Extended enterprise development in contract manufacturing

Abstract

The contract manufacturing phenomenon has transformed the world-wide electronics manufacturing industry into a global system of production network. This phenomenon is now occurring in other industries in various disguises, as the increasingly dynamic environment forces firms to consider the management of production network for greater competitiveness as well as for greater performance on their existing assets. This research study examines the aspect of contract manufacturing, extended enterprise and the relationship between them. This thesis offers an extended enterprise theoretical framework for managing production network. The framework demonstrates how the use of tools in the exploitation of linkages between a set of activities can address the competitive challenges to a group of firms. This approach significantly departs from the traditional information technology based approach that focuses on linking different firms together. While, intuitively, the information technology component remains important, institutionalizing them with best practices across individual firms can be an issue. The core of this study is to address other operational components of an extended enterprise that are relevant to managing production networks. In order to address this, this research developed a conceptual model of inter-firm linkage identifying the value-technology-activity interdependency within a production networks. It is hypothesized that substantial organizational innovation from these firms are essential in allowing champions/change agents to secure new changes as opportunities arise. Based on the model, this research proposed other elements of an extended enterprise to form a template to guide the development of enterprise in practice. This research chose a best practice dissemination approach and the starting point of this is to analyze inter-organizational generic process that crosses a group of firms. This research approach is based on the continuation of reference site methodology established by the manufacturing information systems unit whereby the approach employs inductive reasoning for conducting field research and representing field data as the researcher embeds himself in the complex situation to make changes for organizational innovation. Multiple case studies and expert panel survey are the validation instruments for the conceptual model and extended enterprise template. The inductive reasoning rationale empirically validates the template by identifying implications for extended enterprise development in practice. In identifying four streams of organizational innovation, namely, process design, enterprise model development, information strategy and best practice assimilation, and the research provide a more comprehensive picture of other components of an extended enterprise. Organization innovation requires a value creation philosophy to share a view on the transformation process to align unilateral decisions and actions from different firms for technology transfer. Using empirical evidence from eight cases, this research derived a schematic representation of production networks. For sustainable competitiveness, the emphasis of this study is dedicated to transform the production network from one state to another. In a production network of diverse stakeholders, extended enterprises succeed through means of collective action that is difficult to secure given individual firms' unilateral strategic intent. Unilateral decisions and actions from individual firms are limited in a sense that inter-firm linkages are subject to constraints with trade-offs restricting them for further action. Diffusing the vision of an extended enterprise must begin with examining inter-firm linkages to address relational needs between firms. The transformation of a production network rests on the notion of articulating a standard of operation crossing different firms, and the standard serves as the means to facilitate the diffusion of organizational innovation as well as the dissemination of best practice into the production network. The first contribution of this research is based on the idea that the management of production network is important to gain competitive advantage. This research offers a vision of extended production paradigm to manage the formation of a networked organization for a group of firms. The second contribution developed, based on the evidence of multiple case studies and the extended production paradigm, a synthesis model of an extended enterprise template to shed light on the extended enterprise development in practice. This shares a platform strategy for the purpose of leading the customization of value chains by different players in the production network. A third contribution of this research is the development of a case protocol that encapsulates insights of the application of production network to guide practitioners to frame their business context with a purpose of aligning different players to create value. The case protocol guides practitioners to write case study reports from which the guiding process articulates organizational innovation for extended enterprise development.