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Management of supplier and raw material with respect to food safety is a complex task, yet it can be made simple by appropriate organizational and management culture. A food safety manager with the right culture, adequate formal education, and relevant experience would apply the available tools, such as good manufacturing practices, hazard analysis and critical control point, and audits to ensure the final safety of a product. Supplier performance and adherence to agreed specifications with regard to raw materials are key criteria to be managed in maintaining food safety. Continuous contact and review of supplier and raw material performance would lead to continuous improvement.

We study a supply chain in which an original equipment manufacturer (OEM) outsources manufacturing functions to a contract manufacturer (CM) for cost saving. In addition to accepting the OEM’s order, the CM can develop self-branded products and enter the end-market. Because of the OEM’s well-known brand and long-term good reputation, we take the asymmetric customer loyalty into consideration - a fraction of customers are loyal customers (LCs) who only consider buying the product from the OEM, while other customers in the market are non-loyal customers (NCs) who might switch to purchasing the CM’s product because of the lower selling price. We explore whether the CM will enter the end-market and if so, what is the impact of the market entry on the OEM and the entire supply chain. Counterintuitively, we find that there will be no market entry when the CM is relatively strong, i.e., the CM is able to provide self-branded products with relatively high acceptance and the CM has a relatively large bargaining power. In addition, when the NC segment is an important profit source for the OEM, i.e., the NCs’ market size is relatively large and their willingness-to-pay is relatively high, the market entry will not occur, either. The OEM’s profit is always hurt by the CM’s market entry unless the OEM always only sells the product to the LCs, while the supply chain sometimes can get benefit. Through numerical simulations, we reveal the relationships between the profit change of different parties and the key parameters, such as the relative willingness-to-pay and market sizes of two types of customers, the CM’s bargaining power and the acceptance of the CM’s product, when the market entry becomes an available option for the CM. The impact of production cost difference on the market entry decision and profit changes is also analyzed in the extension when producing the OEM’s product is more costly for the CM than producing the self-branded product.

This paper investigates the outsourcing relationship between an original equipment manufacturer (OEM) and a contract manufacturer (CM) when both compete in the same product market. We identify optimal solutions and the favorable conditions that both players may benefit from outsourcing when either one is the dominant player in the Cournot competition in the base setting. In the extended models, we include a supplier in the game who sells the key component to the CM and explore all players’ decisions on pricing and/or quantity. We find that the optimal wholesale price for outsourcing is normally higher when the CM is dominant than that when the OEM is dominant. The Win–win conditions that both the OEM and the CM favor outsourcing in various scenarios are identified. There exist some scenarios that no outsourcing will be formed due to conflicting interests between the OEM and the CM. The supplier may benefit from outsourcing due to additional OEM's quantity when the OEM's production cost is high. In that case, a Win–Win–Win result for outsourcing occurs for all three players in the extended model.

The increasing pressure on manufacturing organizations to produce eco-friendly products has led these organizations to select sustainable contract manufacturers for outsourcing their products. This study aims to develop an approach for selecting a contract manufacturer (CM), having the capability of producing environmentally sustainable automotive products for original equipment manufacturers (OEMs). A framework is proposed to achieve this task. This framework is developed by integrating two multi-criteria decision-making techniques (MCDM), viz. Analytical Hierarchy Process (AHP) and ViseKriterijumska Optimizacija I Kompromisno Resenje (VIKOR). The selection of the CM for producing eco-friendly automotive products is based on certain criteria (i.e., different life cycle stages of products to be considered by CM) and sub-criteria (i.e., various ecodesign practices to be implemented by CM under each life cycle stage of products). A total of 22 sub-criteria are selected on the basis of literature and expert’s opinion from auto industry and academia. The application of the proposed research has been demonstrated through a case study which includes 4 alternative contract manufacturing companies related to automotive products. AHP method has been utilized to assign the weightage to different criteria and sub-criteria, whereas VIKOR approach has been utilized to evaluate the environmental performance of 4 CMs and to select the most efficient one. Results show that “Ensuring easy maintenance and repair,” “Improving durability and higher reliability,” and “Using alternative manufacturing techniques” are the top 3 criteria for the selection of sustainable CM. In addition, CM3 stands out to be the most sustainable among the four alternative CMs because of the ability to consider key environmental criteria especially during the selection of raw materials and manufacturing processes. The outcomes of this research may be utilized by the OEMs to understand the different criteria for selection of a sustainable contract manufacturer. Also, the proposed approach can lead the OEMs to evaluate the environmental performance of different contract manufacturers and to select the best one.

