Impact of competitive strategy and cost-focus on global supplier switching (reshore and relocation) decisions

Abstract

This study analyzes how global supplier switching decisions (reshore and relocate) are influenced by the buyers’ cost-focus and competitive strategies. Comprehensive survey data were gathered from US textile and apparel industry. The analysis revealed that the buyers with distinct competitive strategies such as Made-in-USA, speed-to-market are likely to have significantly higher proportions of reshoring activities. Furthermore, large companies and retailers are shown to be more cost-focused than small and manufacturing companies, respectively. Finally, cost-focused companies are shown to be more likely to switch their international suppliers. By analyzing the buyer side of supplier-switching and identifying the common features of companies engaging in reshoring or relocation, our analysis enables us to better interpret international supplier-switching. While other studies have regarded the superior performance of the prospective supplier or the external issues as the main factors, we emphasize the impact of internal dynamics of buyers on the international supplier-switching processes.

Keywords:

• Supplier-switching
• reshoring
• relocation
• competitive strategy
• cost-focused outsourcing