The Importance of Suppliers Integration in the New Product Development Process - Coursework Example

The importance of supplier’s integration in the new product development process Table of Contents Introduction 3 Research gap 3 Firm’s collaboration with suppliers 4 Assessment, selection and integration 4 Impact of culture 5 Importance of trust and team work 6 Impact of trust 6 Teamwork 7 Link between trust and team work 8 Reference List 10 Introduction Buyer- supplier relationship and integration in the new product development process plays an important role in the overall success of the business venture. The manner in which suppliers are integrated within the product development process impacts the ultimate performance of the manufacturing firms in the market (Petersen, Handfield and Ragatz, 2005). The relational norms between buyers and suppliers depend upon a number of factors such as the cultural orientation of individual firms, the leadership abilities and the motivational factors of the respective entities. It is observed that many organizations in North American nations fail to understand supplier-organization relationship. The primary cause of strain arises from the fact that design teams are reluctant to listen to various ideas provided by the suppliers (Van Echtelt, et al., 2008). It is also seen that under circumstances where the supplier company have superior knowledge and resources, then their integration into the new product development process is stronger. When the resources shared are high, greater integration gets effected. Globally it is observed that the successful integration of suppliers within the product development process helps firms to achieve their goals in an effective manner (Wynstra, Van Weele and Weggemann, 2001). However successful integration calls for cultural adjustments, strong and protected channels of communication and resource sharing. Team work and understanding respective organizational targets are also important factors for proper supplier integration. Research gap The existing research aims to analyse the impact of culture, team work and trust in the process of integrating suppliers with the product development process. Although there are many literatures existing in respect of the impact of culture in supplier integration, very few researchers have concentrated upon the aspect of trust and team work in supplier integration (Seppanen, Blomqvist and Sundqvist, 2007). The current research not only focuses upon cultural issues which arise during the process of supplier integration, but also focuses upon trust and team work. Integration of suppliers in the product development process leads to collaborating the competencies and resources of both suppliers and the manufactures. As a result team work and trust between the suppliers and the manufacturers play an important role. Identifying this gap, the current research includes conducting thorough analysis in respect of the impact of trust and team work in developing strong supplier integration in the new product development process (Zineldin and Jonsson, 2000). Firm’s collaboration with suppliers Strong collaboration between the firm and the suppliers is essential in order to facilitate quick and better new product development. The importance of such collaboration with the suppliers and the essential features of the same are discussed as follows: The integration with suppliers may not be required in all manufacturing concerns. Successful firm are seen to selectively determine the areas in the new product development process where the integration with suppliers is necessitated (Van Echtelt, et al., 2008). Organizations expect that when suppliers are involved in the manufacturing process, a portion of the raw materials or the technical know-how required would be provided by the suppliers (Tan, 2001). When more than one organization is involved in the product development process, then it becomes essential that targets required to be achieved and the metrics of the project are known and understood by all. Clearly defined targets give the members of the project unity in direction (Frohlich and Westbrook, 2001). Supplier’s integration with the firm during the product development process is only successful when the suppliers are given an active role to play. Suppliers must be provided with the freedom to provide suggestions in respect of improving performance (Wynstra and Pierick, 2000). In order to successfully integrate suppliers into the product development process, information sharing between the two parties becomes crucial (Mishra and Shah, 2009). Communication pattern between the suppliers and the organization must therefore be strongly developed (Ettlie and Pavlou, 2006) Supplier’s commitment towards product development is an important aspect. Most organizations are seen to share an uncomfortable relationship with the suppliers as they are not an integral part of the management. Without a strong commitment on behalf of the suppliers it is difficult to give effect to sharing of resources and information (Walter, 2003). Assessment, selection and integration Suppliers are required to be carefully assessed before they are integrated with the product development process. Assessment should be made in respect of the competencies and resource capabilities of the firm (Poot, Faems and Vanhaverbeke, 2009). When two firms are involved with the product development process, capabilities of both firms gets shared. The weaknesses of the suppliers may also get filtered into the organization. The selection criterion of suppliers who are required to be integrated with the product development process depends upon the requirements of the customers and the characteristic features of the product. For instance, if the new product development requires advanced technology then it would be beneficial to integrate those suppliers who possess strong technical capabilities (Roberts, 2001). Once the respective suppliers are assessed and selected, the integration process is begun. The process of integration begins with informing suppliers regarding the targets which required to be achieved. Then details are given in respect of the resources which are required from the supplier’s side (Song and Di Benedetto, 2008). Impact of culture Most organizations are seen to struggle with establishing cultural compatibility with their suppliers. Establishing a sense of understanding becomes even more difficult if the suppliers belong to a foreign nation. Cultural dissonance between the suppliers and the organizations may lead to difficulties in communication and give rise to numerous issues. The culture followed by different organizations impacts the way they function. For instance one of the cultural qualities of Chinese organizations is to work collectively whereas the American culture stresses upon individualism. The objective of the firms involved in the product development process is to integrate the cultural norms in an effective manner so that the project is benefitted (Parker, 2000). Culture, in the organizational context can be described as the set of values, experiences, attitudes and beliefs which are shared by all the members of the organization. Culture defines the manner in which the components of an organization interact with each other internally and with the external world. It also determines aspects such as the manner in which decisions are taken and the flow of information. In other words, culture determines the manner in which organization conducts itself on a day to day basis. The integration of suppliers in the product development process depends upon how well the firms can culturally adapt with each other. It is seen that the cultural differences existing between firms makes it difficult for suppliers to actively participate in the product development process. Cultural dissonance may mainly disrupt the communication process between the supplier and the manufacturing firm. Moreover, if the supplier and the manufacturing firm hail from different