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Manufacturing competence and external integration: absorptive capacity in a first-tier supplier
Högskolan i Gävle, Institutionen för teknik och byggd miljö, Ämnesavdelningen för industriell ekonomi.
Högskolan i Gävle, Institutionen för teknik och byggd miljö, Ämnesavdelningen för industriell ekonomi.
2007 (English)In: 14th International Annual EurOMA Conference, Ankara, Turkey, June 17-20, 2007, 2007Conference paper, Published paper (Refereed)
Abstract [en]

There has been increasing interest in understanding the mechanisms for successful collaboration and learning in the supply chain. In a widely quoted paper, Cohen and Levinthal (1990) alleged that firms need to have absorptive capacity in order to benefit from external sources. The purpose of this paper is to extend the arguments to manufacturing, by illustrating how the dimensions of absorptive capacity are equally relevant in a manufacturing setting that includes customer and supplier integration in production processes. Based on a pilot case study of a Swedish firsttier supplier, it is shown that many of the fairly common manufacturing-related practices have an impact on the absorptive capacity of a small firm. This implies that manufacturing investment strategies not only influence the operations of the firm but also determine how effectively it can communicate with its external environment.

Place, publisher, year, edition, pages
2007.
Keyword [en]
absorptive capacity, manufacturing competence, external integration
National Category
Other Mechanical Engineering
Identifiers
URN: urn:nbn:se:kth:diva-7389OAI: oai:DiVA.org:kth-7389DiVA: diva2:12401
Conference
14th International Annual EurOMA Conference, Ankara, Turkey, June 17-20, 2007
Note
QC 20101122Available from: 2007-07-24 Created: 2007-07-24 Last updated: 2012-01-09Bibliographically approved
In thesis
1. Externa integration and the need for manufacturing competence
Open this publication in new window or tab >>Externa integration and the need for manufacturing competence
2007 (English)Licentiate thesis, comprehensive summary (Other scientific)
Abstract [en]

For a number of years, manufacturers have increasingly focused on their perceived core competencies and outsourced activities not seen as such. In doing so there are an increasing number of competencies that fall outside the ‘core’ domain but are nonetheless required for effective product and process development. The proposed solution to this problem has been external integration with an emphasis on collaborative product or process development and also the wider concept of supply chain management. It is, however, not always easy to substitute internal competencies with customers’ and suppliers’ capabilities. Many authors have focused on finding the prerequisites for effective external integration and particularly on areas such as trust and power.

This thesis contributes to the literature by extending the concept of absorptive capacity into the manufacturing domain and in the context of external integration. A conceptual framework is developed, where different streams of the literature have been merged into one coherent model. Integral parts of this framework are the concept of absorptive capacity as well as a model of competitive priorities. Competitive priorities have been taken into account as firms differ; what contributes to competitive advantage for one firm may be irrelevant for another.

Three papers are included in the thesis. The first one uses survey data, from a representative sample of the Swedish manufacturing industry, in order to validate the concept of absorptive capacity in the manufacturing sector. The second paper also uses survey data but aims to shed some light on competitive priorities’ impact on both the extent and the outcome of internal and external integration. The third paper describes a case study of a first-tier supplier and aims to illustrate how absorptive capacity in a manufacturing firm may look in practice.

The thesis concludes that the conceptual framework is indeed useful for understanding the challenges of effective external integration. Internal manufacturing competencies may allow a firm to integrate more effectively external sources, but the required competencies may vary from firm to firm. This implies a need for a fit between companies’ competitive priorities, external integration and absorptive capacity. It also implies that companies may struggle to achieve competitive advantage by utilising their customers and suppliers if they do not simultaneously develop appropriate competencies in-house.

Place, publisher, year, edition, pages
Stockholm: KTH, 2007. viii, 56 p.
Series
Trita-IEO, ISSN 1100-7982 ; 2007:6
National Category
Other Mechanical Engineering
Identifiers
urn:nbn:se:kth:diva-4467 (URN)978-91-7178-730-9 (ISBN)
Presentation
2007-08-17, Seminarierum 443, plan 4, KTH, Lindstedtsvägen 30, Stockholm, 11:00
Opponent
Supervisors
Note
QC 20101122Available from: 2007-07-24 Created: 2007-07-24 Last updated: 2010-11-22Bibliographically approved
2. Manufacturing capabilities: expendable commodities or catalysts for effective supply chain management
Open this publication in new window or tab >>Manufacturing capabilities: expendable commodities or catalysts for effective supply chain management
2012 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Many large companies have for a long time been very successful in their industries by combining leading edge R&D and marketing with strong internal manufacturing capabilities. An alternative model is now getting increased attention, where R&D and marketing is conducted internally and manufacturing performed by outsourcing partners. This development is partly due to divergent views on the strategic role of manufacturing capabilities: expendable commodities that can be purchased from a low-cost provider versus resources essential for sustaining long-term competitive advantage. Although assessments of the strategic role of manufacturing capabilities have been performed previously, recent supply chain trends such as globalisation and fragmentation mean that they may no longer be relevant. The purpose of the thesis is to assess the strategic role of manufacturing capabilities for a product-owning firm, by focusing on what impact its internal manufacturing capabilities have on the effectiveness of the supply chain.

Two methods have been used for the research: survey and case study. The survey is representative for the entire Swedish manufacturing sector, whereas the case studies are to some extent industry- or company-specific. Two companies were researched: one in the telecom equipment sector, the other a supplier to multiple sectors, including the telecom equipment sector. The results of the research have been presented in five scientific articles that are also found in the appendices.

The thesis argues that in order to evaluate the strategic role of manufacturing capabilities, it is important to look at how they contribute to the focal firm’s competitive priorities. When the technology is new, the competitive priority tends to be innovation, and the role of manufacturing capabilities is to facilitate more efficient NPD. When products mature, low cost becomes the dominant competitive priority, and the role of manufacturing capabilities is to facilitate a high operational efficiency of the supply chain. Although the potential role of manufacturing capabilities is dependent on the firms’ competitive priorities, just possessing manufacturing capabilities will not automatically translate into high performance. Instead, the performance outcome is dependent on both the level of manufacturing capabilities and, even more importantly, how they are leveraged through the integration of customers, suppliers and the product development department.

This thesis contributes to the discourse on the role of manufacturing in two ways. First, the thesis investigates how competitive priorities impact the role of manufacturing capabilities in the supply chain. Second, this thesis explores how manufacturing capabilities influence the efficiency of integration. The main theoretical contribution is to develop and test the concept of manufacturing absorptive capacity within the context of manufacturing capabilities’ role in the supply chain. The thesis concludes that manufacturing capabilities are almost inevitably seen as strategic because they help firms integrate external sources more efficiently, thereby achieving performance improvement in terms of both operational efficiency and efficient product development. When the performance improvement corresponds with the prevailing competitive priority, the supply chain can be said to be effective. Manufacturing capabilities can thus act as a catalyst for effective supply chain management.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2012. viii, 73 p.
Series
Trita-IEO, ISSN 1100-7982 ; 2011:08
National Category
Business Administration
Identifiers
urn:nbn:se:kth:diva-58826 (URN)978-91-7501-212-4 (ISBN)
Public defence
2012-01-20, Sal F3, Entréplan, Lindstedtsvägen 26, KTH, Stockholm, 10:00 (English)
Opponent
Supervisors
Note
QC 20120109Available from: 2012-01-09 Created: 2012-01-09 Last updated: 2012-01-30Bibliographically approved

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