Cost awareness as a fundamental prerequisite of advanced manufacturing technology adoption in a supplier–OEM dyad Open Access

Interesting because: Previous research on the management of manufacturing technologies has largely overlooked the complexities associated with obtaining accurate cost information in subcontractor–customer dyads. This is especially true regarding cost savings in cases in which a subcontractor is capable of delivering new-technology-enabled value to its customer. Surprisingly, the customer company may also have a lack of understanding of its own costs, and the information may be based on false assumptions. As a result, new technology adoption providing the full value potential of advanced manufacturing technologies (AMTs) may remain unjustified and unimplemented.

Theoretical value: This article opens a whole new area of research, “critical studies on costs in manufacturing technology adoption.” We problematize formulating a factual basis for manufacturing-capacity-related decisions (acquired as services or investments) as there is no absolute truth about which party (of customers or their AMT-using subcontractors) possesses the most accurate cost information. Consequently, we encourage more research on manufacturing technology acquisition decisions and especially costs as a key factor therein.

Practical value: We build a framework for analyzing and developing cost awareness from the perspectives of both the manufacturing technology supplier, subcontractor and their customer company. With the help of the framework, managers can identify and examine sufficient/insufficient levels of cost-awareness. It is particularly interesting if the supplier-customer relationship under examination falls into the categories of a “buyer’s challenge” or a “seller’s challenge,” because in these categories, the relationship requires joint development of capabilities and the correction of misunderstandings.

As recent research points out, building a business case for and thus proving the legitimacy of new technology introduction in manufacturing is not necessarily easy (Kristiansen and Aas, 2026). But why and how is this the case, since it is a long-standing question why new technology introduction is sometimes difficult, even if the new technology holds tremendous potential for improving manufacturing performance (Small, 2007). Indeed, more research has been called for to understand the costs vs. benefits in new manufacturing technology adoption – especially in small- or medium-sized enterprises (SME) (Martinsuo and Luomaranta, 2018; Krishnan, 2024).

Importantly, AMT provides manufacturers with a foundation to create economic benefits (e.g. Sun and Xi, 2025). The problem is that the respective costs are not always easy to calculate. A solid business case is built on available facts and calculable benefits, but the more complex the offering, the more beliefs about possible benefits become part of legitimizing new manufacturing technologies or services (Kristiansen and Aas, 2026). More specifically, there might be inadequate capabilities to evaluate AMT investments in the long-term (Díaz et al., 2005; Stornelli et al., 2021). This makes it critical that technology suppliers can take a larger role in communicating the value of AMT introduction to their manufacturer customers (Chaney et al., 2022) – a task far from easy.

To shed light on constructing the business case for AMT, the study builds upon the theoretical concept of cost awareness (see, e.g. Kurunmäki, 1999; Velasquez et al., 2015). We use this concept to analyze our in-depth, qualitative case study (cf., Stornelli et al., 2021) of a Finnish supplier that attempted to create, communicate and ultimately deliver added value to their customer OEM in terms of cost effectiveness. We pseudonymously call this supplier company “LaserCo.” LaserCo’s business is founded on AMT, as it seeks to deliver a digital manufacturing service offering to its customer, an original equipment manufacturer (OEM). We will utilize LaserCo’s case to answer our research question: how does cost awareness influence AMT adoption? Indeed, earlier research encourages a longitudinal single-case study as a way to understand what “actually” happens when a supplier offers technology-based value to their customers (Wouters and Kirchberger, 2015).

In the studied context, LaserCo seeks to expand its existing tube laser cutting-focused offering with wider digital services (software-based product redesign and automation extension), thereby benefiting the OEM through the generation of increased added value. Here, value and added value are defined financially in terms of costs to ensure measurability and evaluability, with particular emphasis on cost savings to the customer, leading to potential mutual value creation and productivity gains for both companies (Grönroos and Helle, 2010; Tiitola, 2025).

