Robert B. Handfield

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.

Applying environmental criteria to supplier assessment: A study in the application of the Analytical Hierarchy Process

Abstract Increasingly, purchasing managers are being asked not only to transform purchasing into a more strategic function but also to integrate environmental issues in their decisions. Introducing the environmental dimension into purchasing decisions embeds a new set of trade-offs in the decision, complicating the decision-making process with both qualitative and quantitative factors. Yet, few companies use any structured analysis to evaluate suppliers along environmental dimensions. In this study, we illustrate the use of the Analytical Hierarchy Process (AHP) as a decision support model to help managers understand the trade-offs between environmental dimensions. We then demonstrate how AHP can be used to evaluate the relative importance of various environmental traits and to assess the relative performance of several suppliers along these traits. Three case studies were carried out to demonstrate the benefits and weaknesses of using AHP in this manner. Finally, we examine how AHP can be incorporated into a comprehensive information system supporting Environmentally Conscious Purchasing (ECP).

Effective case research in operations management: a process perspective

Abstract Despite many calls for case-based operations management research, the successful publication rate of such articles in top-tier journals has been less than stellar. A five step case-based research and dissemination process is presented. Guidance is given to future researchers for each step in the process. In addition, areas of weakness are examined and discussed in detail. Future potential research questions in operations management considered to be appropriate for the case-based method are highlighted.

The Severity of Supply Chain Disruptions: Design Characteristics and Mitigation Capabilities

Supply chain disruptions and the associated operational and financial risks represent the most pressing concern facing firms that compete in todays global marketplace. Extant research has not only confirmed the costly nature of supply chain disruptions but has also contributed relevant insights on such related issues as supply chain risks, vulnerability, resilience, and continuity. In this conceptual note, we focus on a relatively unexplored issue, asking and answering the question of how and why one supply chain disruption would be more severe than another. In doing so, we argue, de facto, that supply chain disruptions are unavoidable and, as a consequence, that all supply chains are inherently risky. Employing a multiple-method, multiple-source empirical research design, we derive novel insights, presented as six propositions that relate the severity of supply chain disruptions (i) to the three supply chain design characteristics of density, complexity, and node criticality and (ii) to the two supply chain mitigation capabilities of recovery and warning. These findings not only augment existing knowledge related to supply chain risk, vulnerability, resilience, and business continuity planning but also call into question the wisdom of pursuing such practices as supply base reduction, global sourcing, and sourcing from supply clusters.

The role of trust and relationship structure in improving supply chain responsiveness

In order to reduce cycle times between supply chain entities, managers must work to create new relational forms that rely on trust to a greater extent. We present a model suggesting that to build relationships based on trust, suppliers must invest in site-specific and human assets, and buyers must judiciously apply contracts to control for relative levels of dependence within the relationship. Our model also suggests that buyer-dependence, supplier human asset investments, and trust are all positively associated with improved supply chain responsiveness, defined in this study as the supplier’s ability to quickly respond to the buying party’s needs. This model is tested with data gathered from a sample of purchasing managers in North American manufacturing firms. The results suggest that even in cases when buyers do not have a great deal of control over their suppliers, working to build trust within the relationship can improve supplier responsiveness. D 2002 Elsevier Science Inc. All rights reserved.

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.

'Green' value chain practices in the furniture industry

Abstract This paper draws on the results of interviews with five environmental managers in the furniture industry to develop a taxonomy of environmentally-friendly (‘green’) best practices within the operations management value chain. This taxonomy is then extended to develop a group of propositions concerning the role of management in promoting environmentally-friendly practices. The results suggest that in order to be successful, environmental management strategies must be integrated into all stages of the value chain, which includes all of the processes spanning product design, procurement, manufacturing and assembly, packaging, logistics, and distribution. While the potential for environmental performance improvement in all five of the companies is evident, all of them demonstrated ‘pockets’ of environmentally-friendly practices (EFP) in different areas of their respective value chain functions. The propositions and results emerging from the analysis also suggests that reacting to regulations is no longer sufficient. World-class EFP must anticipate and pre-empt changing environmental regulations and customer expectations, and proactively prepare products, processes and infrastructure for these changes without sacrificing competitive advantage.

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.

Supply Chain Management: An Empirical Study of Its Impact on Performance

Total quality management, supply base management, customer driven corporate policy, and other elements of supply chain management are frequently cited as strategic options to achieve competitive success in the 1990s. However, attempts by companies to implement these options have not been universally successful and have in many cases failed to yield the desired results. This study presents details of a survey carried out to determine whether particular quality management, supply base management, and customer relations practices can impact corporate performance. In addition it examines the impact analyzing the competitive environment has on performance. Regression models identify several factors that directly and positively impact corporate performance. These include the extent to which companies analyze the strategies of competitors and determine future customer requirements, and the commitment they have to evaluating performance throughout the supply chain.