Value creation options for contract manufacturers: Market strategy transition and coevolution in networks

Manufacturers increasingly seek new ways to add customer value and differentiate. However, in business markets such efforts often remain relatively unsuccessful, leading to a large number of services offered and higher costs, but with limited corresponding returns. Based on extensive expert interviews and case study research, this paper studies how suppliers in the highly commoditized metalworking industry try to realize new types of customer value. The paper identifies "ideal" value positions pursued by Belgian contract manufacturers and service providers in order to survive in an industry characterized by fierce price competition from low labor cost countries. Further, the paper shows how companies can migrate to these "ideal" value offerings. Key success factors and potential traps for each ideal type are identified. Market strategy transition necessitates an internal "alignment" strategy and an external "coevolution" with chain partners. © 2008 Emerald Group Publishing Limited.