Towards achieving network capabilities in global production network of contract manufacturers

The growth of global trade throughout the world has created remarkable opportunities for manufacturing companies to capture potential market share. This along with access to low-cost production resources and knowledge has encouraged manufacturing companies including global contract manufacturers to establish production plants overseas. However, managing and operating a network of geographically dispersed production plants all over the world requires systematic network management for achieving critical network capabilities. Network capabilities have been introduced and examined extensively, yet few studies, if any, have studied network capabilities in a contract manufacturing context. Therefore, the objective of this research is to develop knowledge regarding network capabilities in a global contract manufacturing context. In order to fulfil the objectives of this research, literature reviews were conducted as well as three case studies with data collected in a global contract manufacturing company headquartered in Sweden. The results refer to cost and flexibility as two major challenges facing global contract manufacturers. Moreover, product, production processes and complementary processes were identified as three synergetic areas within the production network of a global contract manufacturer. Working actively with those synergetic areas in the production network could facilitate the achievement of network capabilities especially in response to demands of being cost efficient and flexible. Finally, taking into account the unique needs of global contract manufacturers when developing the production systems, some results refer to possibility of achieving network capabilities during the production system development process.