Cooperating for supply chain effectiveness: manufacturing strategy for Chinese OEMs

Abstract

As the world economy has become increasingly integrated, Chinese manufacturers play the role of world factories in the global value networks for many industries. The study examines the role of Chinese OEMs in the global supply chain and how the OEMs can enhance supply chain effectiveness. There is no single best strategy for OEM suppliers. They can choose either to be dedicated OEM service providers or to build their own-brand products. Both can achieve high supply chain effectiveness. However, once the OEM strategy is chosen, the way to manage the supply chain should be different. Dedicated OEM suppliers should emphasise particularly manufacturing flexibility in pursuing supply chain performance. Product modularity has a possibly negative impact on supply chain performance. For both dedicated OEM suppliers and own-brand ones, goal congruence is essential for supply chain performance. Managerial implications for this study are also discussed.