The case study pinpoints certain interesting challenges in AMT legitimization: the findings show that, especially in cases in which there is considerable information asymmetry between an AMT supplier and its manufacturer customer, it can be quite problematic for AMT adoption. Indeed, as its theoretical contribution to current manufacturing technology adoption literature (e.g. Raj et al., 2020; Ito et al., 2021; Jones et al., 2021, Stornelli et al., 2021; Krishnan, 2024; Kristiansen and Aas, 2026), this article shows that insufficient cost awareness might prevent the customer from seeing the value potential provided by the new digital manufacturing technology. While it is not necessarily a case of beliefs (Kristiansen and Aas, 2026), it might – surprisingly – not be a case of facts either. Indeed, we add to this literature by pointing out the importance of using up-to-date, shared, factual cost information to outline customer value that stems from operational cost savings enabled by AMT adoption (Stornelli et al., 2021). Moreover, for practitioners, the article proposes a conceptual approach (a two-by-two matrix) to analyze and develop cost awareness among the stakeholders in a customer-supplier dyad. Altogether, the article outlines a new, relevant yet largely uncharted territory for manufacturing technology management researchers: we bring together literature on value creation, AMT and digital servitization in a novel synthesis, opening a new area of research: critical studies on costs in manufacturing technology adoption.

The article proceeds as follows: We begin by reviewing the existing literature on AMT implementation decisions, cost as a crucial factor in AMT adoption, as well as offering AMT as a digital service, followed by our empirical methodology and findings, and finally discussion and conclusions.

AMTs have been extensively studied in previous research, consistently demonstrating the benefits of AMT for business operations (e.g. Oztemel and Gursev, 2018; Stornelli et al., 2021). At the ecosystem level, AMT can be categorized into three constructs: (1) automation technologies, (2) information flow and (3) decision support systems (Cimini et al., 2020). Studies have examined readiness for adopting new technologies and the extant literature of technology and/or innovation readiness identifies both barriers and enablers to the implementation of new technologies or innovations. Prior studies highlight how the interaction of barriers and enablers determines the success of new technology adoption and its potential impact on a firm’s business performance (e.g. Cheng et al., 2018; Jankowska et al., 2023). Extant literature has widely acknowledged the benefits of AMTs in enhancing firms’ financial performance (Bourke and Roper, 2016; Sun and Xi, 2025), with cost reduction frequently identified as a particularly salient factor in this context (Jonsson, 2000; Iakymenko et al., 2016; Oztemel and Gursev, 2018; Stornelli et al., 2021; Momeni et al., 2024).

Prior AMT adoption literature has noticed that when deciding about whether to implement AMT or not, companies should not only pay attention to manufacturing costs, but more widely to nonfinancial criteria as well (see, e.g. Díaz et al., 2005). However, in this research, we restrict ourselves to financial factors, with particular attention to costs and their reduction. Indeed, costs and the associated profitability have continuously been seen as important decision criterion for manufacturing technology investments (e.g. Hofmann and Orr, 2005; Fulton and Hon, 2010; Kim and Oh, 2024). Costs associated, e.g. with operational production (labor, setup-time), materials, design (time-to-market), process time, stability and efficiency can be considered when weighing the opportunity to adopt AMT or not (Fulton and Hon, 2010; Stornelli et al., 2021; Naghshineh and Carvalho, 2022; Wong and Ngai, 2023). It is, however, challenging to determine such costs when investing in new manufacturing technologies (see also Jones et al., 2021) as there is a “lack of clarity regarding the economic benefit” (Raj et al., 2020, p. 6) accompanied with overall uncertainty concerning manufacturing technology implementation (Krishnan, 2024; Rocha et al., 2025). As a result, we currently know too little about how costs emerge as a decision criterion in AMT adoption.

The manufacturing capabilities of a firm can be classified into four dimensions: cost, quality, delivery, and flexibility (Jonsson, 2000; Cheng et al., 2018). These dimensions also provide a framework for linking customer-perceived value to measurable outcomes, thereby operationalizing customer value. The existing literature (Jonsson, 2000; Iakymenko et al., 2016; Oztemel and Gursev, 2018; Ito et al., 2021) often addresses costs at a general level, typically acknowledging cost reduction as one of the key benefits of AMT, thus driving AMT investments and adoption.

Much of the extant literature on AMT adoption, indeed, has focused on the investment logic behind AMTs (e.g. Krishnan, 2024), or promising new value stemming from new technologies just around the corner (Ghobakhloo et al., 2024). However, even comparing the operational costs before and after AMT adoption might not be as easy as it seems at the outset. This hampers the expansion of AMT use. Moreover, acquiring AMT-based manufacturing capacity as a service, i.e. looked indeed from the operational cost viewpoint rather than that of the investment logic, has so far received too little attention in academic research.

