managing supplier involvement in new product development: a portfolio approach

*Corresponding author. Eindhoven Centre for Innovation Stud-ies/Institute for Purchasing & Supply Development, Eindhoven Uni-versity of Technology, Faculty of Technology Management, P.O. Box513, 5600 MB Eindhoven, Netherlands. Tel.: #31-40-2473841; fax:#31-40-2465949.

E-mail addresses: [email protected] (F. Wynstra), [email protected] (E. ten Pierick)

European Journal of Purchasing & Supply Management 6 (2000) 49}57

Managing supplier involvement in new product development:a portfolio approach

Finn Wynstra!,",*, Eric ten Pierick#

!Eindhoven Centre for Innovation Studies/Institute for Purchasing & Supply Development, Eindhoven University of Technology,Faculty of Technology Management, P.O. Box 513, 5600 MB Eindhoven, Netherlands

"Jo( nko( ping International Business School, Jo( nko( ping University, P.O. Box 1026, 551 11 Jo( nko( ping, Sweden#Department of Commercial Management and Marketing/Strategic Management, University of Twente, Faculty of Technology and Management,

P.O. Box 217, 7500 AE Enschede, Netherlands

accepted 3 September 1999

Abstract

Supplier involvement in new product development projects has become an increasingly popular method for improving projecte!ectiveness (product costs and quality) and project e$ciency (development costs and time). One of the key issues in managing thisinvolvement is determining which type of involvement a manufacturer should have with the various suppliers that may be engagedsimultaneously in a development project. In this article, a Supplier Involvement Portfolio is introduced to distinguish four types ofsupplier involvement in development projects. Subsequently, suitable supplier}manufacturer interfaces for the four types of involve-ment are de"ned in terms of the direction of information #ow, the communication media used, the amount of communication, thetopics discussed and the functions involved. ( 2000 Elsevier Science Ltd. All rights reserved.

Keywords: Supplier interface; New product development; Supplier involvement portfolio

1. Introduction

1.1. Supplier involvement in product development

Many "rms increasingly realise that supplier involve-ment in new product development can be bene"cial withregard to the costs and quality of new products and thecosts and time associated with their development. Conse-quently, more and more suppliers are becoming involvedin their customers' development projects. This involve-ment may range from giving minor design suggestions(e.g. to improve a component's manufacturability) tobeing responsible for the complete development, designand engineering of a speci"c part or sub-assembly. In

contrast with generally held belief, however, prior re-search has shown that supplier involvement in new prod-uct development may not always lead to improvementsin project e!ectiveness (product costs and quality) andproject e$ciency (development costs and time) (Birou,1994; Hartley, 1994; see Wynstra, 1998; pp. 53}55). Still,this does not imply that supplier involvement is a poorstrategy; it emphasises that supplier involvement shouldbe managed carefully.

Especially in the case of "nal products consisting ofparts from many di!erent suppliers, supplier involvementmay increase the complexity of managing developmentprojects. One of the key issues in such situations is todetermine which type of involvement a manufacturershould have with the various suppliers that may beengaged simultaneously in a particular development pro-ject. Collaboration with suppliers in product develop-ment takes time, e!ort and money in terms of co-ordination and communication; not only for the supplier,but also for the manufacturer. Supplier involvement isnot very useful if the same amount of time as has beensaved in internal engineering hours is now spent onadditional communication with suppliers. Di!erentiation

0969-7012/00/$ - see front matter ( 2000 Elsevier Science Ltd. All rights reserved.PII: S 0 9 6 9 - 7 0 1 2 ( 9 9 ) 0 0 0 3 5 - 0

1Obviously, literature provides various typologies that refer to thesupplier's participation in the customer's product development as oneof the aspects in supplier}manufacturer collaboration. Given theirgeneral character, these typologies su!er even more from the shortcom-ings discussed here than the current typologies that speci"cally dealwith supplier involvement in new product development.

between several forms and phases of supplier involve-ment may help to set priorities so that the involvement ofsuppliers becomes more manageable and economical.

Another argument for di!erentiation is that suppliersof di!erent parts and components contribute to a di!er-ent extent to the development of the "nal product. Litera-ture provides us with a variety of models or typologiesthat di!erentiate between di!erent forms of supplier in-volvement on the basis of product characteristics (Clark,1989; Lamming, 1993; Kamath and Liker, 1994; Bidaultand Butler, 1995). Although valuable, these typologieshave some shortcomings that make them less suitable formanaging supplier involvement in single developmentprojects.1 Two of these shortcomings are especially rel-evant for our discussion. First, the models are &static' orin#exible in assuming that a supplier of a certain com-ponent should be involved in the same way in di!erentdevelopment projects. For example, the models indicatethat suppliers of assemblies (e.g. a complete dashboardfor a car) should always be involved early in the develop-ment project. This argument, however, focuses more onthe supplier's potential contributions (&suppliers of com-plex products possess greater capabilities') than on theactual need for such contributions (design suggestions,etc.) from the point of view of the manufacturer. In somecases, the modi"cation or innovation of the "nal productdoes not require changes in the major subsystems of theproduct, but only in a small component. Useful tools fordistinguishing di!erent supplier roles in developmentprojects should, therefore, include a consideration of theneed for supplier input in the speci"c project at hand.

