Bring It Back or Send It Out: Reshoring After the Supply Chain Crises

Why the location question is being asked anew after the crises

Anyone who waited for components from Asia between 2020 and 2023 knows the feeling: a low price does not help much if the goods do not arrive. The pandemic, shortages of chips and intermediate products, the Red Sea crisis, and new tariffs have changed the calculation on which many purchasing and location decisions were based. Since then, bringing production back, reshoring for short, has been a constant topic in industry associations and the media.

This article therefore asks: After the supply chain crises, is it worth bringing manufacturing or purchasing back, and how can a small business tell whether this applies to it? To answer it, we first clarify the terms and the thinking model of total costs, look at what surveys and studies show, weigh two readings, and finally derive a calculation that answers the question for individual parts.

Offshoring, reshoring, nearshoring: the terms

Offshoring refers to relocating manufacturing or purchasing to a distant country, usually because of lower costs. Reshoring is relocation back to the home country. Nearshoring means relocation to a nearby country, for German businesses for example to Poland, the Czech Republic, or Portugal. There is also talk of friendshoring, meaning a preference for politically allied countries.

For small businesses, a second distinction is more important, one that Steiner, Deflorin, and Dietl (2026) emphasize in a review of 119 studies: whether an activity takes place within the company or at a supplier. A corporation can relocate its own plant. A small business usually has no plant in Asia; it buys there. For it, reshoring usually means replacing a distant supplier with a nearby one or taking over a work step itself. Make or buy describes how to answer the basic question of doing something yourself or buying it in.

What surveys show about actual relocations

The public debate suggests that many companies are bringing production back. The figures paint a different picture. In a survey by Deloitte and the Federation of German Industries (BDI) among 148 supply chain managers in autumn 2025, 68 percent planned to relocate production in whole or in part within the next two to three years, citing tariffs as the main reason. Only 9 percent wanted to bring production back from China to Europe.

The survey has an important limitation: 84 percent of participants came from large companies and only 16 percent from small and medium-sized ones. For a business with 30 employees, it therefore says little about what it should do. But it shows the direction: relocation goes mainly where markets and tariffs demand it, and reshoring remains the exception.

An older, large-scale finding fits this. Cohen and colleagues (2018) analyzed a global field study from 2014 and 2015 among leading manufacturers from various industries that captured actual decisions of the preceding three years. The majority relocated abroad. Reshoring did occur, but rarely to correct an earlier decision. And labor costs no longer determined location choice alone but were weighed against many other factors.

The thinking model: total costs instead of unit price

The thinking model behind both findings is called total cost of ownership. It says that the price on the invoice is only part of what a part costs the business. Added to it are freight and duty, the capital tied up in longer lead times and higher safety stocks, costs for inspection and rework, the effort of coordinating across time zones and languages, and the risk that delivery fails altogether.

An everyday analogy: anyone who buys a cheap car abroad does not compare only the purchase price. They factor in transfer, registration, trips to the workshop, and resale value. With parts for their own production, many businesses do not, because these costs end up in other cost centers and remain invisible to purchasing.

A case study by Huq, Pawar, and Subramanian (2021) at a European aerospace manufacturer shows how large these hidden costs can be. Seven experienced managers used a structured method to assess how strongly various disruptions affect manufacturing in Asia and in Europe. For firm-related disruptions, according to the product managers, 78.7 percent of the weight fell on manufacturing in Asia and only 21.3 percent on manufacturing in Europe; for the supply chain managers, it was 84.0 to 16.0 percent. Both groups therefore preferred in-house or nearby manufacturing and recommended taking the total cost of acquisition into account, including the hidden costs of distance.

The authors name the limitations themselves: one company, one industry, seven respondents. The figures are assessments, not measured costs. But they show how differently experts assess distance when they explicitly weight disruptions instead of only comparing prices.

The cheapest supplier is the one with the lowest total costs, not the one with the smallest price on the invoice.