PurposeThis paper explores growth opportunities for a contract manufacturer (CM), which operates a global virtual manufacturing network (GVMN). The Swiss factory should play a profitable role in the holding's competitive strategy, in spite of lower-cost alternatives within its network.Design/methodology/approachThe study applied a design science method over a period of two years of collaboration with the partner firm to complete three iterations of solution incubation and refinement.FindingsThe design artefact is a growth strategy for a CM with independently-managed, heterogeneous sites. A novel capability mapping tool reveals competitive advantage by deploying the GVMN as an order fulfilment system. Engineering and sales are integrated with production to project higher revenue streams in multiple locations including Switzerland.Research limitations/implicationsThe research expands the operations management (OM) focus on optimization and continuous improvement. Results indicate that local and global manufacturing capabilities can be configured to target network performance, implying that the smile curve flattens in certain GVMN configurations. The exploratory case study is limited by a lack of statistical generalizability and is specific to the contract electronics manufacturing industry.Practical implicationsManaging manufacturing as a network can restore feed-forward and feedback loops, which are disrupted by de-verticalization and externalization. The visualization positions a Swiss plant in an inimitable role, serving growth accounts, which require co-development. The order fulfilment strategy and capability maps can be adapted to other GVMNs.Social implicationsThe study presents an alternative to shuttering high-cost locations using performance improvements instead of protectionist interventions. This could have a material impact on de-industrialization in developed nations like Switzerland.Originality/valueThe strategy innovation originates in practice. Its synthesis drew on multiple disciplines to position OM as a strategic lever for competing in global value chains (GVCs). The author finds alternatives to the internationalization logic of cost arbitrage and adds to developed country studies. This is an OM contribution to the broader debate on globalization dominated by the social sciences.

More and more contract manufacturers have started to establish their own brands besides providing manufacturing service for retailers who operate exclusive well-known brands. This paper studies the encroachment strategy of a contract manufacturer in a supply chain and the impact of fairness concern. Four scenarios are investigated by building game models: no fairness concern, the retailer’s fairness concern, the contract manufacturer’s fairness concern, and both members’ fairness concern. The results show that when there is no fairness concern, the contract manufacturer always has motivation to encroach. However, when there exists fairness concern, only when the reservation price is sufficiently high, the contract manufacturer will encroach. Fairness concern has certain strength to stop the contract manufacturer’s encroachment. When the reservation price is sufficiently low, the encroachment of the contract manufacturer benefits the retailer, or else it will harm the benefit of the retailer. The effect of fairness concern on profit margin and wholesale price decisions is opposite under different encroachment strategies. However, the fairness concern has no impact on the retail price of the private brand. Under encroachment strategy, contract manufacturer’s or both members’ fairness concerns have positive effect on the retailer’s profit in certain conditions. However, the fairness concern always decreases the contract manufacturer’s profit no matter what the form it is. Numerical examples show that it is best for the supply chain that both members have fairness concern under no encroachment. However, when the contract manufacturer has a private brand, it is best for the supply chain that no one has fairness concern when the advantageous inequity concern parameter is sufficiently low. When the advantageous inequity concern parameter is sufficiently high, it is best for the supply chain that both members have fairness concern.

This study considers an original equipment manufacturer (OEM) who (a) relies on a contract manufacturer (CM) to produce its new products, and (b) engages the CM again or an independent remanufacturer (IR) to perform the remanufacturing operations of branded patented products through either authorization or outsourcing. This study chiefly investigates the optimal remanufacturing engagement strategy (i.e., engage a CM or an IR) and remanufacturing mode (i.e., authorization and outsourcing) that should be taken by an OEM. This paper derives the optimal responses of the three parties (i.e., OEM, CM, and IR) by comparing the outcomes of different remanufacturing engagement strategies and remanufacturing modes under two settings, depending on whether the wholesale price is exogenously or endogenously given. The results suggest that the OEM is better off adopting the authorization remanufacturing mode by either working with the CM or the IR when the wholesale price is exogenously given. When the wholesale price is endogenously determined by the CM, the best strategy for the OEM is to work with the IR using the outsourcing approach. The CM and the IR also show different preferences between the two modes. The IR or CM that engages in remanufacturing always prefers the outsourcing mode than the authorization mode in the two settings. However, when the CM does not engage in remanufacturing, it is better off adopting the authorization mode when the wholesale price is exogenously given or when the remanufacturing cost is relatively low in the endogenized wholesale price setting.

