary movement of goods between the point of consumption and the point of sourcing and hence contributed to greenhouse gas emissions. With many things changed, hundreds of U.S. companies have started Reshoring. Due to supply chain disruptions and increased tax implications, including tariffs, there is a growing desire among companies to achieve economic and environmental sustainability through reshoring. This model case study highlighted the common offshoring challenges and demonstrated new methods/solutions for the companies to save their bottom line. Using the Reshorability Index (RI) and Total Cost of Ownership (TCO) we developed a model to show which products or components we should bring back to the U.S. instead of continuing offshoring. From this study, we have found out that reshoring is not only an economically profitable decision but also has a positive impact on reducing GHG (Greenhouse Gas) emissions. Our research found that the companies that currently offshore heavy products will benefit more from implementing our developed model. Leveraging this model, industries can identify, and compare the ownership cost of their purchased materials and take the decision on potential reshoring. Additionally, companies will be able to calculate the GHG emission and identify the reduction of such emissions due to reshoring.