Managing the involvement of suppliers in product development - A conceptual framework combining perspectives from traditional and lean product development
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As global competition increases, businesses today are under pressure to deliver higher quality, at lower costs and at a rapid pace. In order to handle such pressure, firms of today are increasing their specialization to leverage their core competencies and excell at what they do. As a result, firms are becoming more dependent on their suppliers, with complementary specializations in order to provide end products of better quality and higher value. Simultaneously the importance of providing new and innovative products is accelerating. In certain industries it is now reported that over 50% of annual revenues are generated by products introduced during the past five years.This evolution has led practitioners as well as scholars to focus on providing guidance as to how firms today may involve their suppliers in product development (PD) processes. Even though there seems to be a general understanding of the potential positive effects of involving suppliers in product development, it has not been found to universally be considered a viable approach. The body of existing literature clearly indicates that supplier involvement does not consistently enhance and augment PD projects, neither in terms of effectiveness nor efficiency. However, it will be argued in this thesis, in line with Wynstra and Pierick (2000, p.49), that this does not imply that supplier involvement is a poor strategy; it emphasises that supplier involvement should be managed carefully and that the varied results may in part be due to differences in how firms manage such involvement. The purpose of this thesis thus became to explore the issue of managing supplier involvement in new product development, and how to ensure the appropriateness of such management. A thorough investigation of the current academic literature within the NPD and LPD fields pertaining to supplier involvement revealed that a significant amount of research has been conducted in order to identify basises for sound management. Several characteristics of components, suppliers and relationships are suggested as important variables for determining appropriate management. However, it has been observed that these highly situational characteristics and their influence on management has often been studied in relative isolation, seldom as part of an overall framework for guiding appropriate involvement management. Furthermore, existing frameworks derived from practises of specific firms in specific industries (e.g. LPD-frameworks based on the practises of Toyota) seem to take for granted certain characteristics of that industry and thus yields varied results when applied in different contexts. Following the evidence of the literature review and following the rationale of Miles and Huberman (1994), a conceptual framework was developed to illustrate and explain graphically the main factors, constructs and variables in relation to the response of an organisation to a major disruption. The developed framework, shown in Figure 1, includes the previously neglected features of detection and activation, and aims to conceptualise organisational adaption and resilience during disruptive periods. The framework aims to provide an improved understanding of organisational behaviour during turbulent conditions and begins to explore the linkages between organisational resilience and other business strategy concepts such as competitive advantage and risk management. Therefore, a conceptual, theory-based framework encompassing a wide array of characteristics in order to more fully capture the context of the product development project and as a result produce more situationally appropriate recommendations has been devised. The framework combines the theoretical contributions examined from both the traditional product development literature as well as the lean product development literature. The proposed characteristics for inclusion in the framework are: the level of technological uncertainty, the complexity of the supplied component, the modularity of the interface between the component and the product, the dependency on the supplier, the capabilities of the supplier, the level of trust between the parties and the history of interaction between the parties.The framework further suggests that these characteristics influence the appropriate management, but that the ways in which management is influenced happens mainly in three ways. These ways are suggested to be the timing of involvement, the responsibility awarded the supplier and the communication with the supplier, and will be referred to as the managerial dimensions of supplier involvement. Based on the examined literature descriptions of the characteristics and their constituents are provided, and the interrelationship between the characteristics and the managerial dimensions are proposed.As a logical next step, the conceptual framework is applied to two embedded cases in order to provide initial validation of its empirical relevance. The cases are analysed using the proposed framework and the results are discussed in comparison to the actual management of the cases. The appropriateness of the conceptual framework and the theory it is based on is then evaluated for relevance to this empirical setting. This case study provided the following further insights:The application of a unified and overall framework may in fact be a worthwhile undertaking in order to identify proper management of supplier involvement, and may resolve some of the issues connected to the fragmentation of extant literature.The characteristics of trust and history between buyer and supplier appear to act as supporting constructs, mitigating the effects and identification of the rest.The characteristic of dependency is central in the identification of appropriate management of supplier involvement.Cultural differences between the involved parties and the commitment of the supplier seem to influence the involvement to such an extent that these characteristics warrant further attention.The literature from the LPD field seems to be more focused on practical methods applicable in a certain context, while the literature from the NPD field is of a more general nature focusing on what results methods should generate. As such there appears to be an untapped potential in combining the perspectives, where the tools and methods from LPD approach may be utilized in other contexts as long as the context is accounted for, e.g. by the application of a framework such as the one proposed in this thesis.