Assessing inter-organizational dynamics of manufacturing service supply contracts

The practice of service-based manufacturing, utilized in various industries, particularly in electronics, pharmaceuticals, and automotive, is on the rise as it improves enterprise effectiveness in dynamic markets. The mutual responsibilities between the supplier(s) and user(s) of such services are spelled out in defined-time-horizon contracts. While such contracts define mutual obligations of both parties involved on a tactical/operational level, their long-term strategic objectives may be in conflict. This paper is focused on studying the dynamics of the manufacturing service contracts. It investigates the factors affecting the shape of the negotiation space for such contracts, and also the way it should be navigated in response to changing market conditions. The paper presents analytical framework developed to facilitate behavior analysis of the actors involved in the contract.