Analysing the Enabling Effects of Industry 4.0 Onto Backshoring in SMEs – Engineering Assignment Help

Assignment Task

Task 

1 Introduction

• Over the past decades, the world has seen a continuous increase of globalisation and interconnectedness. Due to digital communication technology, cheap airfares, etc
• This is also true for industrial production and supply chains. A trend towards global, integrated supply chains in order to provide the most competitive and innovative products at the most competitive markets. Labour arbitrage, access to skills and knowledge. (How many countries are involved in building an iPhone?)
• This is also true for SMEs, to operate at more competitive prices etc.
• However, different trends are challenging the current principles and understanding of globalised value chains and off-shoring of manufacturing and innovation managemen activities, such as
• Global footprint: Because Covid, climate requirements and emissions, creating domestic jobs, balancing trade budgets, supported by more nationalistic governments)
•  trade wars and barriers, including customs
•  calls to “buy local”
•  political push for national industry sovereignty often with focus on SMEs, like in Australia [e.g. Defence White Paper 2016]
•  long delivery times of globally sources products and materials
•  especially critical given an increasing customer wish for customised and quickly delivered parts, often with requirement updates during the process
•  rising awareness for sustainability including carbon footprints of supply chains
•  along with more “positive” trends like decreasing labour costs through new digital technologies such as cobots
• New digital tech: This is supported by the facilitation of new technologies such as additive manufacturing. Overall, I4.0 can serve as an enabler here. Therefore, in the recent past, the opposite of this, called reshoring and backshoring, is becoming more popular.
• There are many reasons for re-shoring, which recent paper have started to consolidate
• can be clustered in a typology based on “the ultimate goal of production relocation (i.e. customer perceived value vs cost-efficiency) and the level of analysis (i.e. internal environment vs external environment) of motivations for reshoring” (Fratocchi, et al., 2016).
• Alternatively, clusters of reshoring motivations have been identified as These clusters are: cost, quality, time and flexibility, access to skills and knowledge, risks, market, and other factor (Stentoft, et al., 2016)
• The 5 Ws and 1 H of reshoring (state of the art analysis) (Barbieri, et al., 2018)

• some examples here, such as
• reduce labour costs through cobots
• high product flexibility through AM
• high manufacturing flexibility through AM and smart process and flow management
• etc.
•  different authors claim that this is particularly interesting/beneficial for SMEs

• Research is limited
•  no papers on i4.0-enabled backshoring in SMEs
•  ca. 10 papers on i4.0 and backshoring
•  ca. 10 papers on backshoring and SMEs
•  only i4.0 in SMEs a bit more evolved with 227 peer-reviewed articles
• There is a tendency that because of those external factors and technical capabilities, the pros seem to be outweighing the cons more and more. – paradigm shift.
• Open issues/questions:
• Understanding motivation and constraints of countries: However, different countries with different industrial and economic profiles have different motivations for reshoring (Wan, et al., 2019)
• Understanding motivation and constraints of specific industries and companies
•  especially SMEs with limited size, capabilities, resources, power, etc.
•  Why is reshoring particularly interesting for SME?
•  Or what does SMEs prevent from reshoring?
•  Or does I4.0 provide special opportunities for SMEs? Or are SMEs disadvantaged in using the reshoring potential because they take up I4.0 slower?
• this links to questions around a general Understanding of exact link between i4.0 and resulting re-shoring potential
• While the implications and potentials of I4.0 for SMEs are the subject of lots of research, reshoring has not yet been studied extensively either for SME or in the context of I4.0
• This aligns with: It is suggested to explore the global manufacturing footprint or new digital technologies as further drivers for reshoring (Stentoft, et al., 2016)

• Hence, we are exploring how can SMEs leverage Industry 4.0 to support their back-shoring ambitions in times of increasing global challenges.
• Leading to our initial research question: How can Industry 4.0 support SMEs in back-shoring their manufacturing activities?

4.2 How reshoring is unfolding for SMEs

• Not much research on this yet (show some WoS stats?)
• Example from NZ (Canham & Hamilton, 2013)
• SME bicycle industry (Gylling, et al., 2015)
• Scopus (( TITLE-ABS-KEY ( re-shor* OR reshor* OR back-shor* OR backshor* ) AND TITLE-ABS-KEY ( sme OR “small and medium” )
•  10 papers
• Harris 2020 – The Covid-19 crisis and manufacturing: How should national and local industrial strategies respond?
• Leisner 2020 – Global competitiveness of European surface technology.

Part 1: competitiveness and the relationship between European manufacturing and surface finishing sectors

• Gray 2017 – Why in the world did they reshore? Examining small to medium-sized manufacturer decisions
• Ashby 2016 – From global to local: reshoring for sustainability
• Gylling 2015 – Making decisions on offshore outsourcing and backshoring: A case study in the bicycle industry
• O’suilivan 2015 – College students understanding of production management and master production schedule through using a real world tool, complimented with company tours and in- Class visits, provides an excellent learning experience at farmingdale state college.
• Kunz 2015 – A smart resolution: A workforce health check
• Heim 2014 – Offshoring or reshoring? Current trends and decision support for small and medium-sized enterprises in high-wage countries [Offshoring oder reshoring?: Aktuelle trends und eine Entscheidungshilfe für KMU in Hochlohnländern]
• Canham 2013 – SME internationalisation: Offshoring, backshoring, or staying at home in New Zealand
• Kinkel 2010 – Production relocation and backshoring in times of crisis [Verlagerungsverhalten im Zeichen der Wirtschaftskrise]

4.3 How I4.0 enables reshoring (A+B in the figure)

• Definitions of I4.0 and reshoring, if not mentioned in introduction
• No comprehensive research yet (show some WoS stats?). Empirical research is still rare in this field.
• Some individual studies
• I4.0 still has questionable impact on reshoring in Germany (Müller, et al., 2017)
• In high-cost countries, “the adoption of technologies, such as robotics and threedimensional printing, is relatively limited among reshoring companies, and often confined to reshoring strategies where the cost focus that originally motivated the relocation offshore is still retained” (Ancarani & Di Mauro, 2018)
• “analyses show that the perceived relevance of Industry 4.0 among companies has a positive impact on companies that have moved manufacturing back and on companies that have moved manufacturing out and back. Conversely, the perceived relevance of Industry 4.0 among companies has a negative impact on companies that have remained domestic. The perceived relevance of Industry

4.0 has no impact on companies that have moved manufacturing out” (Stentoft & Rajkumar, 2020)

• “it emerges that Industry 4.0 technologies are mainly adopted when the backshoring decision regards manufacturing activities earlier offshored in far-away low-cost countries. This would be consistent with the idea that production automation mainly support relocation at the home country aiming at reducing costs and/or increase the customer responsiveness with more customized products” (Fratocchi & Di Stefano, 2019)
• “Findings suggest that backshoring is associated with the adoption of Industry

4.0 when the firm’s priorities are high quality and the reduction of costs tied to non-conformance. Backshoring initiatives prioritizing the reduction of direct costs or responsiveness are not significantly tied to Industry 4.0 adoption. The analysis further highlights that the adoption of new technology by firms that compete on quality is more likely when they are involved in product innovation” (Ancarani, et al., 2019)

• Study from Hungary and Master Thesis to steal from

4.4 Industry 4.0 in SMEs

• Think we probably don’t need to talk about this much….
• I4.0 readiness of SMEs link
• Implementation in SMEs. Sur ey from Germany Austria. Also mentioning  shoring link
• Opportunities and challenges link

4.5 Analysing the enabling effects of Industry 4.0 onto backshoring in SMEs(through mapping of characteristics)

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