...com/locate/pursup Supplier involvement in new product development and innovation: Taking stock and looking to the future Thomas E. Johnsen à Purchasing & Supply Management, Audencia Nantes School of Management, 8 route de la Joneliere, BP 31222—44312 Nantes Cedex 3, France a r t i c l e in fo Article history: Received 18 November 2008 Received in revised form 19 March 2009 Accepted 25 March 2009 Keywords: Supplier involvement New product development Supplier relationships abstract This paper provides a comprehensive and critical review and synthesis of the current state of empirical research into supplier involvement in new product development (NPD). The paper begins by defining supplier involvement in NPD and evaluating the rationale for supplier involvement in NPD. This suggests that early and extensive supplier involvement in NPD projects has the potential to improve NPD effectiveness and efficiency, however, existing research remains fragmented and empirical findings to date show conflicting results. The paper takes stock of the research on supplier involvement in NPD, tracing the origins of the literature to the late 1980s, and evaluating the development of the field up to the present day. From this broad base of empirical research the analysis identifies a set of factors affecting the success of supplier involvement projects. The paper concludes with a discussion of two emerging themes: (1) supplier relationship development and adaptation; (2) supply network involvement in product...
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... * Home Page » * Business and Management Early Supplier Involvement In: Business and Management Early Supplier Involvement Q1 – What is the logic behind pursuing early supplier design involvement with suppliers? 1. Improvement in product quality 2. Stronger communication between firms 3. Decrease in process time and production cost 4. High utilization of sources 5. Decrease in cycle-time leading to shorter time-to-market 6. Improvement in manufacturability 7. Innovative products and ideas 8. Increase team work 9. Alignment of technology roadmaps/strategies 10. Cross-functional training Q2 – If a buying company has an objective of involving suppliers early during product development, what type of questions should the buying firm ask a supplier during evaluation and selection? 1. Is the supplier willing to have a long-term commitment? 2. Does the supplier’s roadmap & policies align with those of the buyers? Do they share buyer’s vision? 3. Is supplier flexible to vary production on a need-by basis and flexible to changing demands (quantities, timeframe)? 4. Is supplier willing to share technical expertise and process knowledge to improve Product Development efficiency? 5. Is the Supplier willing to share Accounting records to compare actual cost v/s estimated cost? 6. Is the supplier willing to continuously evaluate cost reduction opportunities? 7. Is the supplier willing to share expertise to develop and share...
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...can then investigate the products availability. This often draws with the established relationship of vendors as well as manufacturers, purchasing managers and can discern whether offering meet the minimum requirement specifications, and whether delivery or quality may be problematic and which requirements could be utilized. With this, the first step that would be processed would be defining the needs and also the parameters would be a critical way of determining the commercial equivalents, which would arrange these equivalent according to suitability in case there is an industry shortage and/or any other natural disaster which would happen to interrupt production and the supply chain. Interpret the value to the organization when early supplier...
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...potential suppliers. How many suppliers do you think should ideally be integrated in the early skid-steer development process? Why that many or that few? The case for early integration of suppliers in the new product development process is compelling, but it is important to recognize that supplier integration is a process that must be managed properly in order to achieve maximum impact. Primary candidates for supplier integration should be based in terms of their impact on product performance, their technical complexity, their impact on product development time, and their impact on product cost. It not necessary that if 100 suppliers are required to be integrated, all the suppliers will be ready to become the part of the early development process. If company is thinking for long term integration then the supplier's future capabilities may be as important as their current capabilities. Supplier involvement in a product development effort can sometimes be uncomfortable and therefore without commitment in both organizations, the communication and sharing of information and resources necessary to make the relationship work will probably not occur. The number of potential supplier’s involvement in this situation will depend on all these factors and hence cannot be assigned a number. It can be 100 or it can be 0 2. Are there tradeoffs in terms of the number of suppliers to integrate? If so, what are the tradeoffs Yes, there are tradeoffs in terms of the number of suppliers to be integrated...
