Information systems in fast cycle development: identifying user needs in integrated automotive component development

Product development literature strongly emphasizes the need for open communication between suppliers and Original Equipment Manufacturers (OEMs). There is a widespread expectation that computer-aided communication networks will enable organizational members to work more flexibly, to share knowledge and competencies, and to span functional and company boundaries. However, few studies merge the possibilities of new information technologies and the operational needs of specific groups of users, for example product development engineers. The research reported in this paper aims to fill that gap. Through in-depth case studies of two development projects involving one auto OEM, one of its systems suppliers (working directly with the OEM) and five medium-sized expert suppliers (working either directly with the OEM or through the systems supplier), we identify three groups of user needs that are not currently satisfied by existing information system solutions: improvement of coordination and communication; enhancement of the access to new technological information; and support for the development of an organizational memory. We then explore what kind of information systems might help satisfy the above-mentioned needs. Potential barriers to efficient implementation of information systems in terms of the motivation of people using the systems, the reliability of the information, and the willingness to render information more transparent are discussed. It is concluded that when implementing information systems to support operational development work, it is essential to ground the system specification in clearly identified user needs that reflect the double nature of product engineering, namely the continuous interplay between routines and cognitive processes.     

Risky Business or Competitive Power? Supplier Involvement in Japanese Product Design

Notwithstanding the alleged risks of outsourcing design work, leading manufacturers in the Japanese automotive industry collaborate closely with their key suppliers. Despite widespread recognition of the effectiveness of these close-knit supplier networks, however, little research exists on the factors that affect the purchase of design work from suppliers. S. Nazli Wasti and Jeffrey K. Liker fill this gap by exploring the factors that affect Japanese automotive firms' purchase of design work from their component suppliers. Using data from a survey of 122 Japanese automotive component suppliers, their study addresses two key questions. First, what factors lead Japanese buyers to involve some suppliers heavily in design while giving others relatively little control over design decisions? And second, does the Japanese practice of involving suppliers in design offer performance benefits? The study focuses on first-tier suppliers of parts, assemblies, and complete subsystems (e.g., audio, fuel and emissions, heating and air conditioning). The study does not include suppliers of raw materials and chemicals, assembly and processing equipment, indirect materials, tooling and dies, computers and software, or engineering and business consulting services. The study breaks down the broad concept of supplier involvement in design work into three measurable elements: the extent to which the supplier influences decision-making during the early stages of product development; the amount of control the buyer retains over the design; and the frequency of design-related communication between the buyer and the supplier. Factors that have a positive effect on the level of supplier involvement among the companies studied include technological uncertainty of the component and the supplier's in-house technical capabilities. For companies in the study, the level of competition in the supplier market has a negative effect on the degree of supplier involvement in design. The responses indicate that supplier involvement offers performance benefits for both the supplier and the buyer. For the supplier firms studied, increased involvement in the design process permits greater focus on design for manufacturability (DFM). And of course, supplier-generated design improvements clearly benefit the buyers, allowing these firms to capitalize on the experience and the insight that their suppliers have regarding the parts that they supply.     

Configuring and managing strategic supplier portfolios

Acknowledging that not all supplier relationships can nor should be close partnerships, this article explores the development of strategic supplier portfolios. The strategic portfolio perspective considers risks, trade-offs, and interdependencies between the firm's array of supplier relationships. Based on over 50 interviews with managers and archival data from 12 multinational companies, a strategic supplier portfolio management framework is developed. The authors explore processes that firms use to plan, implement, and monitor strategic supplier portfolios. This research indicates that by assembling superior supplier bases, developing suppliers and integrating them into product development and manufacturing, strategic supplier portfolios contribute to competitive advantage.     

A Model of Supplier Integration into New Product Development*

In many industries, firms are looking for ways to cut concept‐to‐customer development time, to improve quality, and to reduce the cost of new products. One approach shown to be successful in Japanese organizations involves the integration of material suppliers early in the new product development cycle. This involvement may range from simple consultation with suppliers on design ideas to making suppliers fully responsible for the design of components or systems they will supply. While prior research shows the benefit of using this approach, execution remains a problem. The processes for identifying and integrating suppliers into the new product development (NPD) process in North American organizations are not understood well. This problem is compounded by the fact that design team members often are reluctant to listen to the technology and cost ideas made by suppliers in new product development efforts. We suggest a model of the key activities required for successful supplier integration into NPD projects, based on case studies with 17 Japanese and American manufacturing organizations. The model is validated using data from a survey of purchasing executives in global corporations with at least one successful and one unsuccessful supplier integration experience. The results suggest that (1) increased knowledge of a supplier is more likely to result in greater information sharing and involvement of the supplier in the product development process; (2) sharing of technology information results in higher levels of supplier involvement and improved outcomes; (3) supplier involvement on teams generally results in a higher achievement of NPD team goals; (4) in cases when technology uncertainty is present, suppliers and buyers are more likely to share information on NPD teams; and (5) the problems associated with technology uncertainty can be mitigated by greater use of technology sharing and direct supplier participation on new product development teams. A supplier's participation as a true member of a new product development team seems to result in the highest level of benefits, especially in cases when a technology is in its formative stages.     