But how can operational costs then be managed? For the numerous SMEs in the manufacturing sector, cost awareness (see, e.g. Kurunmäki, 1999; Velasquez et al., 2015) is potentially a matter of life and death. Cost awareness refers to the enhanced understanding of costs facilitated by new and more detailed costing systems (Kurunmäki, 1999). Limited cost awareness and resulting errors in cost calculations could jeopardize the business. Imbalance in cost awareness can undermine the perceived value of AMT provided by SMEs (Krishnan, 2024), particularly when a supplier lacks power to influence the customer’s cost calculations or operational practices (Lavia López and Hiebl, 2015). Moreover, setting the point of comparison can itself be difficult, as there is no absolute “current level” of costs, for instance, that all comparisons could be made against (Tiitola, 2025).

Therefore, effective adoption of new manufacturing technologies requires mutual cost awareness across both supplier and customer organizations, as such technologies impact the customer’s value creation activities and associated cost structures at both ends (Demeter et al., 2024). Oddly, extant literature often assumes customers inherently understand the costs within their processes (Heinonen et al., 2010), an assumption that is rarely confronted. Moreover, current AMT and value creation literature is insufficient in examining cases, in which an SME supplier masters a new technology and attempts to sell the potential customer value to a larger customer, particularly in cases in which the supplier has transformed its business model toward services and is capable of providing a broad range of advanced solutions (Momeni et al., 2025). Altogether, while risks associated with AMT investment have been researched and key risk factors identified (e.g. Iakymenko et al., 2016), the value created by suppliers in delivering AMT as a service, specifically in a serial production context, has not been explored in existing literature. Yet, such an approach could potentially enable customers to leverage the benefits of AMT without facing the challenges linked to direct investments.

Digital servitization has been conceptually explored extensively in literature, encompassing product technologies, software and data, as well as service-oriented offerings. Increasing attention has been directed toward the role of software in servitization, with its growing significance within the product–servitization–software context being recognized as an emerging development direction.

In addition to the acknowledged significance of software, the literature identifies cost as a critical factor in the provision of digital services (Karatzas et al., 2025; Kohtamäki et al., 2022). Literature has emphasized the necessity – especially for SMEs – to develop service offerings, and digital service offerings in particular, as a means of advancing business development and customer relationships, with cost savings acting as a clear driver of this transition (Karatzas et al., 2025; Kohtamäki et al., 2022; Blichfeldt and Faullant, 2021; Åkesson et al., 2024). The literature has further examined the enablers and barriers to the adoption of new (digital) technologies, identifying economic and also noneconomic factors, such as trust, as significant determinants (e.g. Raj et al., 2020; Ito et al., 2021; Jones et al., 2021, Stornelli et al., 2021; Kristiansen and Aas, 2026).

From the servitizing perspective, Blichfeldt and Faullant (2021) stress the role of product and service innovation in the pursuit of competitive advantage following the adoption of digital technologies. Study of product-service systems (PSS) aligns with service innovation research and encourages the development of services in SMEs (Åkesson et al., 2024). However, further research is needed on service productization in the case of suppliers who employ AMT for high-volume production (Zanardini et al., 2016).

Altogether, this article highlights the importance of cost awareness in decision-making processes related to the adoption of new technology, whether through direct investments or by acquiring it as a service. With too little understanding of how value from AMTs is created in SME-customer dyads, either as direct investments or as services, there is a need for empirical research on the types of challenges AMT adoption may be hindered by, to understand how such challenges could be overcome in the future.

This research is based on a longitudinal interventionist case study (2015–2021) (e.g. Lyly-Yrjänäinen et al., 2017) examining LaserCo providing manufacturing and digital design services based on the tube laser technology. A longitudinal case study enables sufficiently deep exploration of the phenomenon, customer’s cost perception, in its real-world context, revealing the complexity of customer’s cost perception owing to the fact that it is not well understood in practice and the related research remains insufficient. In this study, therefore, focusing on a single case ensures the most authentic access to the phenomenon (Yin, 2014). By drawing upon “information-oriented selection” of a “deviant case” of cost awareness and co-operation between the LaserCo and their OEM customer in opening their books, our article is able to examine an issue that might be more widely applicable as well (Flyvbjerg, 2006, p. 230): limited cost awareness hampering manufacturing technology adoption. The longitudinal design facilitates close collaboration between the researcher and the case organization. Through repeated interactions and joint problem-solving, mutual trust is established, thereby enhancing the likelihood of generating genuine and meaningful results (Van de Ven and Johnson, 2006). In this vein, it became possible to develop a rich description of the case and the context, from which the results could be derived.

