The influence of supply chain context (OEM vs. subcontracting) on quality management

Management Science and Operations

Operations and Technology Management Working Paper Series

Voss C A;Sousa R

Chris Voss

2003

In recent years, companies have increasingly subcontracted parts of their manufacturing operations to third party manufacturers, thus leading to an enormous growth in the number of subcontractor plants. These are specialized in the routine provision of manufacturing services to a range of external customers. Subcontractor plants have developed specific forms of organizing their operations which, it can be argued, are significantly different from a traditional Original Equipment Manufacturer (OEM) operation. Quality Management (QM) has often been advocated as being universally applicable to organizations and organizations activities. QM’s best practice prescriptions have had their cradle in primarily OEM environments. This raises the question of whether a subcontracting environment places specific challenges to managing quality. This study sets out to empirically investigate whether OEM and subcontractor plants employ different patterns of use of process QM practices – a critical and distinctive subset of the whole set of QM practices. And if so, to explain how the supply chain context (OEM vs. Subcontracting) affects these practices. The study uses the case study method to compare the use of process QM practices between OEM and subcontractor plants in the UK electronics industry. By selecting plants mature on quality from a single very competitive industry and controlling for process technology, the study aimed to isolate the effects of a plant’s supply chain context on QM practice. The study strongly suggests that process QM practices are contingent on a plant’s supply chain context, and identifies mechanisms by which this takes place. The study’s findings can be used to inform the implementation of QM programs by providing guidelines for which process practices to emphasize in a particular supply chain context or for which adverse context characteristics to modify in order to accommodate the use of particular practices.

OTM 03-019

Operations and Technology Management Working Paper Series

No