In strongly competing markets, such as the automotive industry, collaboration between clients (e.g., OEM) and suppliers is changing. Ford and Chrysler are examples of companies that no longer consider suppliers as mere component producers, but as partners in the creation of innovative products. Clients outsource not only production of parts to suppliers, but also the development of parts and increasingly the development of complete (sub)systems. Collaboration in product development between client and supplier is becoming more and more important.
Management of collaboration is, however, extremely complex given the number of unsuccessful collaborative efforts. Apparently, problems in managing collaboration are different from the problems managers are used to encountering. However, little is known yet about the problems in collaborative projects between clients and suppliers.
In this paper, a number of problems in collaborative projects will be identified. The paper is based on case studies in three Dutch companies involved in changing client–supplier relationships.
Collaborative product development forms an answer to the market demands that are changing due to globalisation of competition and individualisation of consumer wishes. Today, consumers expect a varied assortment of innovative and highly qualified products. Moreover, client organisations are forced to develop and produce these products in limited time against low costs to stay ahead of competition.
However, companies have increasingly less time, fewer people, and less financial means to satisfy the market demands alone. Extensive collaboration with suppliers offers companies possibilities to gain fast access to specialist knowledge and capabilities, to spread and share costs and risks, and to better exploit the expertise of their partners (Douma, 1997, Quinn and Hilmer, 1994 and Littler et al., 1995).
Close collaboration between client and supplier fits the ‘lean-production’ approach (Womack et al., 1990). In this approach, the product creation process as a whole is considered, instead of each of the companies that perform a part of this process (Lamming, 1996). Each activity that is executed at a client or at a supplier on behalf of the product to be created contributes to the success of that product. To achieve success collaboration is essential.
Management of collaboration is highly complex. Research has shown that more than 50% of the collaborative efforts are unsuccessful (Harrigan, 1985 and Littler et al., 1995). Apparently, managers meet problems that are different from the ones they are used to. Until now, little is known yet of the problems managers of collaboration between clients and suppliers in product development may encounter.
Much is written about the perceived advantages of collaboration. In addition, much attention is devoted to the support information and communication technology (ICT) may provide to collaborative product development between geographically dispersed sites. In this paper, these issues will be addressed too. However, the main focus will be on problem areas in management of collaborative product development between client and supplier.
The research reported in this paper can be characterised as empirical research. Information has been gathered to gain insight into recurring problems and the organisational changes necessary to solve them. The research consisted of two steps. A first impression of the new strategy has been developed based on interviews with managers and product development engineers at Lockheed Martin, Ford, Chrysler, and General Motors in the United States of America. Second, three Dutch companies have been visited to further investigate the consequences of collaboration in product development for daily practice. In this step, semi-structured interviews have been held with managers, project leaders, product development engineers, and purchase and sales managers. They have been asked about their experience with realising the changes in the product development strategy. The second research step is reported on in this paper.
Collaborative product development between client and supplier is an answer to stricter market demands. Realisation of the new strategy means transfer of design tasks from clients to suppliers. Collaboration in product development changes the relationship between client and supplier. No longer is one party (often the supplier) subordinated to the other, but all parties are mutually dependent with respect to knowledge, continuity, and care. Clients as well as suppliers will have to change their organisation and adapt to their new role.
Differences between collaborating organisations might cause problems. Managers face the task of understanding these differences and aligning the organisations. Communication is essential to achieve and maintain a balance between client and supplier. On the other hand, communication depends on a well-balanced relationship.
In an empirical study several aspects of management of collaborative product development have been identified, presented in this paper, and again listed below. Further research into management of collaborative product development should be aimed at development of theories and knowledge on the aspects of relationship management. Besides, there is a need for practical means and methods to establish and maintain balance in relationships.
