Building responsive contract manufacturers through value‐focused strategies

Contract manufacturers differ from the traditional manufacturing model in that they build a variety of products for various clients, whereas original equipment manufacturers build only proprietary products. To achieve seamless supply the contract manufacturer must slip in and out of each client's network of suppliers who together build the entire product. This paper describes the development of a diagnostic instrument for contract manufacturers to align core competencies to developing value criteria. A value‐focused diagnostic instrument is created specific to contract manufacturing. The major elements were verified by surveys. Applicability and exploitability of the diagnostic instrument was validated using action research. The instrument provides sequential analysis to assist contract manufacturers in the formulation of effective value‐based strategies. Suppliers of contract manufacture who display proficiency at value delivery will enhance prospects for inclusion on client preferred supplier lists. The system offers a supply management approach from the supplier viewpoint that synthesises across TQM, customer focus and business excellence.