This document discusses reshoring and Piquadro's decision to reshore production from China back to Italy. It defines reshoring as bringing manufacturing back home and identifies different types. For Piquadro, reshoring was driven by rising costs in China, a desire to improve quality control and focus on Made in Italy branding which is highly demanded overseas. Reshoring allowed Piquadro to leverage local labor, supply chains and e-commerce to customize products, while creating jobs in Italy. The company aims to produce 40% of goods domestically.
2. What is reshoring?
Reshoring can be considered as the process that âbrings
manufacturing homeâ. There exists several type of reshoring:
ï” In-house reshoring (from owned offshore facilities back to
owned home-based facilities)
ï” reshoring for outsourcing (from owned offshore facilities
back to home-based suppliers)
ï” reshoring for insourcing (from offshore suppliers back to
owned home-based facilities)
ï” outsourced reshoring (from offshore suppliers back to home-
based suppliers)
3. The Reshoring phenomenon in
Italy
According to Cer (Centro Europa
ricerche), in 2015 Italy was the
second country in terms of reshoring
(first one USA), with 101 decisions
to bring manufacturing home. The
sector mostly affected by this
phenomenon is the apparel one,
counting for 43% of the total cases,
followed by electrical equipment
(21%) and leather industry (14%).
Reshoring decision per sector in 2016
A. Finotto (2016) - âSfida reshoring per il made in Italyâ, Il
Sole 24 ore
4. Why to reshore?
Several sources of information agree on common reasons that
drove and still deeply influence the reshoring phemonemon.
ï” High-quality as competetive advantage (the Made in Italy)
ï” Lower customs duties
ï” Closer relations with clients
ï” Higher flexibility in managing the distribution
ï” Bank and regional investments
5. PIQUADRO
Italian company founded in 1987 by
marco palmieri in riola di vergato
(BO).
It is specialized in leather goods (in
particular travel and business items).
In 2004 it started an
internationalization process. new
stores were opend across different
countries.
In 2015 its turnover was 69.3 million âŹ
Design, technology and comfort are
the key elements of the company. for
what concern the design, this is
entirely italian.
6. PIQUADRO:
OFFSHORING
âą In 1998 offshoring of the productivity
activity in Shenzen, China.
âą First steps in the international market:
focus not only on the quality end
product, but also on the brand ï its
diffusion and popularity in order to
ensure a structured presence abroad.
âą The firm could not compete in prices so
they gave great importance to
marketing campaigns, advertising
campaigns and events through
advertising agencies in order to
guarantee visibility.
âą They opened a fashion store and a
corner in a multi-brand concept in order
to make the brand perceptible to the
target audience choosing prestigious
locations, just to gain good visibility.
ï focus on brand stores, but also on
multi-brand outlets.
Economic situation after the offshoring
in china:
When, Where,
How:
7. âą The implementation in China has pointed
out factors that concern not only the
production process but also the acquisition
of the local know-how. They have tried to
learn new working approaches that are
totally different from their way of running
business.
âą The offshoring process enabled them to
- reduce production costs,
- achieve resources that they have invested
in other projects such as: marketing,
development of new markets, the
construction of a new factory in Italy in
Gaggio Montano (Bo), with an investment
of 8 million euro.
âą China has guaranteed greater control over
the quality of the manufactured product, a
significant reduction of production costs
and therefore better value for money.
âą They used Italian raw materials in
chinese factories and once
finished, the products returned to
Italy, where they are controlled
and organized in their warehouse,
fully computerized and able to
respond to an order in less than 24
hours.
âą They have implemented new and
faster distribution channels
through which they have
guaranteed a fast delivery. ï The
sales network guarantee always a
constant supply of the stores.
Advantages: Procedures:
8. Reshoring: causes and benefits
ï” In 2014 Piquadro abandoned its factories in China where 80% of
goods sold where produced.
ï” There are different causes that pushed Marco Palmieri to take this
decision:
1. Labour costs rose by 58% in the last years â ten years ago labor in
China costed ten times less than now, today the difference
consistently decreased to one/third
2. At the same time, costs of provisions increased as well as transports
of raw materials that raised the final costs of goods.
3. The need for quality. China didnât provide the same Italian quality.
Italy carries on a manufactureâs quality which is one of the top in the
industry.
9. 4. M. Palmieri wanted to re-establish the philosphy of Made in Italy that
nowadays is higly requested, particularly from overseas, where a huge
quality of products is expected.
5. The hypothesis to produce and to sell the product directly there was not
adapted, because of the strict purchasing power of Chinese consumers,
particularly for the âpremiumâ collection, whose cost is pretty high.
Focusing on reshoring, Piquadro has been able to refocus an important slice of
its business in the domestic country, exploiting diverse advantages:
A. A deep concentration of human labor that brings to the firm rapidity of
productâs execution, flexibilty and the plus of âmade in Italyâ.
B. Take advantage of the filiĂšre productive, where raw materials can be
found within 100 km, considering it as a big value that few companies
have.
C. Creation of employment thanks to the creation of new mills.
10. D. The e-commerce: Piquadro allowed people to create their favorite product
directly on the website of the company, enabling customers to shape the
product according to their tastes. Through e-commerce the firm exploited
the advantage of the mass customization that would not have been possible
from China because of the time of shipping and processing.
To conclude, M. Palmieri affirmed his will to bring back almost the 40% of
production to Italy.