LaserCo is a Finnish small-sized subcontracting company with 7 MEUR turnover and 30 employees. LaserCo focuses purely on tube laser cutting and their actual machinery consists of six tube lasers in three locations. Their customer, OEM, is a mid-sized manufacturer that has two factories in Finland and is operating in global markets. OEM represents a highly typical Finnish technology industry firm, characterized by long-standing traditions and extensive experience in in-house product manufacturing. Moreover, the company has achieved steady growth and engages in exports to multiple countries. It is therefore reasonable to assume that the findings of this study could be representative of the manufacturing sector more broadly, and that the phenomenon revealed in the research – the asymmetry of cost awareness – could well occur on a wider scale.

The interventionist researcher leads LaserCo’s sales team, but at the same time has had an academic role, as a doctoral student at the home university of the author team. This academic affiliation has allowed the interventionist researcher to take the conceptual (etic) viewpoint to the research project; the industry affiliation, on the other hand, has provided the interventionist researcher with the close-to-practice (emic) viewpoint, yielding and exceptionally deep access to relevant data: the negotiations and the relationship between LaserCo and OEM (Lyly-Yrjänäinen et al., 2017). Earlier customer value literature has encouraged interventionist work to gain insights from practice and learn for theory-construction purposes (Wouters and Kirchberger, 2015).

We choose to utilize quantitative data as part of the qualitative study to thoroughly understand the real-life value-based sales process and challenges therein. The quantitative, technical data consisted of, e.g., CAD drawings, cost calculations, bills of material and manufacturing process metrics such as inventory levels and setup times. As part of the longitudinal case study of the relationship between OEM and LaserCo (as called for by Pessot et al., 2021), we analyzed the gained qualitative data. We collected technical data and systematically archived it in accordance with the project’s progression, as detailed in Figure 2. To enhance the reliability and contextual richness of the dataset, we complemented these records with the research team’s field notes, which documented interpretations of project stages as well as observed phenomena (Yin, 2014).

The OEM’s cost calculations primarily comprised direct costs, labor and materials. LaserCo conducted its calculations based on a corresponding principle. This approach enabled us to generate comparable representations of the product’s cost structure, which we documented accordingly.

Figure 1 demonstrates the evolution of the supplier-customer relationship and the timing of the research project, identifying five subsequent phases. Business relationship established in the year 2015, Phase 1. In Phase 2, the collaboration developed, and the first two phases may be regarded as prerequisites for initiating the research project since a trust-based relationship with the client was established through close collaboration. In Phase 3, a research project was initiated with the university acting as an independent evaluator.

The research project proceeded with a prototype presentation and performing transparent disclosures of cost structures in Phase 4. However, unexpectedly, the project was halted by OEM after they introduced their own cost calculations, which indicated a negative cost development.

In the latter part of the project, during Phase 5, the project team conducted a more in-depth analysis. As shown in Figure 1, the anticipated development of customer value was thus not fully realized, and the cost-efficiency potential enabled by the new technology was only partially achieved (customer value and unattained value).

Figure 2 illustrates the key interactions through meetings, emails and TEAMS. In the upper part are rendered the main steps chronologically specifying involved parties and researcher’s role, as well as key interventions. The quantity of events and correspondence between OEM and LaserCo using multiple media is represented in the lower part of Figure 2. Altogether, the data set comprised correspondence between OEM and LaserCo, and multiple types of documents. The documents contained both qualitative and quantitative information, but the analysis was conducted under the qualitative methodology: a rich case narrative was built upon the available material to make sense of what is actually happening in a situation in which a supplier company tries to introduce advanced manufacturing technology to its customer (as in Khorram Niaki and Nonino, 2017).

Tube laser cutting technology falls under AMT category, improving companies’ efficiency by employing automation in manufacturing. Tube laser integrates and automates several traditional production phases such as sawing, drilling, milling and deburring. Production data is in digital format and product 3D models are converted into NC-programs (CAM) directly. Highly advanced software tools enable location-independent product design and engineering over the network within the supply-chain ecosystem or company’s intranet.

Tube laser machine is shown in Figure 3. Raw material, tubes or profiles are fed into loading unit and laser head located in laser compartment cuts the desired end-products. Laser head is a servo-driven unit enabling versatile cutting shapes ranging from simple straight cuts to demanding bent-corner cuttings, presented in Figure 3.