Effects of Supplier and Customer Integration on Product Innovation and Performance: Empirical Evidence in Hong Kong Manufacturers

While the beneficial impacts of supplier and customer integration are generally acknowledged, very few empirical research studies have examined how an organization can achieve better product performance through product innovation enhanced by such integration. This paper thus examines the impact of key supplier and customer integration processes (i.e., information sharing and product codevelopment with supplier and customer, respectively) on product innovation as well as their impact on product performance. It contributes to existing literature by asking how such integration activities affect product innovation and performance in both direct and indirect ways. After surveying 251 manufacturers in Hong Kong, this study tested the relationships among information sharing, product codevelopment, product innovativeness, and performance with three control variables (i.e., company size, type of industry, and market certainty). Structural equation modeling with correlation and t‐tests was used to test the hypothesized research model. The findings indicate a direct, positive relationship between supplier and customer integration and product performance. In particular, this study verifies that sharing information with suppliers and product codevelopment with customers directly improves product performance. In addition, this study empirically examines the indirect effects of supplier and customer integration processes on product performance, mediated by innovation. This has seldom been attempted in previous research. The empirical findings show that product codevelopment with suppliers improves performance, mediated by innovation. However, the sampled firms cannot improve their product innovation by sharing information with their current customers and suppliers as well as codeveloping new products with the customers. If the adoption of supplier and customer integration is not cost free, the findings of this study may suggest firms work on particular supplier and customer integration processes (i.e., product codevelopment with suppliers) to improve their product innovation. The study also suggests that companies codevelop new products only with new customers and lead users instead of current ones for product innovation. For managers, this study has demonstrated that both information sharing and product codevelopment affect performance directly and indirectly. Managers should put more emphasis on these key processes, especially when linked with product innovation. Managers should consider involving their suppliers and customers in the early stages of design. Information sharing with suppliers is also important in product development. As suggested by this study, extensive effort on supplier and customer integration should be made to directly augment current product performance and product innovation at the same time.     

The impact of OEM supplier initiatives on buyer competence development: The moderating roles of collaborative relationship and competitive environment

This paper explains the impact of original equipment manufacturing (OEM) supplier initiatives, which are proactive and deliberate behaviors, on buyer competence development. It argues that these adaptive and proactive behaviors in the outsourcing relationship have a significant impact on buyers’ competence development. The sample population consisted of 800 OEM suppliers in Taiwan. SPSS was used to examine the causal relationships among the variables. The empirical results indicate that OEM supplier initiatives have a positive effect on buyer competence development. In addition, two of three collaborative relationship variables—information sharing and long-term collaboration—foster the relationship between OEM supplier initiatives and buyer competence development. However, the moderating role of competitive environment has a negative effect on this relationship.     

Modularity, component outsourcing, and inter-firm learning

Modularization of product architectures is a strategy for managing complex design activities and production systems, and associated supply chain issues. It has wide-reaching implications, from design engineering to business strategy. With standardized interface specifications, component outsourcing is possible, both with respect to the division of tasks in functional specification and detailed engineering of a product architecture. However, failure at the system level could still take place if interface compatibility issues of the outsourced component with the rest of the system are not understood. Outsourcing creates a certain degree of supplier-buyer interdependence and possibilities for inter-firm learning. A study of Chrysler Jeeps WIPERs suggested that learning-by-failure from one product architecture cultivated closer cooperation between the supplier and Chrysler to solve technical problems as well as to be innovative in searching for the best technological solutions for future product architecture designs.     

