Supplier integration into new product development: coordinating product, process and supply chain design

Abstract

In many industries, firms are seeking to cut concept to customer development time, improve quality, reduce the cost of new products and facilitate the smooth launch of new products. Prior research has indicated that the integration of material suppliers into the new product development (NPD) cycle can provide substantial benefits towards achieving these goals. 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. Moreover, suppliers may be involved at different stages of the new product development process. Early supplier involvement is a key coordinating process in supply chain design, product design and process design. Several important questions regarding supplier involvement in new product development remain unanswered. Specifically, we look at the issue of what managerial practices affect new product development team effectiveness when suppliers are to be involved. We also consider whether these factors differ depending on when the supplier is to be involved and what level of responsibility is to be given to the supplier. Finally, we examine whether supplier involvement in new product development can produce significant improvements in financial returns and/or product design performance. We test these proposed relationships using survey data collected from a group of global organizations and find support for the relationships based on the results of a multiple regression analysis.