This paper studies the effects of international taxation on multinational firms' production outsourcing strategies, which has attracted recent attention from both practitioners and legislators. We find that under the territorial tax system, the presence of global tax disparity may result in subtle changes of a firm's production outsourcing strategy. In particular, the tax consideration can make the firm more inclined to keep material procurement in house and use buy-sell arrangement to retain profit in low tax jurisdictions. Such an effect can not only cause the firm to choose a more expensive material supplier but also overproduce the products. Therefore, besides the general concern of income shifting, tax considerations can further lead to operational distortions. We show that to reduce tax disparity while preventing tax exemption for shifted foreign profit may lead to a win-win outcome for the firm and the stakeholders. The firm will make more efficient operational decisions to obtain a higher after-tax profit at certain reduced tax rate, while the home country stakeholders can receive more tax income. Interestingly, the foreign contract manufacturer may also benefit from such a change.

When an innovator outsources the manufacturing of an innovative product to a contract manufacturer (CM) which is also a competitor in the end market, the potential innovation spillover may be a serious concern. We study an innovator’s outsourcing decision under spillover risks with an emphasis on the ex ante uncertain values of innovations, and distinguish between technical innovations which can only spill over through outsourcing and non‐technical innovations which can also spill over in the market. We find that in both cases an innovator may strategically outsource to a competitor‐CM, albeit for distinct motivations: for technical innovations, it is done so that the competitor‐CM would yield market leadership to the innovator; and for non‐technical innovations, it is done so that the competitor‐CM would face innovation uncertainties alongside the innovator.

This paper studies information sharing in a supply chain where a contract manufacturer (CM) acts as both an upstream partner and a downstream competitor to an original equipment manufacturer (OEM). To better explore the effect of information sharing on a coopetitive supply chain, we consider a sequential game with the OEM as the Stackelberg leader under two different wholesale pricing methods, which is close to the practical situation. Our analysis shows that when the wholesale price is exogenously given, information sharing is beneficial for the OEM but hurts the CM, and a side-payment contract is designed to induce Pareto-optimal information sharing. When the wholesale price is a decision variable, the CM benefits from information sharing while the OEM does not and a discount-based wholesale price contract is designed to induce truthful information sharing. The numerical examples analysis further finds that the OEM benefits from the exogenous wholesale price scenario while the CM benefits from the endogenous wholesale price scenario. The study sheds lights on the decision-making processes for operating and managing the coopetitive supply chain and extends the research scope of information sharing. Our findings also provide some scientific references about information sharing in daily production.

An electronic product like a smartphone might involve hundreds of thousands of patents. The risks caused by infringement make it necessary for enterprises to consider patent licensing when outsourcing production activities in the electronics industry. This paper studies the outsourcing strategy considering patent licensing in an electronic product supply chain composed of a patent-holding firm, an original equipment manufacturer (OEM) and a contract manufacturer (CM). In addition to outsourcing manufacturing to the CM, OEM also considers outsourcing the patent license obtaining as well. We construct two outsourcing modes, called Turnkey and Consignment. No matter under which outsourcing mode, the patent-holding firm will charge unit royalty and a fixed fee paid in a lump sum. The results show that the OEM tends to choose Consignment without considering fixed fees, while the CM prefers Turnkey. When considering fixed fees, the patent-holding firm could align their preferences by coordinating fixed fees borne by OEM and CM. What's more, considering the environmental pollution caused by the production of electronic products, both strategies may lead to higher social welfare than the other strategy.

This paper investigates a vertical supply chain consisting of an original equipment manufacturer (OEM) and a contract manufacturer, who performs production function for the OEM. The contract manufacturer decides whether to encroach the OEM’s market and build her own private brand. The advertising effort of two members is considered. The results show that the contract manufacturer’s encroachment decreases the profit margin of the OEM and increases the wholesale price. When the substitution effect is sufficiently small, the introduction of the private brand slightly harms the benefit of the OEM. However, when the substitution effect is sufficiently large, the introduction of the private brand can significantly benefit the OEM which is counterintuitive. The introduction of the private brand is beneficial for the contract manufacturer and the whole supply chain. The management insight is that: For the contract manufacturer, it is better to introduce a highly substitutable brand with the OEM, which can significantly benefit both the contract manufacturer and the OEM.