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...organization with a need and the types of needs are identified for the project and analyzed. Once the needs are identified, these needs are then converted into commercial equivalents. That helps the potential suppliers know why it is needed and what is needed. It is preferable to separate into two stages because every organization really needs to identify why and what is needed. Nothing can be failed to spot during any of these actions. When an early supplier involvement (ESI) is implemented effectively, the value to the organization is improved tremendously. As stated in the textbook, “Early supply involvement and early supplier involvement (ESI) help assure that what is specified is also procurable and represents good value. Various organizational approaches, such as staffing the supply area with engineers, co-locating supply people in the engineering or design areas, and using cross-functional teams on new product development or product or service reviews, have been used to address effective early supply involvement.” (Johnson, Leenders, & Flynn, 2010) One of the advantages of specifying by performance is that it has the supplier with the decision making on how to “provide the most suitable product or service” (Johnson, Leenders, & Flynn, 2010) It also allows the “the supplier to take advantage of the latest technological developments and to substitute anything that exceeds the minimum performance required.” (Johnson, Leenders, & Flynn, 2010) The disadvantage of specifying...
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...Case Study Early Supplier Integration in the Design of the Skid-Steer Loader 1. Suppose there are 100 potential suppliers. How many suppliers do you think should ideally be integrated in the early skid-steer development process? Why that many or that few? The case for early integration of suppliers in the new product development process is compelling, but it is important to recognize that supplier integration is a process that must be managed properly in order to achieve maximum impact. Primary candidates for supplier integration should be based in terms of their impact on product performance, their technical complexity, their impact on product development time, and their impact on product cost. It not necessary that if 100 suppliers are required to be integrated, all the suppliers will be ready to become the part of the early development process. If company is thinking for long term integration then the supplier's future capabilities may be as important as their current capabilities. Supplier involvement in a product development effort can sometimes be uncomfortable and therefore without commitment in both organizations, the communication and sharing of information and resources necessary to make the relationship work will probably not occur. The number of potential supplier’s involvement in this situation will depend on all these factors and hence cannot be assigned a number. It can be 100 or it can be 0 2. Are there tradeoffs in terms of the number of suppliers to integrate...
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...organization when early supplier involvement (ESI) is implemented effectively. Outside suppliers play a crucial role in virtually every medical OEM’s manufacturing process. Smart ones treat their suppliers more like partners and less like vendors; by working closely with key suppliers early in the process, they can create more value, improve quality, and reduce overall time to market for even the most difficult or critical components. Early supplier involvement (ESI) in the development cycle is the best way to contain costs while maximizing the benefits that come from utilizing suppliers’ specialized skills. By engaging key suppliers early in the process and focusing on the desired results, an OEM can quickly address any potentially sticky issues, drive out unnecessary costs early on, encourage innovation, and improve project organization. Without ESI, a manufacturer runs the risk of unnecessarily lengthening the overall development cycle, increasing the number of design revisions later in the process, and ultimately ending up with a device that is too complex, too expensive, or too difficult to manufacture. When assembling a project team, be sure all disciplines needed to bring the product to completion are represented on the team and are included in the each design review to ensure that the product can, in fact, be manufactured effectively, efficiently, and reliably as designed. It’s a good idea is recommended to have a single program manager from the plastic supplier appointed early...
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...organization when early supplier involvement (ESI) is implemented effectively. Outside suppliers play a crucial role in virtually every medical OEM’s manufacturing process. Smart ones treat their suppliers more like partners and less like vendors; by working closely with key suppliers early in the process, they can create more value, improve quality, and reduce overall time to market for even the most difficult or critical components. Early supplier involvement (ESI) in the development cycle is the best way to contain costs while maximizing the benefits that come from utilizing suppliers’ specialized skills. By engaging key suppliers early in the process and focusing on the desired results, an OEM can quickly address any potentially sticky issues, drive out unnecessary costs early on, encourage innovation, and improve project organization. Without ESI, a manufacturer runs the risk of unnecessarily lengthening the overall development cycle, increasing the number of design revisions later in the process, and ultimately ending up with a device that is too complex, too expensive, or too difficult to manufacture. When assembling a project team, be sure all disciplines needed to bring the product to completion are represented on the team and are included in the each design review to ensure that the product can, in fact, be manufactured effectively, efficiently, and reliably as designed. It’s a good idea is recommended to have a single program manager from the plastic supplier appointed early...
