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Abstract
The increased use of suppliers in the new product development process has important implications for the strategic performance of
organisations. In this paper an analysis of supplier collaboration in the development process is deployed to support the development
of a dyadic (or two-level) capabilities analysis of the strategic management of the innovation process. By setting an organisation's
competencies within the context of their customer or supplier interactions this paper supports the view posited by Ford et al. (1986)
that interaction de"nes the value of assets and resources. In a study of collaboration in the UK auto industry, it was found that both
operational and relational competences are critical factors in the performance of the new product development process. Thus, the
ability of customers and suppliers to develop both structured and ad hoc processes of interaction is shown to be important to the
development process from early supplier selection process. 2000 Elsevier Science Ltd. All rights reserved.
0969-7012/00/$ - see front matter 2000 Elsevier Science Ltd. All rights reserved.
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30 S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37
This line of reasoning predicates the study of compet- cess and the subsequent collaboration of the suppliers
encies founded on suppliers' and customers' resources and customer over the duration of the development pro-
and activities in the domain of the customer}supplier grammes studied.
dyad. The research theme here was thus to examine the
impact of the supplier management process on strategic
performance at a dyadic level of analysis (Ellram and 5. Supplier selection
Hendrick, 1995).
Supplier selection for speci"ed goods and services is
a critical decision for many purchasing organisations,
4. Research methodology since supply performance can have a direct "nancial and
operational impact on the business. (Baily et al., 1994). In
In order to explore dyadic processes research was collaborative design the selection of suppliers becomes of
conducted into the process of collaborative new product increased signi"cance since suppliers are involved in the
development, an important change process which was speci"cation of goods and services, and therefore the
deemed to be the most appropriate domain within which commitment to a particular source of supply may be
to examine the impact on the performance of core com- embedded in the product/service design. It has thus been
petencies (Hamel and Prahalad, 1994p. 202). The re- argued that in such circumstances organisations are buy-
search process involved document analysis, interviews, ing the supplier's capabilities (Croom, 1992). Study of the
site visits, observation and detailed performance data supplier selection process is thus useful to test the in#u-
analysis over the duration of two development pro- ence of operational and relational criteria on the selec-
grammes by one major player in the automotive industry tion decision.
conducted over an eight-year period. The research pro- The sourcing decisions behind supplier selection for
grammes concentrated on analysing the development of a range of vehicle systems including steering, interior
purchasing strategy and identi"cation of strategic com- trim, wiring harnesses, climate control, braking systems
petency within a number of customer}supplier dyads. and fuel tank systems were examined. Supplier selection
The main concern of the research was with human was seen by the customer organisations as a critical
perceptions of competitive criteria, and the physical con- process, and documented sourcing procedures, or proto-
"guration of resources and procedures adopted to man- col, were set out to codify these capabilities in a struc-
age interaction. Given the interest in both subjective and tured manner. To support the protocol, the sourcing
objective variables and constructs a mixed-methodology decisions were undertaken by a team representing design
case study approach was therefore taken. Broadly speak- engineering, "nancial analysis, manufacturing, logistics
ing, a principally qualitative methodology was con- and purchasing.
sidered appropriate in the observation of behaviours and Ceteris paribus, the formal sourcing protocol relied
perceptions informing decisions using primarily semi- heavily on the supplier's ability to meet cost targets.
structured interviews as the research method. It was also However, from the research analysis it was clear that in
possible to engage in participant observation for the practice a wider set of concerns were involved. These
development of the case studies. In the observation and included concerns for carry-over of components to other
examination of more objective elements of the study programmes; warranty and productivity performance,
(such as vendor rating pro"les, process capability and design system compatibility, availability of key project
facilities layout), the use of archives, reports, and perfor- management skills and personnel and R & D resources.
mance measurement were key methods of data collec- In addition, the perceptions of the sourcing team were
tion. In particular, a longitudinal content analyses of noted and in some cases were seen to be the determining
a series of customer}seller team meetings between the factors.
buying company and three of their suppliers over In presenting the summary analysis of the sourcing
a three-year period provided an insight into the concerns decisions it was clear that major and signi"cant di!er-
addressed during formalised interactions. However, many ences existed between the decision process relating to
of the interactions between actors in the dyads studied totally new suppliers and the decision relating to existing
were of an informal nature and here contemporaneous suppliers.
notes and post event interviews were employed within The summary analysis is presented in Table 1.
the customer organisation and six suppliers. It is felt that The signi"cance of the di!erence between existing and
by the adoption of a multi-method approach in the new suppliers lies predominantly in the emphasis placed
examination of speci"c customer}supplier interaction, on relational capabilities when considering existing
the concern for triangulation and methodological plural- suppliers.