This paper studies a supply chain in which the incumbent original equipment manufacturer is the quality leader and the encroaching contract manufacturer is the quality follower acting as a free rider for the former’s investment in quality improvement. Investigations were made into the contract manufacturer’s encroaching conditions and the original equipment manufacturer’s strategies of investment in quality improvement to deter the contract manufacturer’s encroachment. Results show that, different from the traditional encroachment, the contract manufacturer always has the incentive to encroach on the original equipment manufacturer’s final market if there is no quality investment opportunity. However, if quality investment is attainable for the original equipment manufacturer, there exists a threshold for the contract manufacturer’s imitating capability, in excess of which the contract manufacturer will encroach on the original equipment manufacturer’s final market. The structure of quality improvement plays a critical role regarding deterring the contract manufacturer’s imitation and encroachment, and the encroachment is conditional when the contract manufacturer’s imitating ability is relatively weak. Moreover, the threat of the potential entrant will facilitate the original equipment manufacturer’s quality investment, even though the quality investment per se is unprofitable. Under certain conditions with quality investment, the contract manufacturer’s encroachment can improve the original equipment manufacturer’s profit, thus achieving a win–win outcome.

Business practices have demonstrated that a contract manufacturer (CM) can introduce an own-label product and thus compete with its original equipment manufacturer (OEM), i.e., factory encroachment, which has not been obtained much attention in literature. Considering a three-level outsourced supply chain consisting of a CM, an OEM, and a retailer, this paper analyzes the impact of factory encroachment on players' gains. We show that factory encroachment could implement Pareto improvement, i.e., all supply-chain players' gains increase under encroachment. We also demonstrate that factory encroachment always offers more surplus to the entire supply chain and the consumer. In addition, the most preferred channel for the supply-chain players, the entire supply-chain system, and the consumer are investigated. We find that an encroachment strategy could be simultaneously favored by all involved parties, provided there is no integration between the OEM and the retailer. However, if the OEM and the retailer act as a single entity, only the no-encroachment strategy could be favored by all parties simultaneously.

The increasing concern about sustainability prompts the original equipment manufacturers (OEMs) to make efforts for sustainable technology innovations, thereby attracting customer demand. However, the increased demand results in more resource consumption and hurts the environmental sustainability deterioration. In this paper, we coordinate the economic sustainability (because of the increased demand and profits) and the environmental sustainability (because of the reduced demand and resource consumption) through procurement outsourcing. We develop a co-opetitive supply chain consisting of an OEM and a competitive contract manufacturer (CM), where the OEM faces the strategic decisions of procurement outsourcing to the CM. In the sense of economic sustainability, we derive three interactive effects that make the OEM prefer procurement outsourcing when its market potential is either low or high. The main reason is that the OEM could drag down the competitive CM with a high component/material wholesale price. In the sense of environmental sustainability, we find that there exists incentive conflict between the economic and environmental sustainability because of the OEM’s priority of achieving economic sustainability. We further identify the “sustainable-effort-dilemma” to show that the coordination of economic and environmental sustainability is attainable when the OEM chooses procurement outsourcing.

Motivated by Google’s technology specifications on Android devices, we consider firms’ decisions on production timing in a co‐opetitive supply chain comprising a manufacturer and an original equipment manufacturer (OEM), where the manufacturer acts as the OEM’s upstream contract manufacturer and downstream competitor. We consider the market acceptance uncertainty of key product designs. If a firm decides to implement ex post production strategy (PS), it can delay the production until the market acceptance uncertainty of its product is resolved. Otherwise, ex‐ante production strategy (AS) is implemented. We find that, due to the co‐opetition, PS does not always benefit either the manufacturer or the OEM, because the value of delayed production is diminished as the competitor may commit a production quantity earlier under AS. Further, firms’ decisions on production timing are dependent on the degree of market acceptance uncertainty of their products and competition intensity. We find that both firms choose PS when uncertainty is high, while only one of them chooses PS when uncertainty is moderate or low. Interestingly, when the competition is intense, the manufacturer tends to choose PS, which can benefit from both the resolved market acceptance uncertainty and OEM’s early commitment of production quantity.

