Principles of Good Product Development

Supplier involvement early in the development process

In the coming years, companies will have to get products to market much faster. To do this they will make many changes. They will, for example, reduce the number of levels of management, adopt teamwork, ensure departments cooperate, provide equal opportunities for female engineers, get work done with a flexible and skilled workforce (rather than by weight of numbers) and buy in specialized services from outside rather than trying to do everything in-house. For many companies, the cost of purchased materials accounts for more than half of their expenses, so it's a good place to try to reduce costs. As well as increased use of suppliers, the future will also see them being involved earlier in the product development process.

In the past, suppliers weren't involved early in the process. The activities of the product development process were carried out in series, and suppliers were only involved near the end of the process. A typical product would go through many activities - it might start life in the marketing function, and then go through conceptual design, engineering design and analysis, testing, detailed design, manufacturing engineering, process planning, tooling, NC programming, production planning, purchasing, machining, assembly, testing, packaging, installation and maintenance.

Often, suppliers would only be involved in manufacturing some of the parts. They wouldn't be involved at the design stage, and often their work only started when they received the released design documentation. Usually they would raise good questions about some aspect of the design. The resulting change process wasted time, led to the introduction of new problems, and often resulted in the product getting to market late.

As well as having a negative impact on performance, this way of working with suppliers didn't take advantage of their knowledge and experience. A particular supplier might be a world-class producer of a particular component, yet not be consulted on initial specifications and design, just expected to produce to a plan produced by people with much less relevant know-how.

In some cases, suppliers were only brought into the process to compete against each other on pricing. As a result the company finished up working with a large number of suppliers, and even with different suppliers on similar products. It was impossible to build up the stable, long-term quality-generating relationships that lead to client satisfaction.

To respond to the need to get products to market faster, to reduce the cost of developing products and to make sure the product provides customer satisfaction, the product development process needs to be re-organized. There are many possible approaches to re-organization. Many of them will increase the reliance on suppliers. Companies that focus on upstream product specification and design activities where they can best use their resources will want to outsource downstream activities where they are not cost-effective (e.g. in detailed drafting) or are less competent than specialized organizations (e.g. in parts manufacture), so suppliers will have a greater role to play in these areas.

In team-oriented companies, people from different functions will work together on the upstream activities, effectively taking the major decisions about the entire product development process in the initial design phase. The team will need to know in detail at an early stage about the different parts of the product, and the way the parts fit together. The team will want to make the best possible use of suppliers with the aim of getting a customer-satisfying product to market as quickly as possible. This will probably mean involving the supplier right at the beginning of the process, when the major modules of the product are being defined. The supplier will then be given the job of designing and manufacturing a complete sub-assembly.

In the re-organized process, suppliers will be expected to respond quickly, to be responsible and to be reliable. They will be expected to have excellent skills, knowledge and experience concerning particular parts or activities. The company will want to have long-term relationships with a small group of highly competent, knowledgable and trusted suppliers.

In companies that don't have early supplier involvement, improvement initiatives in the Engineering Department will only provide some of the expected improvements in the performance of the product development process and in engineering productivity. Each time a supplier is involved in the process, all the traditional problems of wasted time and money mentioned above will appear, and prevent the benefits coming through. The fault won't be that of the supplier, but of the organizational structure.

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Page last modified on March 10, 2000
Copyright 2000 by John Stark