Second, most existing typologies do not address inmuch detail the issue of how the involvement of thedi!erent suppliers can or should be managed. They onlyprovide guidelines regarding the phases of supplier in-volvement within the course of a development project(e.g. from the Concept phase until the end vs. only in theDetail Engineering phase) and the extent of involvement(e.g. the supplier only receives functional speci"cationsvs. almost complete blueprints). However, little if any-thing is said explicitly about the kind of communicationand co-ordination taking place. It is therefore not entire-ly clear how this di!erentiation of supplier roles can helpmanufacturers to optimise their communication and co-ordination e!orts.

In this paper, our objective is to address both short-comings by introducing the Supplier Involvement Port-folio. This is a tool that distinguishes di!erent types of

supplier involvement in new product development. Inaddition, for each type of involvement accompany-ing guidelines for communication and projectmanagement issues are described. The tool as well asthe guidelines have been developed on the basis of anextensive case study of a Dutch medical equipmentmanufacturer.

1.2. Case study and methodology

Philips Medical Systems (PMS) is a product divisionwithin the Professional Products and Systems groupof Royal Philips Electronics, located in Best (Nether-lands). Its diagnostic imaging systems incorporateadvanced X-ray, magnetic resonance and ultrasoundtechnologies. In recent years, cost-reduction e!orts atPMS have increasingly led to discussions on what shouldremain the core competencies of the company and whatshould be outsourced. As a consequence, the involvementof suppliers in product development has become a keyissue.

The portfolio and the di!erent supplier interfaces dis-cussed in this paper result from &design oriented' research(Van Aken, 1999). They are empirically validated byreviewing existing supplier relationships in product de-velopment at PMS and by analysing potential improve-ments by implementing relationships as suggested by ourapproach. The research was carried out in the period1995}1998, involving interviews with purchasers, engin-eers and supplier representatives. Furthermore, tworesearchers have been stationed at the companyfor a considerable period of time, enabling "rst-hand observation of and participation in department andproject meetings and discussions. In addition, projectdocumentation was reviewed (for triangulation pur-poses), and workshops were organised in which theideas were tested and re"ned in collaboration with PMSrepresentatives.

1.3. Disposition

In Section 2, the Supplier Involvement Portfolio isintroduced. However, before describing the tool itself,"rst the problems associated with its development areanalysed. Section 3 deals with the process of &"lling' theSupplier Involvement Portfolio by discussing the stepsrequired to position product}supplier combinations inthis matrix. The actual deployment of the portfolio is thetopic of Section 4. Applying the logic of Media RichnessTheory, guidelines regarding e$cient and e!ective com-munication behaviour are described for each type ofinvolvement. In addition, examples from PMS are usedto illustrate the various types of involvement. Finally,Section 5 concludes the article by discussing its limita-tions and providing some suggestions for future research.

50 F. Wynstra, E. ten Pierick / European Journal of Purchasing & Supply Management 6 (2000) 49}57

Fig. 1. The Supplier Involvement Portfolio.

2. Developing the supplier involvement portfolio

2.1. Initial model

The development of the Supplier Involvement Port-folio was induced by a development project at PMS in1992}1995 * the L'ARC C/N project * in which ex-ternal suppliers had been given greater responsibilitiesfor engineering activities and the delivery of prototypes.A close examination of this and three other (primarilyinternal) development projects revealed that the L'ARCC/N project su!ered from considerable developmenttime overrun (more than the projects in which prototypeshad been made by PMS internal workshop). With respectto other aspects, however, the L'ARC C/N projectdid not perform badly: in terms of development budget,it had a relatively small (8%) overrun, and with regardto the cost-price of the new product, the projecteven resulted in a 12% reduction against the originalbudget.

Further analysis of the L'ARC C/N and other projectsin which outside parties were involved indicated thatthese su!ered from a lack of common understandingbetween the purchasing and development departments.There was a lack of understanding with regard to eachother's tasks and responsibilities, and * even more im-portant * there was a lack of agreement and under-standing with regard to the possible roles of suppliers inproduct development (Sie, 1996). In order to contributeto solving these problems, a procedure was developed fordistinguishing di!erent supplier roles in the product de-velopment process.

Initially, inspired by the example of OceH (a Dutchmanufacturer of o$ce equipment; Wynstra, 1998, pp.47,48), the application of the regular purchasing portfolio(Kraljic, 1983; Van Weele, 1994) was tested for planningsupplier involvement in an ongoing development project.According to this approach, suppliers of Strategic Itemsare involved early, in the Concept phase of a develop-ment project. In the Engineering phase, suppliers ofLeverage and Bottleneck Items become involved. In-volvement of Non-critical (Routine) Items does not startuntil the "nal stages of the development project. Theportfolio was tested by comparing (1) how supplierswould be involved in the process if priorities were set assuggested by the portfolio with (2) the ideal situationinferred from interviews with purchasers and engineerson how it should have been done. This resulted in twomajor "ndings (Wynstra and Sie, 1996):1. it did not result in the right priorities regarding the

timing of supplier involvement in a development pro-ject; and

2. the phase and extent of supplier involvement were notdirectly coupled with each other* early involvementdid not automatically imply a greater role for thesupplier.

