Involving Suppliers in New Product Development

TLDR

Involving suppliers in new product development can reduce cost, shorten time to market, improve quality, and spur innovation, yet many initiatives fail. The study argues that supplier integration succeeds when guided by a formal process that assesses supplier capabilities, technology complexity, and risk. Leading firms implement a formal in‑depth supplier evaluation and risk assessment before adding suppliers to the project team.

Abstract

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.