Supplier Involvement in the New Product Development Process - Thesis Proposal Example

Contents Introduction 2 Importance of NPD for organisations and current performance of NPD projects 3 Organisational structure of NPD projects 4 Involvement of external entities in CFTs 6 How organisational culture impacts on the relationships between the CFT and the suppliers 8 Context of the study 12 Gap in the literature 12 Research aims and objectives 13 Research questions 13 Reference 14 List of figures Figure 1: Description of how CFT may work 5 Introduction Tuominen and Möller (2006) emphasised that the importance of new product development (NPD) is to create the ability of an organisation to remain competitive in business by bringing on board new products that are introduced to respond to major market lapses and gaps identified with the company’s existing product lines. Adding to this, Szymanski and Henard (2011) stressed that NPD improves the longevity of businesses, as the product lifecycle naturally requires that at some point, organisations will need to refine their business and product models to avoid fade off. It is for this reason that a research that helps companies to know the real essence of NPD is very necessary. But as organisations go into NPD projects, it is important that they select the right organisational structure that can foster the efficient and effect utilisation of both tangible and non-tangible resources. In the light of this, Pawar and Driva (2009) recommended the use of a functional organisational structure as the best organisational structure for NPD as it ensures that roles, departments and portfolios are created to cater for different functions that need to be played to ensure the success of the NPD. Very related to the issue of organisational structure is the concept of cross-functional teams (CFT), which talk about putting together expertise from the different functional groups to achieve the collective goal of the organisation (Rosenthal and Tatikonda, 1993). The rationale for adopting CFT has been noted to be for the reason of promoting shared responsibility within the organisation. This is because when there is a CFT, experts and personnel of various departments no longer work in isolation but bring their expertise together in a well harnessed manner to achieve the collective goal of the organisation (Swink, Talluri and Pandejpong, 2006). In a study by Sveiby (1997), it was noted that the need to involve suppliers and other external entities in CFT is very important in fostering the success and performance of NPD. In later sections, detailed focus shall be given to the three important issues of importance of NPD, organisational structure and integration of suppliers (Tatikonda and Montoya-Weiss, 2001). Importance of NPD for organisations and current performance of NPD projects Atuahene-Gima (2006) lamented that most organisation have always resorted to using same old products and business models due to a lack of appreciation for the important role that NPD plays within their organisations. To most organisations like that, their argument has been that holding on to one model or product for a long time helps in the development and creation of brand equity which can be used to build a competitive advantage (Rust, Zeithaml and Lemon, 2000). There is however sufficient evidence to justify the importance of NPD to organisations. For example Eccles (2011) stated that NPD is necessary for extending the product lifecycle of company products. The product lifecycle is seen to have four major stages which are introduction, growth, maturity, and decline stages. Once companies get to the decline stage, bringing on board new product ensure that there is a rejuvenation of the product lifecycle (Post and Anderson, 2006). Based on this, performance of current NPD can be judged by the extent to which they are able to rescue companies from the decline stages of revenue generation (Eccles, 2011). Meyer, Tertzakian and Utterback (2007) noted that one important criteria for succeeding with NPD is having a yardstick that clearly states the expected outcomes with the project by way of efficiency and performance. Based on such a yardstick, it is possible to measure the performance and efficiency of the NPD projects. Using three examples of key performance indicators (KPI) which are marketing and sales, manufacturing, supply chain management, Eisenhardt and Tabrizi (2005) found that NPD performance of most companies in the global computer industry has been abysmal. Several factors were attributed to this situation including lack of shared responsibility, minimal senior management support and absence of cross-function work (Eisenhardt and Tabrizi (2005). This reveals the importance of having a performance measure. Organisational structure of NPD projects The functional organisational structure is the best for NPD as it identifies different functions and roles that must be part of the NPD and rightly assign these to experts and skilled personnel. When people with different expertise and from the different functional groups are brought together to form a team which is given a common goal to accomplish, this team is known as the cross functional team (Krajewski and Ritzman, 2005). Easingwood and Percival (2010) noted that CFTs have several unique characteristics, including the fact that it is made up of people with different expert knowledge, abilities and experience instead of those having the same line of knowledge. Again, it is characteristic of the CFT to have a common