By surveying literature on the topics of contract manufacturing, this report describes how organizations can make use of contract manufacturing to enhance their profitability and competitiveness. This paper is intended to serve as a guide for organization executives, managers, and team members who are exploring contract manufacturing. It is a how-to manual, and addresses various issues involved in the contract manufacturing, and suggests a methodology for addressing them. Finally, the report briefly describes the perceived benefits of contract manufacturing, but lack of understanding of the total costs involved in executing this initiative may adversely affect many organizations. Thus, the question arises how company decides if contract manufacturing is the right decision, and if yes, then how they perform it effectively and efficiently? / text

Thesis (M. Phil.)--University of Hong Kong, 1992. / Caption title.

Master of Agribusiness / Department of Agricultural Economics / Allen M. Featherstone / Johnsonville Sausage is a privately held company based in Sheboygan Falls, WI. The company has a growing cooked sausage business and is evaluating options to expand capacity. Investing in either of two existing facilities or outsourcing production to a co-manufacturer is being considered in this make versus buy analysis. Intense competition in the category and uncertain raw material markets are considerations in the evaluation. Data used for the analyses were obtained from Johnsonville sources. Assumptions for the “make” analyses were based on existing data where applicable such as labor and utilities, and in other cases assumptions were made based on company knowledge of the process. Johnsonville engineers worked closely with equipment vendors to develop the building and equipment investment plan. Data for the “buy” alternative were received from a prequalified co-packer with advanced manufacturing technology. A Net Present Value (NPV) model is developed for each alternative and used to determine financial viability of each. The models consider varying investment requirements, freight rates and cost of goods for each alternative. Sensitivity analyses are performed to address key variables such as raw material prices and sales volume. The paper concludes that investment in Sheboygan is a viable option; however, the investment poses risk if raw material prices rise and or volume declines from expected projections. Therefore, the recommendation is to outsource production and initiate the Sheboygan project when the co-packed volume reaches 15 million pounds.

自1990年代開始，因應眾多新崛起的開發中國家以低廉人力成本優勢切入代工業務及產業中更激烈的價格競爭，台灣產業開始思考如何從過去在代工業務的製造優勢轉投入更高附加價值的活動以維持競爭力，而擁有高利潤率的自有品牌模式成為最受注目的方式，使「代工轉品牌」成為熱門議題。然而自有品牌與製造代工業務是截然不同的商業模式，如何從代工成功轉型經營品牌的關鍵因素持續被關注。本研究即欲透過實證研究，了解從代工轉營品牌績效較佳的廠商當時在外部產業環境、內部組織能力和供應商-買主關係等三方面的獨到之處。 為了透過分析大量的台灣代工轉品牌案例獲得實證結果，本研究採取量化方法，並以判斷抽樣的方式進行全國性問卷調查。透過回收74份有效的台灣案例廠商樣本，分析案例廠商當時在產業及組織的內外部情形對日後發展自有品牌績效的影響。在外部環境上，探討市場異質性、產品生命週期、產業集中度與技術動態性；內部組織能力上，了解代工廠商的行銷能力與動態能力程度；供應商-買主關係方面，則討論品牌業務的差異性及在代工業務上對客戶的依賴性。 研究結果顯示，代工廠商能長期經營自有品牌績效較佳者，當初品牌選擇的產業及市場具備有低度市場異質性與高度技術動態性的特徵；然而對於科技業來說，高度的技術動態性並不利於品牌的初期發展；而代工時期組織內部的行銷能力、動態能力對於轉營品牌的績效皆沒有顯著的影響性；在供應商-買者關係方面，代工廠商的自有品牌若能與客戶的品牌創造業務差異性，以避免利益衝突，的確可能讓轉營自有品牌初期的績效較佳。本研究結果對於台灣欲從代工轉品牌的廠商具有實務參考性，也在缺乏量化研究的此學術領域提供重要的研究成果。 / Since 1990, facing the increasingly intensive price competition from newly developing countries with lower labor and land costs, Taiwan’s firms have begun to consider using advantage of manufacturing from OEM/ODM to other value-added activities in order to be more competitive. Building a brand, which is a high-margin business, becomes the most noticeable fashion, making “from contract manufacturing to own branding” a hot issue. However, brand-building and contract-manufacturing are two totally different business models. The key success factors of transformation are continually studied. This research attempts to understand the key external and internal conditions of the companies who did such the transformation successfully. To meet empirical investigation by analyzing numerous sample firms from of OEM/ODM to OBM, this research applies quantitative research by using questionnaire survey, with the judging sampling method. After gathering 74 effective samples of qualified companies in Taiwan, this research analyzed the effect of external environment, organizational capabilities and supplier-buyer relationship on own-brand performance. In external environment, “market heterogeneity”, “product life cycle”, “industrial concentration rate” and “technological turbulence” are explored in this research, while “marketing capability” and “dynamic capability” are included as organizational capabilities. I also include the “differentiation degree of own-brand compared to OEM/ODM buyers’ brands” and” the dependence degree on OEM/ODM buyers” as supplier-buyer relationship. According to the empirical results, the company who chose the target market with lower market heterogeneity and higher technological turbulence can get better performance in OBM in a long run. However, in the high-tech industry, the higher degree of technological turbulence is not beneficial for doing OBM business. In the suppler-buyer relationship, companies are more possible to get better performance in OBM business if they can make higher differentiation of their own-brand compared to their OEM/ODM buyers’ brands. The results of this research could be the reference for future business practice as well as provide significant insight to the academic research.

