Gary L. Ragatz

Success factors for integrating suppliers into new product development

Abstract Faster, better, cheaper—these marching orders summarize the challenge facing new product development (NPD). In other words, NPD teams must find the means for speeding time to market while also improving product quality and reducting product costs. Cross-functional teams have proved effective for meeting these challenges, and such teams may extend beyond company boundaries to include key materials suppliers. Effective integration of suppliers into NPD can yield such benefits as reduced cost and improved quality of purchased materials, reduced product development time, and improved access to and application of technology. As Gary Ragatz, Robert Handfield, and Thomas Scannell point out, however, those benefits do not automatically accrue to any NPD team that includes representatives from a suppliers company. In a study of 60 member companies from the Michigan State University Global Procurement and Supply Chain Electronic Benchmarking Network, they explore the management practices and the environmental factors that relate most closely to successful integration of suppliers into the NPD process. The study identifies supplier membership on the NPD project team as the greatest differentiator between most and least successful integration efforts. Although the respondents reported only moderate use of shared education and training, the study cites this management factor as another significant differentiator between most and least successful efforts. Respondents listed direct, cross-functional, intercompany communication as the most widely used technique for integrating suppliers into NPD. To integrate suppliers into NPD, a company must overcome such barriers as resistance to sharing proprietary information, and the not-invented-here syndrome. The results of this study suggest that overcoming such barriers depends on relationship structuring—that is, shared education and training, formal trust development processes, formalized risk/reward sharing agreements, joint agreement on performance measurements, top management commitment from both companies, and confidence in the suppliers capabilities. Overcoming these barriers also depends on assett sharing, including intellectual assets such as customer requirements, technology information, and cross-functional communication; physical assets such as linked information systems, technology, and shared plant and equipment; and human assets such as supplier participation on the project team and co-location of personnel.

Involving Suppliers in New Product Development

Organizations have been quick to realize that involving suppliers in new product/process/service development efforts has the potential for significant results. Numerous studies have highlighted the fact that supplier participation in product development projects can help reduce cost, reduce concept to customer development time, improve quality, and provide innovative technologies that can help capture market share. However, not all efforts are successful. Supplier integration is most successful when driven by a formalized process that considers supplier capabilities, level of complexity of the technology, and degree of risk. Leading companies conduct a formal in-depth supplier evaluation and risk assessment prior to supplier involvement on the project team.

Benefits associated with supplier integration into new product development under conditions of technology uncertainty

Abstract In many industries, firms are striving to integrate material suppliers earlier into the new product/process development process. 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. In this paper, we develop and test a conceptual model of the effect of elements of the supplier integration process on cost, quality, and new product development time, under conditions of technology uncertainty. Technology uncertainty is operationalized here, as the degree to which the product or process technologies employed in the project are new, complex, and/or rapidly changing. The results suggest that technology uncertainty have a negative impact on cost results, but no direct effect on quality or cycle time. The results also show that certain elements of the supplier integration process are more likely to be employed under conditions of technology uncertainty, leading to significant improvements in cost, quality, and cycle time objectives.

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.

An institutional theory perspective of business continuity planning for purchasing and supply management

Supply chains are increasingly susceptible to unplanned, unanticipated disruptions. With the implementation of the practices of lean systems, total quality management (TQM), time-based competition and other supply chain improvement initiatives, managers now realize that their supply chains are fragile, particularly to environmental disruptions outside their control. As a result of recent events including 11 September 2001, a system is now emerging in purchasing to manage supply risk characterised as having a very low probability of occurrence, difficult to predict, and with a potentially catastrophic impact on the organization. This paper presents case study research findings examining how and why firms create business continuity plans to manage this risk. Propositions are then presented from an institutional theory perspective to examine how various isomorphic pressures result in firms having similar risk management practices embedded in their supply management practices over time.

Order review/release: research issues and perspectives

SUMMARY This paper examines the order review/release (ORR) function and its impact on the operation of the shop floor. A source of disagreement between practitioners and researchers, ORR is an important element of any shop floor control system. This paper attempts to provide a better understanding of this element by presenting a framework for ORR. This framework not only identifies the important dimensions of ORR but also new dimensions for research. The paper also explores the relationship between ORR and job dispatching through a simple computer simulation model. The results indicate that the ORR, while reducing time spent in queue on the shop floor, does not always reduce the total time spent in the system.

A simulation analysis of due date assignment rules

Abstract In the job shop scheduling literature, due dates, when considered, are treated in one of two ways: 1) externally imposed or 2) internally set. Externally imposed due dates are outside the control of the scheduler and are assumed to be set by an order entry or marketing department in agreement with the customer. In this situation, current shop status information is not normally considered in setting the date. Research in this setting has focused on the identification of those priority (dispatching) rules which yield good “due date performance.” Due date performance is usually measured by job lateness, job tardiness, and/or proportion of jobs tardy. Internally set due dates are established by the scheduler as each job arrives. Using job characteristics and/or shop status information, the scheduler estimates the job flow time for each job and sets the due date accordingly. The early research in this setting did not focus explicitly on predicting individual job flow times, but rather on identifying simple due date assignment heuristics which provide good due date performance in concert with a variety of priority rules. More recent researchers have included shop status information in setting due dates. This article reports on a study of eight different rules for specifying due dates in a job shop and the evaluation of their performance. A series of tests is conducted with a computer simulation model utilizing three different dispatching rules to control the sequencing of work. Mean tardiness, mean absolute missed due dates, and standard deviation of lateness data are collected to measure each rules performance. This study reports the first comparative analysis of various due date assignment rules that have been mentioned in the literature by different authors. The findings reported here provide some useful insight into past and future research. First, both job characteristic and shop status information should be used to develop due date assignment rules. Second, the dispatching rule used to sequence jobs at work centers influences shop performance. Third, information about work center congestion along a jobs routing is more useful information than general shop conditions. And fourth, the use of more detailed information in predicting flow time provides only marginal improvement in performance over other rules that use more aggregate information.

Scheduling in a sequence dependent setup environment with genetic search

Abstract Work on scheduling in the presence of squence dependent setup times has generally focused on minimizing the total setup time (or cost) or minimizing the makespan of a set of jobs. We explore the problem of sequencing to minimize the total tardiness of a set of jobs in a single-stage process where setup times are sequence dependent. In particular, we examine the efficacy of using genetic search to develop near optimal schedules in this environment.

A comparison of four methods for minimizing total tardiness on a single processor with sequence dependent setup times

Much of the research on operations scheduling problems has either ignored setup times or assumed that setup times on each machine are independent of the job sequence. This paper considers the problem of scheduling a single machine for minimizing total tardiness in a sequence dependent setup environment. The comparative performance of branch-and-bound, genetic search, simulated annealing and random-start pairwise interchange was evaluated in this problem setting. The experimental results suggest that simulated annealing and random-start pairwise interchange are viable solution techniques that can yield good solutions to a large combinatorial problem when considering the tardiness objective with sequence dependent setup times. However, branch-and-bound may be the preferred solution technique in solving smaller problems, and it is the only solution technique tested that will confirm an optimum solution has been reached. The methods considered in this research offer promise to deal with a class of scheduling problems, which have been considered difficult by both researchers and practitioners.

A framework for the study of due date management in job shops

This paper presents a conceptual model of due date management in job shops. The model describes, in general terms, some of the important variables in the due date management problem and some of their interrelationships. The model is used as a framework within which to discuss the treatment of the due date management problem in the literature, and some ideas for directions for further research are presented.