What affects small businesses differently from corporations

Some particular features apply to small businesses. In 2022, Stentoft, Mikkelsen, and Wickstrøm (2025) surveyed 152 manufacturers in Denmark that had relocated parts of their production abroad. Reshoring and reshoring intentions were positively associated with investment in automation: those who need less manual labor depend less on low wages. A difference by size is remarkable. For well-known types of disruption and higher uncertainty, larger companies planned reshoring less often, while smaller ones planned it more often.

This fits a simple consideration. A corporation can cushion disruptions with several sites, large warehouses, and its own logistics. A small business lacks this buffer. For it, a single missing container can cost a month's revenue. The bottleneck grid in Geopolitics as a business risk describes how to find the few parts on which everything really depends. According to ifo Institute surveys, 80.2 percent of manufacturers reported material shortages in March 2022, 5.8 percent in January 2026, and again 17.2 percent in June 2026.

At the same time, reshoring is no cure-all for small businesses. Choudhary and colleagues (2023) examined the supply chains of Apple and Jaguar Land Rover with 2,066 and 1,283 companies. Contrary to their expectations, indirect foreign suppliers at deeper tiers contributed positively to the network's resilience, while domestic suppliers at these tiers had no detectable effect. They found no effect of reshoring on sustainability. Proximity alone therefore does not make a supply chain more robust. What matters more is not depending on a single source.

Two readings: a renaissance of proximity or a fashion?

Both readings have evidence. The figures clearly indicate that reshoring is not a mass movement in Germany. The studies on hidden costs and on small businesses indicate that it can very well pay off for individual parts.

I therefore consider the location question, asked as a whole, to be the wrong question. A small business does not have to decide whether to bring production back or send it out. For each critical part, it must decide which source has the lowest total costs, and explicitly price in the risk. For standard parts with stable supply, the cheap distant source often remains the right one; for parts with long replenishment times and a high risk of standstill, often not.

The site total-cost calculation for one part

From the total-cost model I derive a calculation that I call the site total-cost calculation. It compares two sources for the same part and requires one afternoon with purchasing and production.

1. Enter the price per part

   Enter the purchase price per unit for both sources, at the same quantity and the same payment terms.

2. Add freight and duty

   Add transport, insurance, duty, and import handling per unit.

3. Value the tied-up capital

   A longer lead time means higher stock. Value the additional stock at your cost of capital and convert it to a per-unit figure.

4. Estimate quality and coordination

   Estimate costs for incoming inspection, rework, complaints, and coordination effort per unit, ideally from last year's experience.

5. Price in the failure risk

   Multiply the probability of a longer supply failure by the damage, such as lost contribution margin, and spread the result over the annual quantity.

In this worked example, the price difference of 30 percent shrinks to just over 2 percent in the total calculation. Whether switching is worthwhile now depends on things the calculation does not capture: the delivery time you can promise your customers, dependence on one source, and whether a second supplier is enough as a safeguard. Evaluating suppliers describes how to rate suppliers on quality, punctuality, and cooperation, and Inventory management how much stock a business really needs.

Conclusion: not the location decides, but the total costs per part

To the guiding question: after the supply chain crises, bringing production back does not pay off across the board. Surveys show that German manufacturers continue to relocate abroad rather than back, and reshoring remains the exception. But studies also show that the hidden costs of distance are often underestimated and that smaller businesses tend toward proximity under uncertainty, for good reason, because they lack the buffers of corporations.

For a small business, the sober conclusion is not to treat the location question as a decision of principle, but to work part by part with an honest total-cost calculation. Those who do so will bring some parts back and deliberately leave others far away. Delivery time as a selling point describes how reliable delivery can be used in sales.

• Identify the five parts with the highest standstill risk.
• Prepare a site total-cost calculation with two sources for each part.
• Estimate the failure risk cautiously and test the decision with a doubled estimate.
• Where total costs are close, build up a second supplier nearby.