goal that they all seek to achieve. What is more, the CFT ought to have an identified set of principles that explains how they will function, given the fact that they must work in an interrelated manner to ensure the achievement of the organisation’s goal. Then also, Avlonitis, Papastathopolou and Goumaris (2001) indicated that leadership is important in the CFT so as to ensure that there is one person or groups of people who are giving directional inspiration to the whole team. CFTs are therefore structured in a waterfall system made up of a leader who coordinates the different roles and functions that must be played by the different experts coming together (Krajewski and Ritzman, 2005). In the diagram below, how the CFT work and operate is better itemised. Figure 1: Description of how CFT may work Source: Olve, Roy and Wetter (2008) From the figure above, it is seen that the CFT is formed by first identifying a business rationale, which serves as the goal to be achieved. Based on the rationale, the team members form their own expectations and identify avenues of motivating themselves for the achievement of the expectations. The team then sets its context based on the organizational context. In the proposed study, the organizational context is seen as the organizational culture. It is important to have a human resource (HR) system and support that encourages the promotion of the organizational context and team context. Finally, members bring their experience to form a learning process, which would have a learning outcome, which is the achievement of the eventual goal of the organization. Again, it is important to note that the intended learning outcome for the proposed study is success with the NPD. Involvement of external entities in CFTs Hart, Hultink, Tzokas and Commandeur (2003) explained a CFT as a team that comprises three members or more, each of which comes with diverse functional entities to work together towards a common goal. Based on this, it would be noted that a central element in CFT is the need to having people with different functional entities coming together to accomplish a set goal for the organisation. Writing on the different functional entities that come together to form a CFT, Dixon, Nanni and Vollmann (2010) explained that most organisations prefer to focus on the use of internal entities, given the fact that it is these internal entities that normally have assigned roles within the organisational structure being used by the organisation. It is therefore common to find representatives from different departments and functional units of the organisation coming together to form the CFT. Bean and Radford (2001) however argued that the involvement of external entities in CFT can be as important as the involvement of internal entities. An integrated approach to the formation of members within the CFT is very necessary. With the integrated approach, it is expected that the CFT will comprise both internal and external entities. As far as external entities are concerned, suppliers, auditors, quality assurance, quality control, regulators, investors, and trade unions can all be referred to. According to Ittner et al. (2000), the involvement of external entities generally ensures that the CFT’s actions and processes will conform to the larger organisational environment, which includes the external entities as stakeholders. The rationale for specifically focusing on suppliers is because of the important role that suppliers play in the NPD process. It would be noted that under the NPD process, the need to create or refine existing products is a crucial practice that influences the overall success of NPD (Guthrie, Petty, Ferrier and Wells, 2009). The overall rationale for involving suppliers in the CFT is to ensure that there is there is coordination in the supply chain management. This is because suppliers are important stakeholders in supply chain management whose inputs and opinions about the effectiveness of the process cannot be left out (Jacoby, 2008). Meanwhile, whether new products are being created or existing products being redefined, it is important to source for raw materials that are used for such purposes. In a study by Day and Wensley (2008), it was noted that majority of multinational organisations and other small and medium scale enterprises that go into NPD require outsourcing of raw materials instead of producing the raw materials within their means. In such cases of outsourcing, it is always important to include suppliers who will become part of the supplier chain of the organisation by providing the raw materials from their places of origin to the production point where the development of new product is taking place. The need for suppliers to be part of the CFT to be responsible for outsourcing can therefore be said to be the traditional role of suppliers when they are involved in the CFT in charge of the NPD (Easingwood and Storey, 2011). Quite apart from this traditional role, Tuominen and Möller (2006) stressed that there are other dynamic roles that the suppliers can play such as giving the CFT information about new trends on the market as based on the demand trend the suppliers receive from other competitors within the same industry (Vilaseca and Torrent, 2003). Once suppliers are made part of the CFT engaged in the NPD, there are both positive impacts and challenges that can be expected. Writing on the positive impacts, Dekimpe and Hanssens (2009) said that when the suppliers are not distant from the team but made a part of