The impact of outsourced manufacturing on timing of entry in uncertain markets

• 成果类型: Article
• 署名作者: Ülkü, S; Toktay, LB; Yücesan, E
• 署名单位: Georgetown University; INSEAD Business School
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• 发表日期: 2005
• 页码: 301-314
• 关键词: process adoption; CAPACITY INVESTMENT; outsourced manufacturing; time-to-market

摘要

Several firms are interested in manufacturing and selling new products based on a new process technology. Before manufacturing can begin, either these Original Equipment Manufacturers (OEMs), or a Contract Manufacturer (CM) needs to adopt the process technology, i.e., make a capacity investment in it. Due to market uncertainty, the timing of capacity investment is crucial. In such a setting, we investigate how the timing of process adoption, an important determinant of time-to-market, is impacted by the make/buy decision. We first characterize the optimal time for process adoption and show that this delay depends on competitive intensity, cost structure and the rate of forecast improvement. Due to differing cost structures, incentives and risks, an OEM and a CM may invest in a new process technology at different times. We show that while there are conditions where outsourced manufacturing can be advantageous for the OEM from a time-to-market perspective, there are also cases where the OEM would be disadvantaged. In these cases, the OEM can accelerate process adoption by risk sharing through joint investment. Finally, the right choice of CM is extremely important for an OEM that faces a short time window for product introduction: An efficient CM not only provides low costs but also rapid access to,new process technologies, and therefore higher revenues.