The reshoring phenomenon - Furla

1. THE RESHORING PHENOMENON:
the case of Furla
Luigi Boscolo Bariga
Giulia Carlin
Michela Castellini
Carlotta Romagnolo
Nicola Tinazzo

2. WHAT IS RESHORING
Reshoring definition:
• A voluntary corporate strategy regarding the home-country's partial or total relocation of
production to serve the local, regional or global demands.
• It can concern any type of activity.
• It is always a decision reversing previous offshoring initiatives.

3. OFFSHORING AND LOCATION DECISIONS
Globalization and offshoring boom in the ‘90s
Low value-added activities to emerging countries in order to sustain lower labor costs
The focus is always more on location decisions creating
new value.

4. FURLA
Furla is an Italian company operating in the leather goods industry.
The product portfolio of Furla includes: leather products for woman and man, footwear for woman,
accessories and other products (as key rings and fashion jewellery).
Among all the categories, Furla produces 3,5 millions of pieces per year, of which 2 million are bags. In
effect, leather products are worth more than 50% of the total sales volume.
Today, Furla has a widespread distribution network with 1.000 point of sales in which the brand is
present:
• 180 directly operated stores (DOS), which make more than 60% of the sales volume,
• 320 franchising,
• main department stores in the world, like Neiman Marcus and Saks in the US, Harvey Nicols and
Selfridges in UK, Mitsukoshi e Takashimaya in Japan, and
• selected specialty stores.

5. THE DECISION TO OUTSOURCE.
WHY CHINA?
In the ‘90s, Furla started an internationalization process to move part of the manufacturing of bags and
accessories to Chinese providers.
The company maintained an important part of the total production in Italy, in particular production for
which high competencies were required, while decided to delocalize types of activities that could be
coherent with the competencies of Chinese suppliers.
In China, efficiency was high and optimal and, in addition, Italian technicians working in Furla constantly
monitored quality. This strategy permitted not to incur in problems and complications and to avoid risks
of selling flawed products and earning itself a bad reputation in the global market.

6. THE COSTS TO PRODUCE IN CHINA
• Higher costs of quality control to have technicians abroad or to collect products in a single
place to check the quality;
• Logistic cost considerations, which have a great impact on the final cost;
• Impossibility of moving abroad more complex production, for which the know-how is based in
Italy;
• Longer development and production times, which do not get along with the short fashion
timing.

7. UPSTREAM VALUE CHAIN ACTIVITIES INTEGRATION
In 2010, Furla acquired 30% of shares in a leather goods company in Florence and started to make
internally prototyping and modelling activities.
This acquisition allowed to buy also:
• Know-how on development,
• Engeneering capabilities, and
• Production activities
This also meant that Furla had control over the most important part of its value chain (considering its
business).
Furla can now better control:
• Time to manufacture
• Raw materials (cost and type)
• Supplier

8. BENEFITS OF THE RESHORING DECISION
• Having production closer to design and R&D, in order to foster innovation;
• Possibility of producing prototypes in few days for the style department and to facilitate
the designing activities;
• Keeping more products at higher manual content in Italy, where the know-how is based;
• Faster time-to-market;
• “Made in” effect, which is an important commercial advantage.

9. DATA OF THE FURLA’S RESHORING
The company, only in the last three collections, has been able to relocate back to Europe a great part of
the total production (between 300.000 and 400.000 pieces).
The strong network relationship and the know-how allow Furla to decide independently each season
where to produce and in which quantities.
Today, Furla manufactures more than 60% of products in Italy, while the remaining production is divided
between Eastern Europe and China. In the last seasons, the firm has been capable to relocate back to
Europe approximately the 10% of the total production.

10. THANKS FOR YOUR ATTENTION