it, it makes it possible for the suppliers to have a better understanding of the whole philosophy and ideas behind the new product being developed. As a result of this, chances that suppliers will provide materials that meet the specific requirements and needs of the project are higher. What is more, having the suppliers as part of the team ensures that the suppliers have a better understanding of the time requirements of the project and thus become conscious of the need to avoid delays (Brignall and Ballantine, 2006). Then also, since suppliers are constantly on the materials market, they impact on NPD project performance positively by educating the team members on acceptable standards and control needed to achieve quality outcomes of projects. With all these said, Abratt (2010) noted that conflict of opinions and specifications can be a challenge with supplier involvement in NPD. To deal with this challenge, it is important to have conflict management and conflict resolution functionalities as part of the CFT. Olve, Roy and Wetter (2008) also touched on the issue of financing and stated that supplier involvement may raise the budget for the NPD, given the fact that their inclusion may come as an expert involvement which requires the payment of compensation and cost of training. How organisational culture impacts on the relationships between the CFT and the suppliers CFTs work with suppliers as external stakeholders of the organisation. CFTs also work with suppliers as members of the supply chain whose inputs are needed to facilitate the supply chain management. The nature and dimension of relationship between CFTs and suppliers have however not been static as it is commonly influenced by culture (Black, 2003). Culture will be noted to be very important in affecting group dynamics within the organisation. This is because the culture of the organisation affects organisational structure, which explains the extent to which group members relate to each other and how information and resources move from one level of the structure to the other (Barney, 1986). It has however been noted that not only does culture affect group dynamics but that it also affect relationship between the CFT and suppliers. In a study by Hauser, Tellis and Griffin (2006), it was noted that organisational culture has a lot of influence on the relationship that exists between internal members of the CFT and external entities such as suppliers. This is because the organisational culture defines the behaviour of people within the CFT as exemplified through the organisation’s visions, values, norms, beliefs, and models of doing business (Berry, Carbone and Haeckel, 2012). By implication, the organisational culture is a larger phenomenon of behavioural trend that impacts on how people within the organisation, including those who are within the CFT will behave or conduct themselves. Normally, when the CFT is made up of only internal members, organisational culture is not seen to be much of a problem. This is because the internal members are considered to be already abreast with the organisational culture as the organisational culture is expected to be manifested through the internal members (Griffin and Page, 2006). It is therefore when external entities such as suppliers are introduced as part of the CFT that most forms of problems with organisational culture arise (Black, 2003). This is because with the coming of the suppliers into the CFT, it is expected that the suppliers, being external entities and strangers to the organisational culture will adjust and adapt in a way that makes cooperation easier (Barney, 1986). Organisational culture is important to supplier involvement in CFT and how organisational culture impacts on the relationship between the traditional team members and the suppliers (Jaworski and Kohli (2014). Once this importance is appreciated, it will be easier to know the best ways in which suppliers can relate within the CFT to ensure a successful NPD. It is important at this point not to confuse Hofstede’s cultural dimensions with organisational culture even though the two has a relation and could act together in impacting on relationship with suppliers (Schrodt, 2002). Unlike organisational culture which defines the behaviour of people within the organisation as influenced by the organisation’s own philosophies and models (Ravasi and Schultz, 2006), Hofstede’s cultural dimensions explains how people of different cultures as defined by country of origin find themselves working together and communicating in the organisation (Waggoner, Neely and Kennerley, 2009). Interestingly, Woodcock (2000) stressed that Hofstede’s cultural dimensions dictate the approach that members within the CFT take towards the utilisation of organisational culture. The point made above s is like saying that given the same organisational culture, two people belonging to two different levels of Hofstede’s cultural dimension will exhibit the same organisational culture in different ways. Based on this, it is possible to the dimensions of culture and how they impact on the relationships between the internal members of the CFT and suppliers. The first dimension noted in the cultural dimension is power/distance (PD), which explains how inequalities exist among different people within the organisation (Hauser, 2008). In a CFT where there is high PD, organisational cultures are known to be structured in a way that there are strong hierarchies and large gaps in authority and respect (Cook, Vansat, Stewart and Adrian, 1995). In