It is optional for a non-ferrous original equipment manufacturer (OEM) to rely on a domestic contract manufacturer (CM) for metal material purchasing and manufacturing services. It is also optional for an OEM to purchase scrap metal abroad due to the government's encouragement, although the OEM suffers from quality uncertainty of the scrap metal, and still need rely on the CM for processing and manufacturing services. In this paper, we characterize the tradeoffs between economics sustainability and environmental sustainability from the perspectives of the OEM, the CM and the government. First, we derive threshold policies for the OEM to select the sourcing strategies, with respect to the quality of the scrap metal. Then, we analyze the supply chain parties' alignment opportunities of their preferences over the OEM's sourcing strategies. Interestingly, we find that win-win situations exist when (1) the quality of the scrap metal is high and the CM's procurement cost is high (both the OEM and the CM prefer cross-border sourcing), and (2) the quality of the scrap metal is low and the CM's procurement cost is low (both OEM and the CM prefer domestic sourcing). Regarding the government, we find that it would encourage the OEM's cross-border sourcing to maximize the social welfare if one of the following conditions is satisfied: (1) the environmental concern is low and the quality of the scrap metal is high; (2) the environmental concern is high and the quality of the scrap metal is low. If the government wants to save domestic resource, CS is always prefered.

When a weak-brand firm and a strong-brand firm source from a common contract manufacturer, the weak-brand firm may advertise this relationship to promote its own product. This paper investigates whether the weak-brand firm should use such brand spillover as a marketing strategy and how this decision depends on the firms’ characteristics and market conditions. We develop a game theoretic model consisting of one contract manufacturer and two firms with asymmetric brand power. The contract manufacturer determines the wholesale prices for the two firms and then each firm decides whether to source from the contract manufacturer. If both firms outsource to the contract manufacturer, then the weak-brand firm may choose whether to promote its product through brand spillover. Although brand spillover improves the attractiveness of the weak-brand firm’s product at no cost, we find that the weak-brand firm should not use brand spillover if (1) its original brand power is sufficiently low or (2) the contract manufacturer does not have a significant cost advantage. Interestingly, the adoption of brand spillover by the weak-brand firm can benefit all three parties under certain circumstances. Nevertheless, when the contract manufacturer has a significant cost advantage, in equilibrium the strong-brand firm will be hurt by brand spillover and hence should take actions to prevent it. This paper was accepted by Dmitri Kuksov, marketing.

This chapter draws from a commercial netnography we conducted to explore Chinese cosmetics consumers’ changing notions of female beauty. Specifically, we were tasked with informing the new product development efforts of ArtCosmetics, an Italian B2B contract manufacturer operating in the global cosmetics market. We use the project to discuss how we used a team of researchers to collect, interpret, translate, and understand data about the central role of cultural codes of beauty in cosmetics tastes and routines. In response to the complexity involved in the project, we improvised a netnographic research design. As a result, our netnography with ArtCosmetics was a methodological and intellectual journey that challenged us in many ways: transnational and effective sampling, appropriately bricolaged research design, collecting and comprehending the nuance of foreign language and foreign culture data from new platforms, resolving heterogenous data, managing vast cultural complexity, and translating sophisticated ethnographic finding into pragmatic consumer, brand, and new product development insights. Today, Chinese notions of beauty and identity are firmly rooted in historical ethnic and national identities but are also fluidly global. Adapting netnography to this fluid transnational context allowed us to grasp a flow of beautyscapes, infoscapes, brandscapes, selfscapes, and usagescapes as shifting elements in a primordial process that oscillates between East and West, traditional and futuristic, and symbolic and functional.

As potential vaccines for COVID-19 advance in clinical trials, initiatives and funding to produce them at large scale are also advancing. The contract manufacturer Emergent BioSolutions has receive...