Organizations are under constant threat from global competition, socioeconomic factors, and political forces that are often unforeseen and dynamic. Consequently, decision makers adopt strategies, some including the principles of modularity, as a countermeasure. The problem addressed in this study was the lack of knowledge about the significance of modularizing contract manufacturing organizations (CMOs). The purpose of this quasi-experimental study was to assess the significance of modularizing CMOs by statistically analyzing capacity utilization, efficiency, and profit margin between modular and nonmodular departments in a focal CMO. This study was grounded in the theory of modularity and the research question addressed what might be the significant value of implementing organizational modularity. The hypotheses posited that a significant difference exists in these metrics between the modular and nonmodular departments of the focal company. ANCOVA was applied to the hypotheses using secondary data of complete job orders undertaken at a company from 2008 to 2013. The results indicated significant differences in capacity utilization, efficiency, and profit margin between modular and nonmodular departments after controlling for differences based on overhead cost or lead-time. Decision makers in manufacturing companies, particularly those in CMOs, may benefit from these findings because they provide answers to questions on the value of modularizing CMOs. The social change implications of this study are based on companies gaining knowledge to improve productivity, manufacture more affordable goods, and provide more skilled employment opportunities. As a result, more people leave poverty and experience an improved quality of life.

Organizations are under constant threat from global competition, socioeconomic factors, and political forces that are often unforeseen and dynamic. Consequently, decision makers adopt strategies, some including the principles of modularity, as a countermeasure. The problem addressed in this study was the lack of knowledge about the significance of modularizing contract manufacturing organizations (CMOs). The purpose of this quasi-experimental study was to assess the significance of modularizing CMOs by statistically analyzing capacity utilization, efficiency, and profit margin between modular and nonmodular departments in a focal CMO. This study was grounded in the theory of modularity and the research question addressed what might be the significant value of implementing organizational modularity. The hypotheses posited that a significant difference exists in these metrics between the modular and nonmodular departments of the focal company. ANCOVA was applied to the hypotheses using secondary data of complete job orders undertaken at a company from 2008 to 2013. The results indicated significant differences in capacity utilization, efficiency, and profit margin between modular and nonmodular departments after controlling for differences based on overhead cost or lead-time. Decision makers in manufacturing companies, particularly those in CMOs, may benefit from these findings because they provide answers to questions on the value of modularizing CMOs. The social change implications of this study are based on companies gaining knowledge to improve productivity, manufacture more affordable goods, and provide more skilled employment opportunities. As a result, more people leave poverty and experience an improved quality of life.