Tube laser technology provides a vast toolbox to design and manufacture components with interesting shapes. Firstly, on the left section of Figure 3, the openings in one workpiece would help position the other workpieces, speeding up the welding work. Secondly, in the middle of Figure 3, the corner would form automatically when the laser-cut tube is bent, speeding up welding and reducing the number of components to manage. Thirdly, on the right side of Figure 3, entirely new forms of machining become possible. Integration of laser technology with a competent service provider (CAD design, tube/profile sourcing, material optimization) could achieve substantial cost reduction and consequently, increase customer value.

Furthermore, component design utilizing tube laser technology enables: (1) simplification of further processing, e.g. welding work, (2) reduction of components, (3) aesthetics/design and (4) lower direct costs. These aspects form the basis for a supplier’s value-based sales argumentation to make the technology desirable for its customers.

Tube laser technology was introduced in 2015 when LaserCo approached OEM, leading to a test delivery, which convinced OEM to start negotiations evaluating LaserCo’s potential as a regular supplier.

LaserCo prepared marketing material promoting tube laser technology’s advantages. The success of the test deliveries was ensured through rigorous quality assurance procedures, while delivery capability was safeguarded by establishing a buffer to mitigate potential disruptions in deliveries from LaserCo.

Encouraged by the initial successful experience, OEM started to increase their purchases; four years later, LaserCo delivered 20–30 different components with batches ranging from a few dozen to thousands. However, the components were based on OEM’s original design, without any design improvements to capitalize on the value embedded in the new manufacturing technology. Over time, it would become clear that by capturing additional value (cost efficiency, reduced cycle time, improved quality), OEM would require redesigning existing components.

To strengthen the relationship with OEM, LaserCo sent an updated information package 2018 highlighting the design features its new machines and updated software tools could provide. When OEM was designing a new product (Figure 4), materials from LaserCo arrived, prompting OEM to explore the potential of testing a new bent corner solution (Figure 3).OEM’s original design was five different components which were welded together (Figure 4, right side). As a comparison, a quote for a bent corner solution was requested by OEM. When sending bent corner prototypes, LaserCo also included a prototype using a rounded bent corner (right in Figure 3) to showcase the most advanced solutions. OEM expressed interest in the new model and requested an additional quotation. Figure 4 summarizes the calculated cost impacts of the three alternative solutions (including materials, laser cutting, welding) compared to OEM’s in-house manufacturing costs for separate five work pieces using traditional manufacturing methods.

In the calculation, the work pieces are cut by LaserCo but welded by OEM. Regarding the welding work, the first two solutions are practically identical; OEM needs to insert five work pieces in a welding jig and then weld seams around the tubes. However, with the bent corner solution, the time needed to prepare the workpiece for welding is reduced, and only the seam on the corner inside face is welded. Together, these changes would reduce the pure welding time by 50%, whereas the conducted analyses showed a potential of reducing total welding time by 20%, considering also the impact of welding procedure’s internal logistics and setup times. As shown in Figure 4, the current solution manufactured by LaserCo would reduce OEM’s costs by 9%, the solution with the bent corners by 26% and the more demanding rounded bent corners by 21%.

OEM conducted an internal evaluation for all three alternatives, assessing them from diverse viewpoints: direct cost, manufacturability, appearance and usability for the end-users. OEM asked for more prototypes to test the impact on welding, and after some further testing, they placed the first order for the rounded bent corner, paving the road for larger joint development efforts with more potential for value creation.

OEM seemed to consider this new type of customer-supplier collaboration promising, enabling solutions beyond OEM’s own expertise. Encouraged by the positive reception of the single component development process, LaserCo proposed OEM to initiate a bigger project in which an existing product in OEM’s product portfolio would be redesigned.

OEM stated their interest in proceeding, and the project team was expanded with educational institute to provide additional expertise and to operate as a neutral evaluator. The following research plan was created, having the objective to demonstrate the added value generated by tube laser technology and the associated digital service:

1. Selecting a suitable product for redesigning (tube-based construction, sufficient volume)

2. Agreement on the open-book principle to reveal actual cost structures

3. OEM delivers technical data for the selected construction

4. LaserCo prepares a new design and related cost analysis, utilizing digital service, 3D modeling

5. Decision on further actions based on the report supported by the educational institute and eventually encourage OEM to restructure its internal processes in order to enable the purchase of 3D modeling from LaserCo

After the kick-off meeting, OEM provided 3D models of the steel frame, and additionally, OEM sent one steel frame to LaserCo to assemble it and thereby get some first-hand experience on how the steel frame had been designed.