A dynamic model of supplier–customer product development collaboration strategies

This study examines transitions between different types of product development collaboration in supplier–customer settings, the events that trigger such transitions, and the emerging requirements for suppliers. The current study contributes to the literature regarding supplier and customer involvement by combining previously discovered types of collaboration into a dynamic model that describes these different types as alternative modes of collaboration that can be implemented in a relationship. Transitions between different types of collaboration are identified in a longitudinal case study. Three of the four transitions identified took place in the same dyad, which demonstrates that it is possible to change the type of collaboration without losing the advantages of a long-term relationship with a customer. The most radical change in collaboration—the change from supplier involvement to customer involvement—involved temporarily discontinuing the original relationship, which indicates that this transition incorporates the highest risk of relationship termination. By offering a dynamic model for product development collaboration, this study is the first to analyze changes between different types of customer–supplier product development collaboration from a supplier's perspective. The dynamic view is important for companies seeking to take advantage of their long-term relationships instead of starting new ones when new requirements for product development collaboration emerge.     

A two-stage model for the design of supply chain networks

This research aims to develop an analytical model of the supplier selection process in designing a supply chain network. The constraints on the capacity of each potential supplier are considered in the process. The assumed objective of the supply chain is to minimize the level of customer dissatisfaction, which is evaluated by two performance criteria: (i) price and (ii) delivery lead time. The overall model operates at two levels of decision-making: the operational level and the chain level. The operational level concerns decisions related to optimizing the manufacturing and logistical activities of each potential supplier in order to meet the customer's requirements. At the chain level, all the bids from potential suppliers are evaluated and the final configuration of the supply chain is determined. The structure of the chain depends on the product specifications and on the customer's order size. An optimal solution in terms of the models for the two levels can be obtained by using a mixed-integer programming technique.     

Improving Supplier New Product Development Performance: The Role of Supplier Development

Suppliers play an increasingly central role in helping firms achieve their new product development (NPD) goals. The literature implicitly assumes that suppliers are able to meet or exceed the quality standards and technological expectations of the firm, and yet, in practice, suppliers often lack the technological capabilities needed to undertake collaborative NPD. In such situations, a firm may choose to intervene and actively develop the supplier's technological and product development capabilities. We develop a theoretical framework that conceptualizes supplier development activities within interorganizational NPD projects as part of a bilateral knowledge‐sharing process: design recommendations, technical specifications, and new technology flow from supplier to the firm, and in turn, the firm can implement supplier development activities to upgrade the supplier's technological capabilities. Antecedents (supplier responsibility, skills similarity, single sourcing strategy) and consequences of supplier development activities (on supplier, product, and project performance) are examined using a sample of 153 interorganizational NPD projects within UK manufacturers. We find broad support for our hypotheses. In particular, we show that the relational rents (in the form of improved product and project performance) attained from supplier development activities in new product development are not achieved directly, but rather indirectly, via improvements in the supplier's creative and technological capabilities. Our results emphasize the importance of adopting a strategic view of the potential returns available from investing in the NPD capabilities of key suppliers, and provide clues about underlying reasons for the suboptimal experiences of many companies' collaborative NPD projects.     

Time-Driven Development of Software in Manufactured Goods

Microprocessors are being incorporated into an increasingly wide range of products. However, many of the companies that manufacture such products are not effectively managing software development for these embedded systems. Despite the current focus on concurrent engineering and cross-functional teams, software engineering is often poorly integrated with the rest of the product development effort. The result is usually a costly delay in the product's introduction to the market. Tomlinson G. Rauscher and Preston G. Smith describe several practices that have proved helpful for accelerating the development of products that incorporate embedded software. Managerial and economic opportunities for accelerating development of hardware-software systems involve planning for dramatic growth in products that include embedded software, cultivating in-house software knowledge, recognizing the financial effects of project decisions, and measuring project progress. Improving time to market requires hiring and developing software engineering staff and managers with the requisite knowledge of the application, ensuring that they understand the techniques for specifying requirements and design, and providing them with clear guidelines for evaluating the trade-offs between project duration, project cost, and product performance. Progress should be measured in terms of the number of components completed, rather than the number of lines of code that are written. During the development process, emphasis should be placed on managing the scheduling links between hardware and software development, obtaining user feedback about the system as early as possible, and using a flexible, ongoing review process. Development groups should establish software requirements and design parameters before they start coding, and testing should commence early in the system design process. By creating a working prototype of the user interface, developers can obtain user feedback and thereby sharpen the design specification. Effective, timely software development requires focusing greater energy and resources on development of the requirements specification. By expending this effort in the first phase of a project, the development team can minimize its use of the time-consuming code-and-debug approach to software development. In addition to breaking down a complex system into understandable pieces, a modular design supports efforts to accelerate product development. With a modular design, work on various modules can be assigned concurrently to relatively independent teams. A modular design facilitates testing of the product as well as reuse of software that was developed and deployed in previous projects.     