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...Early Supplier Involvement Q1 – What is the logic behind pursuing early supplier design involvement with suppliers? 1. Improvement in product quality 2. Stronger communication between firms 3. Decrease in process time and production cost 4. High utilization of sources 5. Decrease in cycle-time leading to shorter time-to-market 6. Improvement in manufacturability 7. Innovative products and ideas 8. Increase team work 9. Alignment of technology roadmaps/strategies 10. Cross-functional training Q2 – If a buying company has an objective of involving suppliers early during product development, what type of questions should the buying firm ask a supplier during evaluation and selection? 1. Is the supplier willing to have a long-term commitment? 2. Does the supplier’s roadmap & policies align with those of the buyers? Do they share buyer’s vision? 3. Is supplier flexible to vary production on a need-by basis and flexible to changing demands (quantities, timeframe)? 4. Is supplier willing to share technical expertise and process knowledge to improve Product Development efficiency? 5. Is the Supplier willing to share Accounting records to compare actual cost v/s estimated cost? 6. Is the supplier willing to continuously evaluate cost reduction opportunities? 7. Is the supplier willing to share expertise to develop and share cost improvements and eliminate any costly processes? 8. Does the supplier share your same values and commitment...
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...the product life cycle, from the products’ introduction to its inevitable decline (Winner, et al., 1988). Concurrent engineering (CE) as a concept has been made more aware in the more recent decades in terms of business practice and in literature. It is widely understood in many industries, from automotive, and material construction, as a common term for developing new products in a cross functionally integrated manner primarily through the use of multifunctional teams in the case of this literature with suppliers and overlapping previously existing sequential activities (Pawar. et al., 2002). Immediately visible results of successful CE implementation are improved quality, reduced time to market and reduced life cycle. Over the recent years, case studies documenting the successes and failures of CE have arisen, many highlight the importance of reduced time to market and the role of the purchasing department in doing so. In the previous literature, the use of CE in its early years benefitted companies in the automotive and aerospace industries, hence for this research the case of Rolls-Royce and project P2001 will be used as an example for the different elements of CE (Backhouse and Brookes, 1996). The purpose of this research is to demonstrate the elements of CE in reference to building supply-side relationship; primarily product introduction and product development. The research will also demonstrate the role of purchasing and how...
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...strategies are best aligned with corporate strategies when requirements and procurability are determined, risks assessed, and suppliers are identified. Supply needs and specifications, early supplier involvement, and strategic requirements will be discussed in this paper. It is preferable to separate need identification and defining commercial equivalents into two separate stages because a company must first know what it needs and why it is needed. The type or category of need should then be determined so it is known exactly what is desired to fulfill the need. There is normally more than one way or option to satisfy a need, so the “why” helps determine how it must be produced. It must also be determined if the need is repetitive or nonrepetitive. This will determine how the product or service is purchased and through what source. A repetitive need may require a sample or trial run to ensure that the need can be met consistently on more than one occasion. Once the need is identified, it can then be converted into a commercial equivalent so the supplier can comprehend the specifications required. Separating the two stages helps identify suppliers with lower costs, higher quality, or cutting-edge technology. Without the separation, value opportunities may be overlooked. According to Johnson, Leenders, & Flynn, (2010) early supply and supplier involvement is important because it reduces the need and difficulties associated with trying to reverse a design decision after it has...
