MIT Sloan Management Review

Operations Management and Research

How Hadco Became a Problem-Solving Supplier

By Craig H. Wood, Allen Kaufman and Michael Merenda

January 15, 1996

AS ORIGINAL EQUIPMENT MANUFACTURERS REEVALUATE WHETHER TO MAKE OR BUY PARTS FOR THEIR PRODUCTS UNDER CONDITIONS OF INTENSE COMPETITION, SMALL to medium-size manufacturers that specialize in producing well-defined types of products have a unique opportunity to become world-class competitors. The authors present a prescriptive approach for staying or becoming a successful parts supplier. They follow a printed circuit board manufacturer, Hadco Corporation, along the four different paths suggested by the strategic supplier typology they developed from a survey of 200 New Hampshire manufacturers.

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Every action has an equal and opposite reaction. We can apply this Newtonian principle to the vertical supply chain: for every part outsourced by an original equipment manufacturer (OEM), there is an equal and opposite opportunity for a parts supplier to furnish that part. While many parts or products have been outsourced to non-U.S. suppliers during the past twenty years in an intensely competitive environment, some U.S. parts suppliers have successfully expanded their share of the business by developing more effective methods to compete against the low labor-cost advantage many offshore suppliers enjoy.

Although no two success stories are exactly alike, there are some general patterns emerging in global competitive markets. We chronicle one company’s efforts to develop successfully a new set of core competencies that give OEM customers what they want, when they want it. The transformation of a manufacturing company from underachiever to a thriving world-class competitor illustrates the more general results we obtained in surveys of small and medium-size manufacturers (SMMs).1 We use a case study of one company, Hadco Corporation, to illustrate specific practices.

First, we discuss the strategic supplier typology we developed using survey data. In the following section, we introduce Hadco and discuss the business and competitive reasons for Hadco’s choice to compete in the printed circuit board (PCB) industry during the 1980s. Next we detail how... To read the complete article, login or sign-up using the form below.

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