In late December 2019, the Treasury and IRS released proposed regulations (REG-100956-19) in connection with the TCJA change to §863(b), under which property produced and sold by a taxpayer would be sourced solely at the location of production. This submission to the Treasury and IRS makes suggestions regarding these proposed regulations that are necessary to appropriately reflect modern business models used by multinationals. These business models typically include centralized management of operations that are spread around the world within group members that operate not as independent entities, but rather as cogs within an integrated worldwide business. They also often involve unrelated contract manufacturers. The areas discussed include: • Expanding the format of the sourcing regulations so that production activities conducted by MNC group members other than the group member taxpayer are included, and • Amending the current allocation approach that uses the adjusted basis of production assets because for MNCs its use causes skewed and nonsensical results The proposed regulations include Prop Reg §1.865-3, which applies the new sourcing rule to nonresident taxpayers affected by §865(e)(2). This proposed regulation needs to provide additional guidance (which is suggested within the submission) for the determination of whether a nonresident taxpayer has “purchased and sold” or has “produced and sold” the relevant inventory property. The submission includes several additional suggestions.

Problem definition: This article investigates the optimal combination of financing schemes (bank finance versus buyer finance) and outsourcing structures (consignment versus turnkey) in a three-tier supply chain composed of a capital-constrained quality-uncertain component supplier (SP), a contract manufacturer (CM), and an original equipment manufacturer (OEM). Academic/Practical relevance: In outsourcing practice, the OEM must decide on whether to procure components directly from the SP (i.e., consignment) or decentralize the component procurement to the CM (i.e., turnkey). However, no paper has yet studied firms’ preferences of all these four combinations of financing schemes and outsourcing structures. Methodology: To address the above concern, we apply a Stackelberg game setting to characterize the equilibrium product quality, contract prices, interest rates, and firms’ profits. Results: Our analysis reveals that buyer finance can conditionally outperform bank finance under both consignment and turnkey; however, the benefit of buyer finance is more significantly undercut by the procurement decentralization. Furthermore, the capital-constrained SP may encounter a collateral dilemma under turnkey, in which the SP suffers from possessing a higher asset value. Notwithstanding, firms can benefit from procurement decentralization in both bank finance and buyer finance when the CM’s capital cost is low enough. Such benefit is more significant in bank finance; thus, it is more likely for the OEM to select turnkey over consignment in bank finance than in buyer finance, but at the expense of other firms. Managerial implications: This study provides some guidelines for OEMs when making their outsourcing and financing decisions. Managers should be aware of that financing schemes and outsourcing structures are not independent of each other, and procurement decentralization should be implemented with consideration of firms’ financial and operational interaction.

För att möta kundernas strikta krav på korta ledtider och krav på lågkostnadsprodukter med hög kvalitet, har många organisationer kommit att bero allt mer på underleverantörer för att utveckla konkurrenskraftiga produkter. Omfattningen av leverantörsintegrering kan beskrivas med mängden ansvar en leverantör får i beställarens produktutveckling och hur samarbetet ser ut mellan parterna. Graden av ansvarsdelning kan innebära allt från rådgivning till fullständigt ansvar för alla processer i produktutvecklingskedjan. Perspektivet i detta arbete har fokuserat på underleverantören och hur den kan skapa värde i beställarens produktutveckling. Vidare syftar denna rapport att ta reda på vilka faktorer som påverkas beroende på när en leverantör integreras i produktutvecklingen. Rapporten undersöker specifikt hur faktorer som tid till produktion, utvecklingskostnader och produktkvalitet påverkas av tidig integration med leverantören. Arbetet bygger på en förstudie av tidigare forskning inom integration av underleverantörer i produktutveckling samt en kvalitativ intervjustudie med två svenska företag. Företagens relation till varandra är kund och leverantör. Arbetet kommer fram till slutsatsen att tidig integration och nära samarbeten med en underleverantör kan ha positiva effekter på pris och kvalitet, men mindre tydliga effekter på tid till produktion. Arbetet visar även vikten av bra kommunikation mellan leverantör och kund för bättre resultat i produktutvecklingen. Faktorer som geografisk plats, mängden resurser som båda parter investerar påverkar dessa resultat i stor utsträckning. In order to meet clients' demands for short development times and cheap products with high quality, many organizations are relying more and more on suppliers to develop products that can compete on today's ferocious global marketplaces. The focus of this paper is on the supplier and how it can affect the client’s product development positively. Furthermore, this paper aims to conclude which factors that are affected when the supplier is integrated into the client’s product development. This report looks at how specific factors such as time to production, development costs and quality of the products are affected by early integration with the supplier. The scope of supplier integration can be defined by the amount of shared responsibility of the product development between the supplier and the buying organization. The level of shared responsibility can mean everything from strictly consulting to complete responsibility of the entire product development process. This paper is based on a study of previous research of supplier integration into product development, including a qualitative interview study with two Swedish companies. The internal relationship of the two companies that take part in this study is that of client and supplier. The conclusions are that early integration and close cooperation with suppliers have positive effects on price and quality, but only marginal effects on development times. The paper shows that regular communication between client and supplier generates better results in product development. Factors such as geographical location and the amount of resources that both parts invest affect these results.

