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Abstract
Rapid technological development, shorter product life cycle, clockspeed competition, and increased outsourcing have prompted many firms to involve their suppliers early in their new product development activities. This paper examines early supplier involvement in new product development and how it is influenced by outsourcing and degree of supplier-buyer interdependence. One of the objectives behind early supplier involvement is to increase product development efficiency and effectiveness as well as to tap into supplier's technological capabilities. However, suppliers can introduce serious problems as well, aggravating the complexity of managing new product development projects furthermore. The aim of the paper is to show that the degree of supplier involvement is dependent on various tradeoffs between sourcing strategies and the degree of supplier-buyer interdependence. The three case studies indicate that, although these firms are aware of the potential benefits of early supplier involvement in NPD, only one firm is embracing the idea, in spite of high degree of outsourcing. Depending on the technological complexity of the product architecture and how it is decomposed, the suppliers can be involved during the planning, design, or production stages of new product development process. Based on the findings of the case studies, some implications for theory and practice are then discussed.
Keywords : early supplier involvement, new product development, outsourcing, supplier-buyer interdependence
Introduction
Globalization, deregulation, more demanding customers, the advances in information and transportation technology contribute to the complexity of designing and managing supply chains (van Hoek et al., 1999) as well as innovation management of a firm. In addition, shorter product life cycles and competitive pressures (not only in technology but also in services) have forced firms to find new ways to manage the supply chain of their products. Value added services are becoming increasingly important to consumers, and advancement of production technology is enabling products to be more easily imitated. This comprehensive information regarding consumer purchase behavior has shifted the power structure of distribution channels from manufacturers to retailers, making the product-service bundles dominant differentiating platforms (Bowersox and Cantalone, 1998). This also has reflected the way supply chains are evolving.
It is generally known that approximately 80 per cent of the manufacturing cost of a product is determined by the design of the product (Clark and Fujimoto, 1991;...