Solectron: From Contract Manufacturer to Global Supply Chain Integrator

Solectron Corporation grew rapidly from a small contract manufacturer in the early 1980s to the dominant company in the electronics manufacturing services (EMS) industry by the late 1990s. In doing so, it evolved from providing peak capacity for its clients, to providing services that clients could not provide on their own (low-cost materials, and access to expensive capital equipment). Its next phase was to providing its clients new ways of operating , such as outsourcing all operations except research, product conceptualization, marketing and sales, allowing clients to outsource those activities that were not part of their core competencies. The case describes this evolution, and the rapid growth of the company. In 2001, the company’s clients suffered severe business downturns, which in turn caused the first contraction in Solectron’s history. The case describes the company’s initial response, and raises questions about how the company should proceed.