such a culture, supplier relationship is likely to be met with much distance from the main CFT as the organisation is likely to be centralised (Hauser, 2008). The opposite is true for low PD, where flatter organisations exist. In situations like that, supplier relationship is expected to be more mutual and active rather than passive. This is because few hierarchies exist and power is not much of an issue (Swink, Talluri and Pandejpong, 2006). The second dimension is individualism (IDV), which explains how the organisational culture allows strength of ties to exist among people within the organisation. Where there is high IDV, supplier relationship may be affected negatively because there is loose ties among people and the internal members may not draw suppliers very close into decision making process (Ittner et al., 2000). Low IDV is thus needed to ensure that there are stronger ties built between internal CFT members and suppliers as such organisational culture emphasise on building skills and relationships (Johne and Storey, 2008). There is also a dimension of masculinity (MAS), which explains how the organisational culture is structured to stick with traditional male and female roles. Jaworski and Kohli (2014) noted that where there is high MAS, there is well defined distinction between work to be done by males and those to be done by females. In effect, suppliers working with such a CFT would have to be assigned roles based on their gender. This means that suppliers will have better liberation to relate and function within the CFT if there are low MAS. Uncertainty/avoidance index (UAI) is the fourth dimension, which explains the degree of anxiety that members within the CFT feel in cases where they have to deal with uncertain or unknown situations. Clark (2009) explained that in organisational cultures where there is high UAI, supplier relationships will lack innovation and dynamism because business is likely to be performed in a very formal atmosphere where there are several rules and policies on what suppliers can do as part of the NPD and what they cannot do. Using a low UAI can therefore be seen appropriate in promoting innovation within the team and in the NPD because such cultures do not fear to take risk. In the last dimension, the extent to which members value long-standing values and traditions as against short ones is explained as long term orientation (LTO). Organisations with high LTO see the family as the basis of society and will therefore not mind if suppliers are engaged in external involvements with family members. This could however become distractive and so low LTO will be most recommended so that the duties of the CFT and suppliers can be strictly focused on implementation of the NPD. Based on all the discussions in this section, it can be noted that the type of organisational culture as manifested through the Hotstede’s cultural dimensions can have major impact and influence on how the suppliers can be involved and engaged in the CFT when undertaking NPD. On the whole, it is expected that the organisational culture will be such that there will be close ties between the internal entities and suppliers as external entities. Context of the study Gap in the literature While reviewing existing literature, what was lacking had to do with the studies that established a relationship between CFT and suppliers. As it is now, this gap in literature makes it difficult to know how different models and outlooks with organisation affects the inclusion of suppliers in the CFT affects the overall performance of NPD projects. It was found that there are several works of research which acknowledge the relationship that exists between the use of CFTs and succeeding with NPD (Keller, 2008; Griffin, 2007; and Adams and Boike (2014). It was also found that most works of literature appreciated the need to have performance measurements when implementing new product projects (Neely, 2008; Bayus, 2007; and Oldenboom and Abratt, 2010). There are some works of literature, which touched on culture and its effects on NPD performance (Yeniyurt, 2003; Johne and Storey, 2008; and Lev, 2002). Such works however treated organisational culture as a holistic phenomenon, which affects the organisation’s performance in exactly the same way. Through the proposed study, the identified gap of lack of relationship between suppliers and the CFT will be bridged by looking at the role of suppliers within the CFT and how supplier involvement ensures the success of NPD. By implication, the proposed study will be helpful in understanding how each dimension of culture as manifested in the organisational culture affects supplier involvement in CFT and how the effect of involvement affects the outcome of performance with the NPD. Research aims and objectives To help bridge the identified gap, the study is to be performed with the aim of exploring supplier involvement in the new product development. To achieve this overall aim, the following specific objectives will be pursued in the study: 1. To find the relevance of CFT in the implementation of NPD projects 2. To find the forms of relationships which exist between CFTs and suppliers? 3. To outline the roles played by suppliers as external entities in fostering the success of NPD 4. To determine how different dimensions of culture affect the relationship between internal members of CFT and suppliers Research questions 1. What is the importance of CFTs in the execution of NPD projects? 2. 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