Syfte - Syftet med studien är att kartlägga hantering av information mellan original equipment manufacturer (OEM) och kontraktstillverkare. Syftet har brutits ner i tre frågeställningar: Vilken information skickas mellan OEM och kontraktstillverkare? Hur skickas information mellan OEM och kontraktstillverkare? Vilka faktorer påverkar informationsutbytet mellan OEM och kontraktstillverkare? Metod – En förstudie genomfördes för att formulera en problemformulering, vilket låg till grund för utformandet av studiens syfte samt frågeställningar. Fallstudien genomfördes parallellt med en kompletterande litteraturgenomgång för att skapa studiens teoretiska ramverk. Studiens syfte samt frågeställningar besvarades genom fallstudien och teorier. Slutsatser – Brister identifierades under studien gång och har en direkt påverkan på informationsutbytet mellan parterna. Det finns flera faktorer som kan påverka informationsutbytet, den främsta påverkande faktorn är kommunikationen inom företaget, vilket ligger till grund för ett väl fungerande informationsflöde. Ett tillverkande företag bör finna en balans mellan tillgång och användning av nödvändiga resurser för att integrera informationsflödet mellan parter och minska möjliga informationsgap. Det existerar svårigheter i att koordinera ett informationsflöde på bästa sätt vid användning av multipla tillverkningskanaler. Genom att identifiera slöseri i företagets administrativa processer kan de elimineras för att minska onödigt höga kostnader för företaget. Implikationer – Studien kan fungera som en vägledning hur företag ska hantera sitt informationsflöde vid användning av multipla tillverkningskanaler. Organisationer inom tillverkningsbranschen kan med fördel ta del av studien för erhållande av förståelse beträffande kommunikation, informationsutbyte, partnerskap samt framgångsfaktorer vid användning av lean i det administrativa flödet. Begränsningar – Då två enheter studerades, kan en relativt hög reliabilitet antas. Dock hade det varit fördelaktigt att studera fler företag med liknande tillverkningsprocess för att stärka studiens reliabilitet ytterligare. Purpose – The purpose of the thesis is to map the handling of information between original equipment manufacturer (OEM) and contract manufacturers. The purpose has been broken down into three research questions: What information is sent between OEM and contract manufacturers? How is information sent between OEM and contract manufacturers? What factors affect the exchange of information between OEM and contract manufacturers? Method – A case study was conducted to formulate a problem formulation, which formed the basis for the design of the study's purpose and issues. The case study was conducted in parallel with a supplementary literature review to create the theoretical framework of the study. The purpose of the study and the three research questions were answered through the case study and theories. Findings – The study identified several deficiencies that have a direct impact on the exchange of information between parties. There are several factors that can influence the exchange of information, the main influencing factor being the communication within the company that forms the basis for a well-functioning information flow. A manufacturing company should find a balance between access and use of the necessary resources to integrate information flow between parties and reduce possible information gaps. There are difficulties in coordinating an information flow in the best possible way using multiple manufacturing channels. By identifying waste in the company's administrative processes, they can be eliminated to reduce ultimately unnecessarily high costs for the company. Implications – The study can serve as a guide for companies to manage their information flow when using multiple manufacturing channels. Manufacturing organizations can benefit from the study to gain an understanding of communication, information exchange, partnership and success factors when using lean in the administrative flow. Limitations – When two units were studied, a relatively high reliability can be assumed. Yet, it would have been advantageous to study more companies with similar manufacturing processes to further strengthen the study’s reliability.

This paper considers a supply chain in which two competing heterogeneous original equipment manufacturers (OEMs) outsource production to a common contract manufacturer (CM) that possesses private c...

