Roles and strategies of contract manufacturers in the telecommunications industry

This paper illustrates how contract manufacturing is playing an increasingly important role in the telecommunications industry. Traditional telecommunications manufacturers need to concentrate on the activities which can bring the highest value to their customers, while they tend to subcontract other activities, especially if they do not have the needed core competencies. In fact, most telecommunications manufacturers are outsourcing some of their manufacturing activities to CMs (contract manufacturers), also called CEMS (contract electronic manufacturing services). GEMS manage a portfolio of plants located around the world using flexible, modular and reconfigurable assembly systems. Two case studies were undertaken in order to demystify the new and diversified role of CEMS in the telecommunications industry. The authors' findings have enabled them to develop a typology of outsourcing strategies for telecommunications manufacturers which correspond to the different roles of CEMS.