Abstract

Manufacturing companies have reorganised their value chains and outsourced their non-core activities at an increasing rate during the last two decades. The importance of subcontractors has grown both from the economic and production point of view. The new manufacturing paradigm that emphases outsourcing, co-operation, networking and agility is much discussed on the general level, but very little empirical research has been done on these issues. The main aim of the study is to increase the understanding of the evolution process of subcontracting chains and explain the managerial aspects connected with the subcontractors' evolution.

In the theoretical part I of the study, the concepts of subcontracting are clarified. The forms to classify subcontractors are discussed as the structure and development of subcontracting systems. The lean supply philosophy and manufacturing strategy concept are presented as a basis for the study. The manufacturing strategy framework for subcontractors is presented.

The empirical findings of this study are based on longitudinal case studies covering the time period from the early 1980's to the late 1990's. Three cases from the metal and electronics industry including an OEM and a few subcontractors are presented. The studies focuses on the factors affecting the evolution of subcontracting, especially the impacts of subcontractors' manufacturing strategy on supply chain decisions. The implications of the case studies allow a number of conclusions to be drawn. The main differences from the lean supply theory was in supplier development and supply chain management practices The production volume, product structure and supplier base were the most important points affecting the subcontracting chain structure. The process of assigning manufacturing to subcontractors happened gradually and included critical points, which should be evaluated. The evolution process of subcontractors from a part supplier towards a system supplier is discussed. The competitiveness of the subcontractors evolves gradually starting from quality and adding other capabilities. In order to develop the subcontracting chain the stage of evolution of subcontractors should be recognised. A conceptual model for four different stages, part, component, specialist and system supplier, was also created in this study.