nations, cultural barriers become even wider. Culture is seen to impact the manner in which suppliers and manufacturing firm interact in the following ways. Proper resource utilization and allocation is important for the successful development of a new product. The manner in which resource are utilized differ between organization due to cultural differences. Many organizations hailing from the Asian nations are seen to avoid altering the landscape if they contain valuable minerals. However firms in the western nations such as in the U.S. may not hinder to do so. The cultural beliefs existing in respect of the utilization of resources may widely impact the manner in which organizations interact with each other. Religion impacts the manner in which business relations are developed and maintained. In Islamic nation, the will of God is considered to be important in business decision making process. They also set out time for prayers during the everyday course of the business activities. Such rituals are not followed in the western nations. Therefore when firms from the western nations such as the U.S. integrate themselves with the firms in the U.A.E or any other Islamic nation, religious mindset may act as a hindrance. Organizations are required to rise above their religious differences by respecting each other’s values and traditions. Importance of trust and team work The collaborated effort of both suppliers and the organization is important for the success of a new product development process. Firms rely upon the timely supply of materials from the suppliers to meet manufacturing time limits and the needs of the consumers. Suppliers are also required to provide high quality goods. Hence, adequate trust and team work is required between the suppliers and the manufacturing organization (Bstieler, 2006). Both parties must together plan the production process and supply chain strategies. Adequate team work facilitates the removal of bottlenecks and other issues which may crop up during the product development process. Since both suppliers and the organization share important details regarding product development, there must exist trust between the two parties so that crucial information is not leaked out to competitors (Millson and Wilemon, 2002). Impact of trust Trust plays an important role when business gets integrated with other firms. When external members such as suppliers are integrated into the product development process, then resources and crucial business information gets shared between the two parties. Trust therefore becomes a motivational aspect through which it is possible to strengthen the ties and ensure that suppliers are more deeply involved with the business processes (Johnston, et al., 2004). It has been seen that there is not enough research which has been conducted in respect of the impact of trust in supplier-buyer relationship. Majority researchers are of the opinion that in the modern day competitive business environment, firms share only relevant information with suppliers as most of these relationships are not long lived. Most firms do not take the risks of sharing internal business details with suppliers (Handfield and Bechtel, 2002). It is also observed that a number of supplier buyer relations are based on contracts. Organizations are also seen to pressurize suppliers into the new product development, especially in cases where the buyers are less powerful. A forced integration may not be helpful in developing a strong trust based relationship between suppliers and the firm. However the importance of trust in the new product development process through supplier integration can be summarised as follows (Krause, Handfield and Tyler, 2007). When suppliers are integrated into the product development process, the success of both firms becomes mutually dependent on each other. The trust aspect becomes more pronounced if the quality of the new product depends upon the efficient participation of the suppliers. Trust between suppliers and the firm propagate a positive environment. This makes the new product development process simpler. If suppliers and the firm trust each other, the degree of complexity associated with negotiations reduces (Lawson, et al., 2009). Trust is also seen to positively influence the information sharing. With trust and sensitivity, important business information gets shared freely. It also encourages suppliers be innovative and provide suggestions to the members of the organization with less fear. A high level of trust between suppliers and the firm may give effect to long term relationships. Teamwork Success can only be achieved through the collaborated effort of all the participants of the business. When suppliers are integrated into the new product development process, teamwork becomes crucial between the firm and the members of supplier team. One of the first things that suppliers are informed when they are integrated with the product development process is that it is essential for them to understand the values of the organization and remain committed towards the same. Commitment can only be given effect to if suppliers feel that their success and the success of the firm are related on multiple levels (Hoegl and Gemuenden, 2001). The present day business environment calls in for teamwork especially for achieving of sustainability. The joint efforts of both suppliers and the firm lead to the radical establishment of sustainable product development. Teamwork and collaboration leads to the sharing of resources. Cost of manufacturing can be reduced to a large extend when the costs of production gets reduced. Through teamwork, firms can make use of the sophisticated technologies possessed by the suppliers. Teamwork also helps the suppliers to understand the specific requirements of the buyers and accordingly develop a number of new types of technologies (Wong, 2000). Every successful organization believes that teamwork between suppliers and the firm can only be achieved, when suppliers are provided with a certain degree of freedom. Teamwork also leads to the development of ethical understanding between suppliers and the buyers which help in overcoming the cultural differences existing in the organization (Chien and Chen, 2010). Business environment is characterized with frequent changes. Changes in technology and resource utilization impact the manner in which business gets conducted. It is important for a business organization to inform suppliers regarding the changes incorporated in the production process. Suppliers are able to adapt themselves with such changes only if there is adequate teamwork. Through the existence of such teamwork, firms are enabled to provide training and instructions to the suppliers (Hoegl and Gemuenden, 2001). Link between trust and team work Teamwork and trust are seen to be interdependent aspects. When there is adequate trust existing between suppliers and the firm, then teamwork is seen to get automatically effected. The establishment of trust and teamwork leads to successful product development. Trading relations and supply chain management is seen to be less strenuous when there is a high level of trust and teamwork. Successful multinational organizations have been able to establish strategic business subunits in varied locations only through teamwork and trust developed over time with suppliers from different parts of the world. One of the crucial impacts of trust and teamwork is upon the quality of the products. When suppliers are integrated into the production process in a proper manner, customer satisfaction is positively affected. Nevertheless, the successful integration of suppliers necessitates teamwork and trust existing between the firm and the suppliers (De Ruyter, Moorman and Lemmink, 2001). Reference List Bstieler, L., 2006. Trust Formation in Collaborative New Product Development. Journal of Product Innovation Management, 23(1), pp. 56-72. Chien, S. H. and Chen, J. J., 2010. 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