Consider a fashion supply chain comprising a supplier, a contract manufacturer and a fashion brand, we examine the fashion brand’s profit performances when the contract manufacturer is either an OEM (having no design capability) or an ODM (having design capability). Regarding OEM, the fashion brand designs the products, outsources the manufacturing function, and has the option of outsourcing procurement function. Regarding ODM, the fashion brand buys unlabeled products from the ODM, which is charge of designing and manufacturing. In this case, buy-back contract is widely adopted so as to share the risk of demand uncertainty between the ODM and the fashion brand. We solve the wholesale pricing problems via sequential/simultaneous optimization, and derive the buy-back price via generalize Nash bargaining. We find that, fashion brand prefers contracting with an ODM when its bargaining power in buy-back negotiation is larger than a threshold, although the fashion brand’s order size under ODM is always larger than that under OEM. Interestingly, we find that the buy-back price is decreasing in the fashion brand’s bargaining power. We further analyze the supply chain sustainability in both ODM and OEM scenarios, finding that the supply chain might achieve both environmental sustainability and economic sustainability in OEM scenario when the fashion brand’s bargaining power in buy-back negotiation is small.

Modern manufacturing entities often operate in capital groups, and their role is sometimes limited to the function of cost centers. From the legal point of view, however, they are separate entities obliged to apply transfer pricing regulations. Meeting the requirements of the arm's length principle can be very difficult at this time, given the relationships and conflicts of interest in the capital group. Complexity increases in capital groups operating in different countries, due to differences in tax regulations. The main purpose of the paper is to demonstrate that the need to valuate the sale of finished goods to a manufacturing entity, which is a subject to a different tax jurisdiction, may lead to a problem of compliance with the arm's length principle. In addition, the paper proposes a methodology for comparability analysis that may be used by manufacturing entities to defend conditions of setting transfer pricing. The paper presents the different functional profiles of manufacturing entities and points out the difficulties that they may encounter when preparing the comparability analysis. It has also been noted that there are differences in transfer pricing regulations in different countries, for example by analyzing Polish and Czech regulations. The lack of uniform benchmarking legislation can cause inconsistencies in the selection of comparable data, resulting in differences in transfer pricing. The paper uses the method of legal regulation review and analysis of results of published studies concerning the scope of transfer pricing and comparability analysis. The paper also adopts a case study analysis.

This paper deals with R&D investment and technology licensing in a supply chain formed of an original equipment manufacturer (OEM) and a contract manufacturer (CM). The R&D is conducted by the CM and the OEM agrees to pay a share of the cost. At the R&D stage, we assume that there are some uncertainties both in terms of performance of the developed technology and market uncertainties. These uncertainties are resolved in the sales stage, as technology matures and information about consumers’ preferences become available. Further, the OEM can license the technology to a third party and share the revenues with the CM. We characterize equilibrium pricing and licensing strategies in two scenarios, namely, the licensing decision is made before or after the uncertainties are resolved. A comparison of the two equilibria indicates that the OEM is indifferent between making the licensing decision in the first or the second stage in most cases. But when the market potential, competition intensity, royalty rate and revenue sharing rate are moderate, there exists a small region in the parameter space where the OEM prefers to make the licensing decision in Stage 2. Interestingly, we obtain that for a large region of the parameter space, the two partners have the same preferences in terms of licensing. It is also found that different probability distribution of stochastic technology efficiency results in different licensing strategies.

This paper considers a supply chain in which an original equipment manufacturer (OEM) outsources her production to a contract manufacturer (CM). For the product’s component, the OEM can either cont...

As a popular production mode, outsourcing enables the cost saving for original equipment manufacturer (OEM) and the acquisition of advanced technology for contract manufacturer (CM). We consider a multi-outsourcing supply chain within the voluntary compliance regime. The game between one OEM facing uncertain demand and arbitrary CMs owning uncertain yields is modeled to study the interactions regarding lot-sizing decisions. A general method is developed to prove the concavity of profit functions, which is formidable to accomplish based on Hessian Matrix. The optimal ordering and production strategies are subsequently characterized. A revenue sharing with surplus purchase contract with great flexibility in parameter selection is proposed to coordinate the supply chain. We find that there exist threshold outsourcing prices beyond which the CMs are motivated to overproduce, otherwise they tend to produce in consistent with the orders. In a competitive market, price war is not a wise strategy for CM due to profit sacrifice. By contrast, if the selling price charged by the OEM is high, a smart CM can appropriately raise its outsourcing price because the order quantity difference among CMs is relatively small. Although supply stability improvement and outsourcing price reduction are both welcomed by the OEM, the latter is more important for it to consider in allocating orders.