During the development process, two components were identified to comprise the biggest potential for improvement (left in Figure 5). Instead of a standard U-profile, OEM used their existing sheet metal machinery to cut the holes and openings and then bent the part into a U-profile, resulting in a nonstandard dimensioned U-profile. If factory-made U-profile was used, only the openings and cut-offs would be needed, eliminating the bending as a second manufacturing process and yielding further potential for saving costs. The new redesign of the steel construction is presented in the right section of Figure 5.

LaserCo proposed a new design introducing a digital 3D model, which, after a few iterations, was accepted by OEM. Key drivers for the redesign were (1) reduction in component quantity, (2) use of standard profiles and (3) faster welding without complicated jigs and tools.

The costs of standard tube parts were easy to calculate; LaserCo delivered these parts to OEM already. For the parts OEM manufactured in-house (the nonstandard U-profiles), LaserCo selected the closest standard raw material to get a perception of material and cutting costs. The manufacturing costs of different options are illustrated in Figure 5.

New calculations, including welding, confirmed the original assumption: the redesigned steel construction version had lower costs (91.7%) than the original version (100%). To continue dialogue, OEM provided their own cost analysis of the original design: its materials, manufacturing and welding showed significantly lower cost (55%) than calculated by the LaserCo (100%), and this way, the cost of the original design seemed much lower versus the 91,70% cost of the redesigned steel construction (Figure 5). The result was a surprise to LaserCo’s project team; LaserCo had been delivering tube parts to OEM for many years, which was thought to prove a competitive price level.

LaserCo’s project team started to examine OEM’s cost analysis thoroughly. Tube components’ costs were known to be acceptable, but in OEM’s cost breakdown analysis, the costs of the sheet metal components manufactured in-house were low, comprising the major difference in cost comparison (components highlighted in Figure 5, left section). To analyze the difference more reliably, LaserCo’s project team decided to remove the sales margins of individual components to show the actual manufacturing costs of the reengineered components.

LaserCo did not have sheet metal machinery, so they requested corresponding prices from their partner network. In this way, the market price was defined for the U-profile components when manufactured with state-of-the-art sheet metal machines. The results of the cost analysis were as follows:

Component 1 vertical U -profile

• Cost calculated by OEM → 100%

• Cost calculated by LaserCo → 170%

Component 2 horizontal U -profile

• Cost calculated by OEM → 100%

• Cost calculated by LaserCo → 700%

The results of manufacturing costs were shared with OEM and thanks to the cooperative mindset of OEM, more light was shed on their cost analysis. The costs of the components were received from the production department, though there was no exact information on (1) when these calculations had been made and (2) what was the used batch size.

Further analysis revealed two interesting insights. First, OEM admitted that their cost analysis was based on outdated data; the cost analysis had been prepared when the current machinery had been ramped up, roughly ten years earlier. Second, the batch size used in OEM’s own cost analysis was estimated to be one year’s consumption, i.e. tens of thousands of components in one run, hence eliminating the impact of the setup time, and thus, hampering the comparability to the cost analysis prepared by LaserCo, which obtained corresponding costs from its sheet metal partner based on significantly smaller batches.

The analysis prepared by LaserCo exposed a contradiction in the costs of the sheet metal parts: the cost shown by OEM could not even cover the actual material costs. This finding made LaserCo project team question whether the cost data related to the in-house manufacturing generally was up to date.

Tube laser cutting typically allows the reduction of labor in later production stages, especially welding. A redesigned steel frame lowered setup times and welding seam quantity, leading to expected cost savings. However, OEM’s welding cost estimates also appeared outdated when compared to current labor rates received from LaserCo’s partners with realistic batch sizes.

During a remote meeting, new cost breakdowns of both parties were introduced to OEM. Regardless of all the evidence and elaborate case description, OEM decided to rely on their in-house costs. It seemed that the organizational barriers prevented OEM from digging deeper into the costs used for their in-house manufacturing operations.

Furthermore, if indirect costs related to sourcing and material handling had been added, the impact of the redesigned solution would have been even higher. In this case, OEM’s own perception of cost structure – not covering any indirect costs such as buffer stocks between production phases and including outdated cost information as well as oversized production batches – led to a situation where the reengineered solution appeared more costly than the existing solution.