ism has been addressed. Following this analysis a paired investigation of sup-
The analysis of the "eld research presented in this pliers' perceptions of the sourcing selection decision was
paper concentrates on the initial supplier selection pro- undertaken in order to identify the degree of congruence
S.R. Croom / European Journal of Purchasing & Supply Management 7 (2001) 29}37 33
Table 1 Table 2
Sourcing criteria * a comparison of existing vs. new suppliers Ranked paired analysis of customer and supplier perceptions of sourc-
ing criteria
Existing Supplier New Supplier
Perception of key sourcing criteria
Operational Quality audit Quality audit
Production process Production process Case example Customer Supplier
analysis analysis
Existing product design Existing product design A &Brand reputation' Design capability
Design capability (e.g. Design capability (e.g. Experience (vicarious) Size
CAD) CAD) Respect and trust Market penetration and
Facilities location & Facilities location & layout scope
layout (e.g. Flowlines) (e.g. Flowlines) Attitudes
Quality assurance (SPC; Quality assurance (SPC;
FMEA etc) FMEA etc) B Adapted relationship Attitudes
Product complexity Product complexity Empathy Responsiveness
Familiarity Service #exibility
Relational Interpersonal relations Team structures Trust Developement capability
Friendships Dedicated individuals Corporate technical
Shared experiences Communication channels support
(internal & external) Attitudes
Team structures Quality management
Quality management Reputation C Familiarity Dedicated production
Responsiveness Recommendation facility
Communication channels Corporate product Attitudes
(Internal & external) capability
Dedicated individuals Process capability Responsiveness
Personal competensies Experience Closeness
Trust Trust
Familiarity Customer focus
Empathy Empathy
Attitudes
concerns, but also frequently involving discussion of rela- Investigations found a number of critical causal
tional issues pertaining to the degree of on site repres- factors.
entation, the #ow of information through the supplier
1. The supplier was not aware of the peculiarities of the
organisation, and demonstration of commitment
customer's operations processes and the particular
through dedicated project management teams. In Table
technical requirements of the new project.
3 the format of interaction is categorised according to the
2. Design engineers were not used to delegating so much
content and focus of the interaction. The use of general
responsibility to their suppliers, and were conse-
processes of interaction such as team meetings and de-
quently resolving minor problems without including
ployment of resident engineers served to provide the
the supplier in the process.
formal and pre-determined channels of interaction (cf.
3. Many of the design, quality and production engineers
communication channels). These were found to be pres-
felt a strong loyalty to the previous, displaced,
ent across the supply base. The less formal or reactive
supplier.
interactions arose as a consequence either of operational
di$culties (such as design or manufacturing problems) or Analysis of the management of this supplier's involve-
in response to relational issues (for examples open sup- ment illustrated a lack of any ad hoc interactions, and
plier events or social events). consequently a lack of real empathy between the parties.
The signi"cance of categorisation of customer supplier This focused the failure recovery on greater interpersonal
interaction is to focus attention on the nature of interac- involvement and also the need for this supplier to place
tion channels. This was of particular use in analysing the a resident engineer in the customer design facility.
mechanisms employed to manage supplier involvement,
in which a critical incident approach was utilised to
explore a number of events during the development pro- 7. Summarising the management of supplier involvement
grammes.
One such critical incident was encountered with a new In presenting the summary analysis of the manage-
supplier of electrical distribution systems. The customer ment of supplier involvement during collaborative devel-
had no previous experience of dealing directly with this opment three main elements of the customers' formal
company but was well aware of their reputation and development protocol were identi"ed. These represent
ability from their various sources within the industry. the signi"cant strategic elements of the new product
Problems and delays began to arise during the develop- development protocol adopted by the client organisa-
ment, which had serious repercussions across the whole tion, and relate to a. the deployment of structured con-
project. Whilst the product (electrical distribution sys- current engineering, b. the emphasis of quality in the
tem) was to speci"cation, delivery was often late, or programmes studied, and c. the impact of supplier in-
components needed modi"cation in order to integrate volvement in the process. These dimensions were re-
fully with other components. The main source of prob- garded as common to the programmes studied, and
lems seemed to be related to logistics, "tting and integra- also subject to review as part of the organisation's
tion with other components. product development strategy process. The analysis
of the research data collected over the duration of
the study has been concentrated into common and domi-
Table 3 nant factors through axial and subsequently selective,
Classi"cation of buyer}seller interactions
coding of the research narrative analysis. (Punch, 1998,
Speci"c General p. 214-218).
The elements identi"ed in Table 4 represent the key
Programmed Pre-scheduled team More general supplier drivers of e!ective collaborative development and are
meetings and interactions suh at intended to summarise the collaborative process
negotiations convened attenance at open days
to address matters or deploymen of
design.
relating to supplier's resident engineers The use of clear project management and quality man-
involvement, (e.g. agement approaches have been recognised widely as
project team meetings critical to product development performance, and such
during new product capabilities are widely acknowledged as essential in prac-
development
Ad Hoc Supply related, un- Casual, social interactions
tice and the literature (Wheelwright and Clark, 1992).
scheduled. Such between individuals and From this research the development of cross-functional
episodes are reactive groups outside of the and inter-organisational mechanisms for the manage-
* e.g. response to an operating environment ment of supplier involvement are regarded as important
unforeseen event such of the relationships (e.g. process structures for the facilitation of collaborative
as a quality problem or dining out, playing
delivery failure a round of golf )
product development performance. However, in addition
to the formal structures laid down, this research has
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