Product types and supplier roles in product development: an exploratory analysis

Manufacturers today often strive toward early supplier involvement in product development. Yet the research literature offers limited guidance on this issue to manufacturing companies and suppliers, and often assumes a “one-size-fits-all” approach. In this paper, we empirically examine whether suppliers for different sourced products play distinctly different roles in product development, by analyzing survey data on a wide range of sourced automotive products. We use cluster analysis to identify four different groupings of sourced products, based on differences along three dimensions: the nature of the sourced products, their cost structures, and the nature of the original equipment manufacturer (OEM)-supplier interaction in product development. We further test the usefulness of our scheme via a set of validating variables that include both key decisions and output performance measures in the OEM-supplier interaction process. We identify Critical systems as highly differentiating, high cost, highly complex systems, for which OEMs provide information to their suppliers largely through performance specifications, and involve suppliers early in product development. In contrast, hidden components are less differentiating low-cost simple components that are defined primarily via physical specifications, whose suppliers are involved later in product development. Invisible subassemblies are nondifferentiating, moderately costly, moderately complex systems whose suppliers are provided information via a mix of performance specifications and detailed physical dimensions. Finally, simple differentiators are highly differentiating, moderately costly, simple assemblies or components. We discuss the implications of our study for managing differential supplier roles in product development.