Despite some successes in involving suppliers early and intensively in product development within the automotive and electronics industries, many companies still experience substantial difficulties in managing this involvement. This article examines three related critical issues: (a) identifying specific processes and tasks for the broader area of purchasing involvement in product development; (b) forming an organisation that supports the execution of such tasks; and (c) staffing the organisation with people that have the right skills.
Supplier involvement in product development holds great potential, both in the short and long run, but few companies seem to be able to realise these benefits. A large part of the unfulfilled potential is due to common problems such as lack of communication and trust, insufficient supplier abilities and willingness, and internal resistance at the manufacturer. This article has pointed to three issues in dealing with the most important problems as they occur at the manufacturer.
First of all, the necessary activities and processes with regard to managing supplier involvement in product development need to be identified. We have argued, in fact, that supplier involvement needs to be extended to Integrated Product Development and Sourcing. Successful Integrated Product Development and Sourcing (IPDS) consists of a number of closely related activities that are carried out at different levels in the organisation, and which have different time-horizons. Integrating and co-ordinating the activities throughout the organisation and synchronising short run and long run activities is of crucial importance.
Arguing that Integrated Product Development and Sourcing (IPDS) consists of four different yet closely related areas of activities, however, does not mean that all activities are equally necessary or important for different companies. In other words, there may or may not be particular contextual antecedents or `driving' factors present in a certain situation. Therefore, when identifying the appropriate purchasing involvement activities in a given situation, it is very important to consider the specific context. Based on our cross-sectional case studies, there seem to be at least four major driving factors related to the manufacturing firm that affect the significance of the different management areas: the size and complexity of the organisation; the type of production technology employed; the importance of R&D processes; and the dependence on suppliers. Company size specifically seems to drive the need for Development Management, especially the formulation and communication of supplier and purchasing involvement policies. Regarding production type, firms with assembly processes need to spend more effort on the areas of Project Management and Product Management. The third driving factor, the (financial) importance of R&D expenditure, bears mainly on Development Management, while the fourth and final driving factor, supplier dependence (f.e. measured by purchasing ratio), has an impact on Supplier Interface Management (Wynstra et al., 2000).
The second issue relates to the organisation of the purchasing function, and especially the part that is involved in the tasks and processes described here. This organisation should facilitate the cross-functional collaboration between the purchasing and engineering function. Such cross-functional collaboration may take different forms, from an ad-hoc liaison type of collaboration, via temporary team-structures to full-fledged permanent integration. Different situations require different solutions, but all aim to do the same thing: make development into teamwork, and support the effective integration of suppliers in the manufacturer's product development process.
The third critical issue in achieving successful supplier involvement in product development involves the availability of adequate human resources. In order to support the development of human resources, there are several areas in which possible measures can be taken. In the area of recruitment and training, emphasis may be given to the education and technical experience of potential employees, and their perception of the tasks of purchasing. By means of job or employee rotation, purchasers could be temporarily assigned to the development department, which would create a better mutual understanding of the links between engineering and purchasing. Finally, communication with other departments about the possible support purchasing can (and should) offer could lead to a more positive perception of the actual capabilities of purchasers.
In summary, involving suppliers in product development can result in major benefits in terms of money and time. But, it requires a great deal of thinking and effort. Primarily, it presupposes active management on behalf of the manufacturer, both in the short term and in the long term, supported by adequate organisational and human resources.