The research question of this article was: “how does costs awareness influence AMT adoption?” In order to answer this question, we employed a longitudinal case study, in which we examined a technology supplier’s (LaserCo) ability to communicate value through cost savings to its customer (OEM) by leveraging AMT and the wider digital service it enables. Customer value was primarily derived from cost efficiency, which directly correlates with business profitability (Fulton and Hon, 2010; Stornelli et al., 2021; Demeter et al., 2024). Such value was sought to yield legitimacy to the new technology introduction at OEM (Kristiansen and Aas, 2026). Open-book accounting from both parties was a key factor in defining added value when evaluating whether the new digital technology, in conjunction with AMT as a substitute for traditional production methods, would generate sufficient cost savings to justify the broader acquisition of AMT as a service from LaserCo.

During the project, it became evident that OEM’s own cost calculations did not support the transition to a new business model: cost information available was outdated and therefore denied product design or more extensive manufacturing outsourcing to the AMT-based LaserCo. This unexpected outcome led LaserCo to conduct a component-level cost analysis to explain the discrepancy in cost assessments. In the end, OEM remained confident of its own calculations and ultimately decided neither to procure the design service nor expand the scope of supply from LaserCo, thus disallowing the potential benefits stemming from AMT.

The primary finding of this study, stemming from the unexpected outcome of the research project, is the observation that customer’s cost awareness plays a decisive role in technology adoption decisions – whether it is through direct investment or through operational costs of service or technology. Limited cost awareness may result from various factors; in this case, it was found to arise from OEM’s overly optimistic assumptions regarding batch sizes, outdated material cost data and the omission of certain indirect costs. Given that such factors easily play a role in the manufacturing environment more broadly than in this case only, this article outlines low cost awareness as a potential hindrance to AMT extension to new areas, and an important area for further academic inquiry.

This study contributes to AMT adoption literature (e.g. Díaz et al., 2005; Martinsuo and Luomaranta, 2018; Stornelli et al., 2021; Chaney et al., 2022; Krishnan, 2024; Sun and Xi, 2025) by exploring the real-life context of using cost information in deciding on AMT adoption. Thus, the article provides needed empirical findings on a less-understood topic: how cost and value considerations actually influence AMT adoption. LaserCo’s case study revealed a situation in which the supplier was more aware of new-technology-related manufacturing costs than the customer. Cost calculations generated by a customer are considered, by default, to be accurate (c.f., Grönroos and Voima, 2012; Åkesson et al., 2024), which, however, due to limited cost awareness, might not be the case as demonstrated by this study.

In this study, SME sought to deliver AMT-based value to a larger manufacturing customer not only through AMT-based component manufacturing but also through the provision of wider digital services, with the aim of co-creating value in collaboration with OEM (Grönroos and Voima, 2012). In doing so, SME enabled the customer to access the potential added value of AMT through the supply chain, thereby obviating the need for the customer’s own direct investment. The digital services examined in this study – digital product redesign integrated into the customer’s processes – would necessitate transition of the customer’s business model. The corresponding business model transition required for this shift has been investigated in prior research (Raj et al., 2020; Kohtamäki et al., 2022), which has identified several enabling factors. While the economic dimension has consistently been recognized as a key driver for business model transition, past research remains limited in in-depth exploration of financial factors, particularly cost savings. Thus, our empirical study sheds light on this matter. However, we also encourage further inquiry into AMT-related business model transition, make-or-buy decisions and legitimization of decisions by business case analysis (Kristiansen and Aas, 2026), to test and build upon our findings.

This research advances understanding of the cost analysis phase by evaluating cost awareness on both the larger customer and supplier sides as a critical determinant, arguing that transparent calculations can yield an accurate representation of cost awareness – if cost information is factual. Indeed, centrally the study problematizes the inherent validity of the customer’s cost calculations, demonstrating that asymmetric cost awareness may significantly hinder the realization of the potential added value to the extent it might otherwise be possible utilizing AMTs.

This study provides new insights into the delivery of the benefits of AMT in a network, in which a small-sized supplier acts as a technology expert and proactively seeks to enhance value creation. The rich and unique project description adds depth and offers an opportunity to examine the challenges of technology and digital service sales from supplier’s perspective. This study opens an entirely new perspective on leveraging the benefits of AMT through supplier networks rather than through direct capital investments. A prerequisite for this approach is a high level of cost awareness,

Based on these findings above, we propose a framework that illustrates the (a)symmetry of cost awareness as a basis for tactical and strategic decision-making when conducting an assessment of how to harness and extend AMT’s benefits (Figure 6). The framework provides a conceptual approach to analyze and develop cost awareness of the stakeholders in a customer-supplier dyad and in a supplier network.

