Managing Supplier Integration into Product Development: A Literature Review and Conceptual Model

This paper presents a critical literature review concerning the effects of involving suppliers in product development, the critical processes underlying the management of this involvement and the potential driving and enabling factors for managing supplier involvement in product development. Together they constitute the building blocks for a ‘input-throughput-output’ model that helps in understanding the crucial elements of how to manage supplier involvement in product development. This model draws on our previous work in this area, but focuses more clearly on the ‘inputs’ and ‘outputs’ of managing supplier involvement. Introduction to managing supplier integration in product development Literature on product innovation has been pervasively trying to distil the key ingredients for company success. Many of the internal and external actors that are involved in product development and the interfaces between them have been subjects of research. Especially the interface between R&D on the one side and marketing and customers on the other side has been investigated (Souder and Chakrabarti 1978; Souder 1988; Griffin and Hauser 1996; Sherman et al. 2000). Compared to this body of literature, the role of suppliers in contributing to company success via product development has been addressed only in a limited way. Also the specific management role of the purchasing function regarding supplier involvement from the customer side has attracted relatively little attention. The attention for this topic, however, has been on the rise. Involving suppliers in product development has namely been argued to contribute to reduced development time, reduced development and product costs and improved product quality. However, the results of supplier involvement seem to be mixed (Birou 1994; Hartley et al. 1997b). For example, involving suppliers early does not always lead to acceleration of project cycle time (Eisenhardt and Tabrizi 1995). Some authors conclude that, apparently, the way supplier involvement is managed in the product development process is important in explaining the success of this supplier involvement (Ragatz et al. 1997; Wynstra 1998). Both in product innovation and in supplier involvement literature, increasingly thoughts are adopted from contingency theory to address the topic (e.g. Souder et al. 1998). Contingency theory tries to understand and explain phenomena and organisational issues from a situational point of view. The theory argues that companies face different environments and have organisational characteristics with a unique history that require differentiated management approaches and organisational structures. Although many alternative views exist, the basic assertion of this research strand is that there is no one organisation or management approach that leads to success. Companies need to adapt themselves to the most relevant aspects of the environments they are operating in. Applied to supplier integration in product development, this implies that the way that suppliers should be involved in product development requires an analysis of the situational factors and the critical processes to be managed. It is this contingency approach that could be valuable for understanding that there is no one way to look at product development and collaboration processes.