面對經營疆界( Business Boundary)越趨模糊的新世代，高科技電子消費性終端產業不斷展現誘人商機；隨著傳統映像管電視機式微，取而代之的薄型電視機進入市場，關鍵組件及軟體等科技研發競賽不斷推陳出新，刺激需求；原家電品牌(製造服務)業者主宰整個電視機產業，如今卻面臨強烈挑戰；覬覦液晶電視機(LCD TV)快速引爆市場需求，成長力道強勁並快速整合產業加值鏈，各業者競爭激烈，積極進場，甚至Electronic Manufacturing Service(EMS)大廠、資通訊業者等皆企圖搶奪液晶電視機市場。 液晶電視機產業能夠快速席捲市場，主要歸功於相關產業，積極投入研發與佈局，特別在投資新代線LCD面板廠、視訊晶片(IC)及設計代工的快速帶動下，讓產業加值鏈呈現蓬勃發展；而台商在此加值鏈佔有最重要的產業群聚。 從2009年德國柏林IFA、2010年美國CES Show、Computex等展覽中觀察到世界大廠不斷在技術研發向前推進；科技浪頭的百家爭鳴，似乎引領電視機產業來到一個不連續又不斷變動的競爭氛圍。在面臨產品生命週期短促、面板價格波動劇烈、多重廣播標準與門檻及終端市場需求變化巨大的經營挑戰下，產業加值鏈持續透過整合或外包策略因應；本研究個案廠商，考量資源分享極大化以提高競爭力，大多在此階段同時選擇代工(OEM/ODM)與自有品牌經營(OBM)。 本研究藉由文獻蒐集與個案深度訪談，得到來自不同資源基礎的四類個案廠商中，無論是選擇代工或自有品牌為主的商業模式，皆在任一模式佔總營收比重超過80%時，雖然產生部份限制，但從企業追求競爭力的角度來探討「驅動力」，其在降低成本、提高營業利益、養成關鍵技術Know-How、經營顧客服務等將展現最佳營運能量與效率；進一步就商業利益的角度檢視「平衡點」，其對於提高市場佔有率、構築自有品牌、經營顧客關係等亦將呈現效益最佳化。 至於，選擇代工與品牌並重之個案公司，則陷入較為不利之經營局面；然而，若能調整以自有品牌經營為主，與代工做切割，在創新能力、整體(含音質與畫質)設計能力等做到最具精緻特色，此亦極有機會先穩固區域品牌經營，再伺機擴張。最後對個案廠商未來發展做出策略建議，以及後續研究之方向，期為業界在強化競爭力與提高營業利益等經營議題，提供參考。 / The rapid penetration of Slim-Type TV with the price decline which is raised by the great progress of LCD related technology and increasing huge investment on new generation Fab. Taiwanese firms play significant roles in this worldwide prosperity and firmly integration at all-stream for a strong supply chain. As supply chain players keep implementing integration strategy to catch up with the cross-boundary opportunities, various business models have emerged. To address this phenomenon, a novel two-phase analytic framework was conducted to study the driving force and balance condition of Taiwan LCD TV vendors’ contract manufacturing (OEM)/OBM Model Choice. Through case-study and secondary data collection, we found that while facing tough business environment, Most of Taiwan LCD TV firms with different resource-bases , have choose both OEM/ODM and OBM to achieve economic scale for revenue increasing. Also, it’s a way to do cost reduction by sharing the resources. However, this study yielded different results when four-case companies implementing both OEM/ODM and OBM strategy, we found that if no appropriate resource allocation and right people/mechanism, increase another business model to existing model will bring the reverse effect. This paper finally concluded that different resource bases companies should consider various driving force and transform to the most suited business model through continue leveraging their own competences to catch the transient market opportunities.

The ongoing globalization of companies has resulted in a highly competitive business climate where companies have to be cost-effective but still flexible with fast response to customer feedback and present in the international scene. In order to meet the fast paced technological development from the competition and changing demand of the customers, companies focus on creating new products and reducing their time-to-market with an early product launch to gain profits from increased market shares. However, in order to maintain profitability of the new product, it becomes even more important for the company to quickly deploy a full-scale production of the product, also known as the production ramp-up phase. Despite being known as a major cost driver in new product development projects, production ramp-up is a research area which have yet received sparse attention compared to research on product launch and time-to-market in new product development projects. However, with shorter product life-cycles and higher market competition it has resulted in a need to shorten the length of a new product’s ramp-up time without making any trade-off to the cost-effectiveness of the ramp-up project and the end product’s final quality. The study identifies the common problems in volume production of a contract electronics manufacturer and their sources of disturbances from the new product introduction process. It also identifies the factors influencing the new product introduction process at the company and how these factors are connected different sources of disturbances. To identify these findings, a single case study was designed and performed at Orbit One AB, a contract electronics manufacturer with a low-volume production of products. The data collection course was executed in an iterative manner over a period of four months through interviews, observation and internal documentation and was backed up and analyzed with a literature study. The data collection through interviews was carried out in two separate rounds, where the first round of interviews was focused on identifying the common problems in volume production and the second round was focused on the factors influencing the output from the new product introduction process. The discoveries from the interviews were analyzed together with the other sources of collected data to reach a conclusive analysis. The results of the study showed that the most common problems in volume production of the company could be traced to six different sources of disturbances: Product, Production System, Design-Production Interface, Quality, Resource Management, and Personnel. The most common problems could also be summarized as: Problems with manufacturability of product; High variation of process performance, Poor correctness of information, Quality issues with products, and High workload on resources. The factors identified in the findings of the study shows that there are multiple and connected factors which affects the final output of the new product introduction process which corroborates with earlier studies and research in the area of production ramp-up. The study did identify two factors which has not been identified by other ramp-up studies, these were: Lack of organizational project culture and customer flexibility.