Customer/Supplier Integration Into New Service Development

Salman Mousayi radArmin Kia

Mina Kashefi

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Outline

• Customer need assessment• Customer integration• Supplier integration• Supplier Risk Assessment• Supplier’s Technology Roadmap• Timing of Supplier Integration• The Future of Supplier Integration• Developing Suppliers’ Capabilities

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The activities concerned with the recognition, gathering and clarification of customer needs and their importance to determine need specifications and objectives for new products/ service .

Sometimes the concept is extended to cover also the activities ensuring that all the important needs are fulfilled

Customer Need Assessment

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A Customer Needs Assessment can provide marketers with insight regarding:

Where challenges or needs exist

Current problems and whether they are expected to increase,

decrease, or stay the same in the future

The direct and indirect costs of failures

Which services or products currently used are the most

successful and why

Obtain reactions to a new product/service or solution

Anticipate future challenges or needs 4of 37

Customer Need Assessment MatrixDesired

OutcomesDefinition Rationale Performance

ExpectationImportance Satisfaction

A word or phrase in

the customers terms that states the

need, issue or problem

to be solved

Description of the

customers desired

outcome.

Provide the reason

that the attribute

is important

to the customer.

List the customer requirements in

qualitative, quantitative, or

comparative terms..

A numerical rating or ranking

designation the

importance of the

outcome to the

customer

A numerical rating of

how satisfied the customer is

with the outcome when the

services are offered

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Better ability to recognize customers’ future needs

Improvement of direct contacts and cooperation

between the service development and customers

More organized and careful co-operation with the

most advanced lead-customers

Development Needs

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NHS South West Essex case

• Conducting Research• Service reconfiguration• Questionnaire• The new service pathway is outlined in the

following steps:Referral and health needs assessmentService SelectionLifestyle Modification

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Why Supplier Integration is important

Strong link between supplier involvement and team performance

Contribution of suppliers in competitive advantage specially in

R&D researches

Studies found performance improvement outcomes from supplier

integration

Length of buyer/ supplier relationship has a positive effect on

product/ service development efforts

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most important Factors in supplier assessment

Understanding the focal suppliers’ capabilities and design expertise

Conducting a technology risk assessment Weighing the risks against the probability of

success

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Key questions in supplier integration Which suppliers should be involved?

Is the supplier able to meet our requirements?

Is the supplier’s technology roadmap aligned with

our technology roadmap?

Given the level of technical complexity, to what

extent should the supplier be involved in the

project?

When should the supplier become involved in the

project?11 of 37

Supplier Integration Approaches

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Design Flexibility andCost of Design Changes

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Different Degree of Supplier Integration

No Supplier Involvement

White box Gray Box Black Box

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Process Model for Consensus on Suppliers to Integrate into NPD/NSD

Identifying Desired Supplier Capabilities and Potential Suppliers

In sourcing or out sourcing

Specify roles and responsibilities it requires of

suppliers selected for new product/service

development?

use those primary criteria in supplier

selection, negotiation, alignment, and

relationship management.

Risk Assessment16 of 37

Important factors in considering new or existing suppliers:

Targets Timing Ramp-up Innovation and Technology Training

Supplier Risk Assessment

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comprehensive risk assessment

What is the likelihood that this supplier can bring the product/service to market?

How does this risk compare to other potential suppliers?

At what point are we willing to reverse this decision if we proceed, and what are the criteria/measures for doing so?

What is the contingency plan in the event the supplier fails to perform? Risk

Assessment18of 37

Supplier is able to design and manufacture a prototype or start-up small volume production

suppliers must also be able to meet product introduction deadlines and ramp-up their production volumes very quickly

Risk Assessment

NotEnough

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Two options when supplier’s capabilities are not at desired levels

• different suppliertechnology is not

critical

• develop and improve the

suppliers’ capabilities

technology is critical

limited numbers of suppliers

Risk Assessment21 of 37

Informal approach– A standard survey augmented by

informal evaluations based on face-to-face discussions with the supplier’s technical personnel

Formal approach– The company audits the supplier’s

facilities for environmental compliance, quality, technical capability, and cost.

Risk Assessment22 of 37

Assessment of Supplier’s Technical Capabilities

• short-term and long-term alignment- To obtain maximum strategic benefit from the integration

of the supplier, companies must share objectives and

have complementary future technology plans

convergence of the partners’ technology roadmaps

Assessing the Supplier’s Technology Roadmap

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To achieve alignment of technology roadmaps with suppliers

• Sharing information is a critical element of the process.• Providing incentive or motivation for suppliers is the

second important element.

Organizations will need to first build stronger relationships with suppliers:

• Sharing future product/service plans.• In turn, suppliers may need to alter their technological

plans to align with those of major customers.Technology roadmap25 of 37

maintain a competitive edge

– continuously monitor competitors’ products, processes, and supply bases

– suggest modifications to current sourcing strategies.

Technology roadmap

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Assessing the Rateof Technological Change

The rate of change in service technology

The current rate of technological change is

challenging many companies’ capabilities, and

they are seeking the help of suppliers with the

development and application of critical but

non-core technologies in their new servicesTechnology roadmap

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If a particular technology is changing rapidly, then

involving the supplier early has potential pitfalls:

the buying company may become “locked into” a

particular design or technology, release the

products/services, and discover that the technology

has become obsolete or has been replaced by a

technology with improved performance

characteristics

STOP

Technology roadmap29 of 37

Timing of Supplier IntegrationCompanies should consider two major factors when

deciding when to integrate the supplier :

the rate of change of the technology,

the level of supplier expertise in the

given technology

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• Field studies suggest that certain types of suppliers are more likely to be integrated earlier

• In general, face-to-face discussions are quicker, and information can be exchanged more effectively

• At an ICT service provider, the supplier’s level of involvement may vary. To get a good quote, the supplier must be brought in early and sit in on the customer negotiation meeting

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Integrate Suppliers at Different Stages

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The Future of Supplier IntegrationService providers expect to increase their use

of supplier integration in the future, and to involve suppliers earlier in the development process than they do now

On average, the respondents considered the supplier integration have been fairly successful

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We are currently satisfied with the results of our supplier integration efforts.”

“Expectations about the results to be achieved from supplier integration will increase significantly.”

Many companies realize the importance of supplier integration, but have not yet perfected the process to successfully implement it.

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Developing Suppliers’ Capabilities

• Just in the early stages of new service development

• Working directly with the supplier to identify and resolve problems.

• Process engineering support, financial support, or even support from within the supplier community itself

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