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...Critical information exchange in supplier involvement product development Master of Science Thesis in Quality and Operations Management ALEXANDER ARVIDSON DEIVITE SILVA Department of Technology Management and Economics Division of Quality Sciences CHALMERS UNIVERSITY OF TECHNOLOGY Gothenburg, Sweden, 2012 Report No. E2012:026 Critical information exchange in supplier involvement product development Master of Science Thesis in Quality and Operations Management Alexander Arvidson Deivite Silva Department of Technology Management and Economics Division of Quality Sciences Chalmers University of Technology Gothenburg, Sweden, 2012 Report no. E2012:026 Critical information exchange in supplier involvement product development Master of Science Thesis in Quality and Operations Management © Alexander Arvidson and Deivite Silva Department of Technology Management and Economics Division of Quality Sciences Chalmers University of Technology Gothenburg, Sweden, 2012 Report no. E2012:026 Printed by Reproservice, Gothenburg, Sweden Abstract The purpose of this thesis has been to review Volvo’s information exchange in supplier involvement product development (SIPD) and to identify important information required to perform effective and efficient product development projects when suppliers are involved. The project was carried out at the Volvo Group which is a leading global supplier of commercial vehicles. Volvo Group is from here referred to as Volvo...
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...identification and (2) specification. Therefore, great attention needs to be paid to ensure that value op- opportunities are not overlooked. Many options exist for fastening two pieces of wood together. Using a nail is only one option. Grooving the two pieces of wood using a staple, bolt or screw, or glue are others. Specifying the need first and then identifying the variety of options to meet the need leave the door open to lower cost and better, or more innovative, solutions. If the supply professional has reason to believe that further opportunities exist to improve on the commercial equivalent presented by a designer or specifier, he or she has the responsibility to bring this to the attention of the designer or specifier. Early supply and supplier involvement prevents the hassles associated with trying to reverse a design decision after it has been made and approved technically. (Johnson, Leenders, Flynn 2010) When you are able to identify more ways than one to achieve a particular goal, you then open the door to see more opportunities to gain revenue. For example you may identify the need of your...
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...meeting the needs of the company properly. Needs identification is where a purchase begins and when the what, the how much and the when something is needed is determined. When this is done, figuring out the options available to fulfill that need and making sure that it is described in a way that potential suppliers will understand, or defining the commercial equivalent, takes place. I believe that the textbook describes it best: “Many options exist for fastening two pieces of wood together. Using a nail is only one option. Grooving the two pieces of wood using a staple, bolt or screw, or glue are others. Specifying the need first and then identifying the variety of options to meet the need leave the door open to lower cost and better, more innovative, solutions.” (Johnson, Lendeers & Flynn, 2011) These two steps are best tackled separately as making sure that the need is correctly explained will ensure the correct solution is found and that the option chosen is the right fit for the company. * Interpret the value to the organization when early supplier involvement (ESI) is implemented effectively. “Early supply involvement and early supplier involvement (ESI) help assure that what is specified is also procurable and represents good value.” (idem) This means that not only does the need have to be taken into account, but the quality of the product or service is just as important a consideration. Making sure that the service or product acquired meets expectations...
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...business has determine these reasons. By having commercial equivalents it allows the suppliers or vendors to be able to grasp on what is exactly needed. To ensure that there are no value opportunities being overlooked; it is important for any business to follow the six steps of the acquisition process, they are: need recognition, description, potential suppliers, selection, receipt and payment. (Johnson & Leenders, 2010). It is preferable to separate need identification and defining commercial equivalents into two separate stages due to the general recognition that about seventy percent of the opportunity for value improvement stands within these first two phases of the acquisition process. (Johnson & Leenders, 2010). There are many technical details that goes into the analysis of the acquisition process. One thing that is consistently recommended is to continuously increase participation of operating managers and key-staff individuals throughout the acquisition process. The involvement of these key individuals would create an efficient process and effective strategic choice throughout the acquisition. "Such involvement, they argue, can facilitate better strategic choices by fostering a broader information base and greater commitment from those who will have to implement the decisions made during acquisition." (Jemison & Sitkin, 1986). Early supply and supplier involvement, also known as ESI, is very important in the acquisition process due to assuring that...
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