Indeed, in an ideal situation, both parties involved would hold a high level of costing skills and thus an extensive and detailed understanding of the customer value implications of a given change, i.e. high cost awareness. In contrast, “Unawareness” refers to the situation where both parties have insufficient cost awareness and might lead to decisions made on an arbitrary basis. Cost awareness asymmetry appears when either customer or supplier has distinctly better cost awareness, leading to a situation where information flow in customer–supplier dyad is hampered, and value co-creation might not be captured.

With their agility and adaptability, SMEs may pioneer digital technology adoption and comprehend its cost and value implications more clearly than their larger customers. As managerial implications, the framework presented in Figure 6 and further reflected upon with the case provides clear suggestions. Indeed, both customers and suppliers need to critically examine their cost awareness in a given customer-supplier dyad in order to be able to make sound decisions. For customers, especially, it would be relevant to consider whether the costs are up-to-date regarding all relevant product and service categories in use in their processes. For suppliers, perhaps more interestingly, the development of the skills and capabilities for identifying, analyzing and communicating the cost implications of their products and services seems to be highly relevant.

Positioning oneself within the framework (Figure 6) is also an important aspect of evaluating cost awareness. Conducting an objective assessment may require acknowledging one’s own potentially diminished cost awareness, which in turn demands a highly effective and trust-based customer–supplier relationship. As an important finding, during the project meetings, it became evident that the development of cost awareness occurs through interactions between customer and supplier, in which information is shared openly. Open information exchange requires relationships built on trust and effective interpersonal communication, emphasizing advanced social skills and the ability to exert influence.

Manufacturing costs could be easily disregarded as something that can be relatively easy to understand (cf., Raj et al., 2020; Stornelli et al., 2021; Krishnan, 2024; Kristiansen and Aas, 2026). According to our findings, even very basic types of direct costs might be a matter of dispute. So, the dispute is not necessarily whether facts or beliefs are utilized in legitimizing AMT, but rather, whose facts and whose beliefs matter. This is an important addition to current knowledge, expanding especially Kristiansen and Aas's (2026) recent work. Acknowledging that costs can never be absolutely accurate or comparable (Tiitola, 2025), the issue is more pragmatically about whether the cost information available is actually utilized for decision-making concerning AMT adoption or not. Ultimately, this article highlights the need for further empirical research to understand the role of cost awareness in technology adoption within SME–customer dyads, opening a new field of research: critical studies on costs in manufacturing technology adoption, which could contribute to understanding costs vs. benefits in the area (Krishnan, 2024) – a route this article has taken seriously but that we understand requires much more work to be examined well enough. This area of research could develop the manufacturing-technology field, particularly in terms of advancing knowledge on how to make value-driven decisions on manufacturing technology adoption. This area, however, could have even broader significance, as it could inspire interdisciplinary research on acquiring a more realistic basis for make-or-buy decisions. In this vein, reasons for high or low cost awareness in manufacturing could also be an interesting area for future examinations.

This study revealed that although a customer’s insufficient cost awareness can be demonstrated through transparent calculations, this does not necessarily lead to the required change in the business model. Customers make decisions to initiate projects based on their own premises, and the technology provider must be able to influence these decisions. The analysis of these factors and the mechanisms through which providers can exert such influence constitutes a clear avenue for further research.

The article is not without limitations. The findings presented related to the case and especially the approach outlined in Figure 6 might require further examination, application, testing and development. Further research should also use other contexts and situations to study the (a)symmetry of cost awareness and its implications for decision-making and value creation. Moreover, the implementation of digital services necessitates business model innovation on the part of the SME (Kohtamäki et al., 2022) and corresponding business model evaluation by the customer. This evaluation would be concerned with cost-based analysis when deciding between acquiring digital technology as a service or an investment, again outlining a promising area for future inquiry. Finally, as this study focused on cost awareness in AMT adoption and challenges therein, further studies could expand from here and study “performance awareness” or even “value awareness” in manufacturing technology adoption.

Altogether, at both strategic and tactical levels, cost awareness is central: it links cost-based value creation, the cost efficiency inherent in AMT adoption and transparent cost accounting practices between an AMT manufacturing service supplier and their OEM customer. This is a new area for future AMT research to benefit from and further pursue.