Changing Strategies and Tactics for New Product Development

There has been a considerable amount of effort and writing devoted to improving the new product development process during the last two decades. Although there have been some surprises in this literature and in reports from the field on how to manage this complex business process, we now have a good view of the state-of-the-art practices that work and do not work to accelerate commercial success of new ventures. We know much less about how firms change their strategies for new product development.
In this article, we report on a study to investigate how companies change the way they originate and develop new products in manufacturing. We made no prior assumptions about what best practices might be for changing the direction of the new product development process, but we reasonably were sure there would be trends in how companies were attempting to create this strategic change. Even though one size does not fit all, there were significant trends in our findings.
We studied eight manufacturing firms using in-depth, open-ended interviews and were surprised to find that most of these companies are beginning to develop products that are new to the firm, industry, and the world (nearly half, or 10 of 21 new product projects), where they had not been eager for radical change in the past. These newer products likely are to be driven by a combination of market and technology forces, with general requirements being directed by internal forces: middle and top management. Results also indicate significantly that being able to marshal resources and capabilities is easier if change is less demanding and less radical, but when middle managers are driving the conversion of general requirements into specifications, resource issues have yet to be resolved. Implications of these findings are discussed for companies aspiring to change the entire process of new product development in their firms based on these significant results.     

The use of asset specific investments to increase customer dependence: A study of OEM suppliers

Making asset specific investments without sufficient economic safeguards is usually seen as a poor managerial practice according to transaction cost economics. However, in practice, many suppliers still invest in asset specificity to satisfy their major customers' requirements, who do not make sufficient investment commitments. The objective of this study is to explore how suppliers that make asset-specific investments maintain long-term relationships with their customers and even make their customers reliant on them. Empirical analysis of data from a sample of Taiwanese original equipment manufacturer (OEM) suppliers shows a significant positive indirect effect of asset specificity on the dependence of customers on suppliers, mediated through joint learning capacity. In addition, a positive link between a proactive market orientation and the degree of customer dependence on the supplier was found. This investigation finds evidence that joint learning capacity and proactive market orientation play critical roles in linking asset specificity to customer dependence.     

Involving suppliers in product development: Insights from R&D directors and project managers

While there is increasing evidence that involving suppliers in new product development (NPD) is important, and for many firms even inevitable, there is also evidence that not all such efforts are successful. Firms aiming at implementing this strategy effectively have to pay close attention to several contingency factors on the organizational level and properly manage supplier involvement on the project level. The exploratory case study research underlying this article explores key issues to be considered when involving suppliers in NPD and the counter measures they can take. Our research shows that companies differentiate between so-called “know-how” and “capacity” projects, and that they manage them differently. Furthermore, this research shows that firms outside the automotive and high-tech manufacturing industries are likely to intensify supplier involvement in the future.     

Strategic Suppliers' Technical Contributions to New Product Advantage: Substitution and Configuration Options

Current theory lacks clarity on how different kinds of resources contribute to new product advantage, or how firms can combine different resources to achieve a new product advantage. While several studies have identified different firm‐specific resources that influence new product advantage, comparatively little research has explored the contribution of strategic supplier resources. Combining resource‐based and relational perspectives, this study develops a theoretical model investigating how a strategic supplier's technical capabilities impact focal firm new product advantage and how firms combine different resources to gain this advantage. The model is tested using detailed survey data collected from 153 interorganizational new product development projects in the United Kingdom within which a strategic supplier had been extensively involved. Empirical results support our research hypotheses. First, supplier technical performance is shown to have a significant positive impact on new product advantage. Next, we show that while supplier technical capabilities have a positive influence on supplier technical performance, the a priori nature of the supplier's task moderates the relationship. Finally, our data support our hypotheses related to the positive relationship between relationship‐specific absorptive capacity and new product advantage, and the proposed negative moderation of supplier technical capabilities on this relationship. Based upon these findings, we encourage managers to recognize that strategic suppliers' with greater technical capabilities perform better regardless of the degree of creativity required by their task; but that strategic suppliers with lower technical capabilities may partially compensate (substitute) for their lack of technical capabilities, if they are able to respond to high problem‐solving task requirements. Furthermore, we suggest that the firm's development of relationship‐specific absorptive capacity is much more important when a strategic supplier is less technically capable. A buying firm's relationship‐specific absorptive capacity can, according to our data, substitute for low supplier technical capabilities. On the other hand, where the supplier has strong technical capabilities, investments in relationship‐specific absorptive capacity have no effect on new product advantage. Our findings reinforce recent calls for research on how firms can combine different resources and capabilities to achieve superior performance.     

From Experience: Avoiding Marketing's Best-Of-The-Best Specification Trap

Too often companies fall into a trap when developing a list of performance specifications for a new product. Milton Rosenau calls this the best-of-the-best specification trap. The problem arises whenever a company bases a specification on the combination of the best single features observed in available competitive products. When this happens, the new product's design is driven by competition and is not derived from a unique market insight. This may not provide the basis for a sustainable advantage. Sometimes, rumors of competitive improvements may even lead to sudden changes in the specification, creating delays in the development process. A far better goal is to develop a specification that responds to an unrecognized and unfilled user need, one that adds high value to users. His points are illustrated with several examples.     

Development and implementation of customer solutions: A study of process dynamics and market shaping

A broad, dynamic network perspective on solution processes remains scarce. This article presents the process of developing and implementing customer solutions and its effects on the wider business environment by investigating customers and suppliers in the global mining industry (Australia, Chile, and Sweden), analyzing the deployment of a new customer solution, and assessing the changes to the competitive environment and focal firms' relationships with other customers and suppliers. It shows that the forces that drive customer and supplier interests and motivation to co-develop customer solutions may change over time, thus redefining the aim and scope of solutions and creating failure risks. Customers present problems; suppliers respond, on the basis of not only the feasibility of the customer-specific solution but also of their evaluation of future solutions in a broader market; then suppliers aim to standardize successful solutions across markets. Customers want close supplier relationships and unique solutions but also like standardized and repeatable solutions, so they can share development costs with competitors and expose the supplier to competition to avoid lock-in effects. From a network perspective, a novel solution can have a market-shaping effect and evoke reactions from other actors who want to enhance their market position. However, these changes are not necessarily deliberate, and the dynamics that market introductions of solutions trigger may be difficult to predict.     

Analyzing supply chain robustness for OEMs from a life cycle perspective using life cycle simulation

Long-term relationships between original equipment manufacturers (OEMs) and stakeholders in their supply chain and end-of-life process can be designed, while considering uncertainty in future environmental legislation changes. This study proposes a method to analyze the capability of OEMs to reconfigure their supply chain and end-of-life operations to achieve performance targets, which are defined in terms of environmental impacts and life cycle costs. Using life cycle simulation (LCS), the physical deterioration and the functional obsolescence of individual products are considered as stochastic elements in the analysis. The analyzed reconfiguration capability provides the OEM with robustness against uncertainty from a life cycle perspective.     

Is local sourcing out of fashion in the globalization era? Evidence from Italian mechanical industry

The paper concerns a study on the changes affecting leading cluster companies' supplier relationships. In particular, the paper aims at investigating under which conditions and how industrial cluster companies rely on local suppliers in the current context of international competitive pressure and easier access to international supply sources. The research methodology is qualitative and based on a long-term longitudinal research of three case studies of Italian industrial cluster companies that are leading firms in specific niches of the mechanical industry. Two main questions are debated: under which conditions have industrial cluster companies relied on local suppliers? What has been the evolution of relationships between industrial cluster companies and their local suppliers? The empirical analysis shows that local suppliers have been playing strategic roles in different ways in distinct historical phases, contributing actively in terms of knowledge and competence development, production flexibility, delivery performance and cost efficiency.     

Suppliers capability and price analysis chart

To remain competitive in customer-oriented economics, the major parties in the supply chain should be integrated and managed effectively to respond to customer needs. Thus, the efficiency of the entire supply chain is a main concern, and is determined by the members of that supply chain. Partner selection thus becomes one of the key steps in supply chain construction. Given buyer–supplier information asymmetry, obtaining complete information from suppliers is difficult, since some supplier attributes cannot be definitely and quantitatively measured. This study establishes a suppliers capability and price analysis chart (SCPAC) focused on the case where the specification limits are symmetric about the target for evaluating supplier performance which applies the process incapability index C_pp introduced by Greenwich and Jahr-Schaffrath (International Journal of Quality & Reliability Management 12 (1995) 58) to measure supplier quality performance and the price index I_p is proposed here to display the difference between budget and component price. Practitioners can instantly and visually obtain information based on the locations of suppliers and price indices on SCPAC. SCPAC also provides clear directions for quality improvement, such as process accuracy and precision. SCPAC thus is an effective and efficient method for evaluating suppliers, which can simplify supplier evaluation, facilitate their effective visual selection, and provide insights into the process situation of suppliers who can become technological innovation partners.