Hence, it was necessary to introduce another criterion(than logistical risks or "nancial importance) for di!eren-tiating between phases of supplier involvement. From theinterviews with purchasing and engineering representa-tives, this criterion appeared to be development risk. Sub-sequently, a new model was developed: the SupplierInvolvement Portfolio.

2.2. The Supplier Involvement Portfolio

The aim of the Supplier Involvement Portfolio is toprovide support for setting priorities with regard to theinvolvement of suppliers in a new product developmentproject so that it can be carried out with an optimalamount of &management capacity' (time and money spenton communication, co-ordination, etc.) while making op-timal use of suppliers' expertise. This portfolio distin-guishes four types of supplier involvement on the basis oftwo variables: (1) the degree of responsibility for productdevelopment that is contracted out to the supplier and (2)the development risk (see Fig. 1).

Since the degree of development responsibility con-tracted out to the supplier is strongly related to thedi!erence in expertise (knowledge, know how and experi-ence) between PMS and the supplier, it a!ects the phaseof involvement. When a manufacturer decides to givea supplier a major responsibility for the development ofa certain component in the new ("nal) product, it is usefulthat this supplier is contacted, &brought on-line', in one ofthe early phases of the overall development project.Otherwise, the speci"cations of (the interfaces with) otherparts of the "nal product may already have been "xedto such a large extent that the supplier's degrees offreedom for developing his particular component mayhave been reduced considerably. As a result, the sup-plier's expertise cannot be fully leveraged in the design ofthat component.

F. Wynstra, E. ten Pierick / European Journal of Purchasing & Supply Management 6 (2000) 49}57 51

Development risk * the importance, newness andcomplexity of the (successful) development of the partconcerned * gives an indication of the time and e!ortrequired developing a speci"c part. The more develop-ment e!orts are needed, the earlier they should start.

Based on these variables, the four types of supplierinvolvement distinguished in the Supplier InvolvementPortfolio are Strategic Development, Critical Develop-ment, Arm's Length Development and Routine Develop-ment (see Fig. 1). Before describing these four types ofinvolvement, we "rst discuss how the Supplier Involve-ment Portfolio can be &"lled'. In this discussion, the twoaxes of the Supplier Involvement Portfolio are describedin more detail.

3. Filling the supplier involvement portfolio

In order to "nd out which type of involvement issuitable, the value of the two variables for each speci"csupplier-component combination (i.e. the position onboth axes of the portfolio or matrix) must be determined.The approach to be adopted when &"lling' the SupplierInvolvement Portfolio is as follows:1(a). determine the degree of responsibility that the sup-

plier holds for the development;1(b). determine the development risk;2. position the supplier-component combination in

the Supplier Involvement Portfolio; and3. re#ect on the distribution of the various supplier-

component combinations across the portfolio, and* if necessary * re-position some of them.

Although it appears to be most logical to follow thesteps in the sequence suggested here, steps 1a and 1b mayactually be done in parallel or reverse order. Below, thethree steps are considered in more detail.

3.1. Determining the vertical axis, the degree to whichdevelopment is contracted out

A distinction is made between four levels at which theresponsibility for the development of a building block(component) can be contracted out:I. technical (or purchasing) speci"cations: on the basis

of (full) technical speci"cations the supplier is givenresponsibility for setting up its production processand for the manufacturing itself;

II. detailed design: on the basis of a detailed design thesupplier is given responsibility for setting up hisproduction and assembly process and for ultimateproduction and assembly;

III. global design: on the basis of functional speci"ca-tions and a global design of a building block thesupplier is given responsibility for: the detailed de-sign; construction and testing of a detailed design;

and the setting up of production and assemblyprocesses; and

IV. functional speci"cations: on the basis of the func-tional speci"cations of a building block the supplieris given responsibility for: the global design (con-cept and feasibility studies); the detailed design;testing of the (global and detailed) design of thebuilding block; and setting up of production andassembly processes.

The approach to determine supplier responsibility forthe development of a building block consists of severalsteps in itself. First, one needs to de"ne each buildingblock and determine, within the speci"c project, the &de-sired' degree of development responsibility given to thesupplier. Central questions for the degree to which devel-opment is to be contracted out are:f Considering the "rm's core technological competen-

cies, into how much detail should it go in developingspeci"cations?

f Are there suppliers with more relevant product orproduction knowledge for this particular part than themanufacturer?

f Are there suppliers that can do the development workmore e$ciently than the manufacturer?

f To what extent does the manufacturer need develop-ment capacity (man-hours) of suppliers to meet theproject targets?Having de"ned the desired degree of supplier respons-

ibility, one needs to identify suppliers that could beinvolved in the development of the building block. Ifthere are no (known) suppliers, the de"nition of thebuilding block or the desired degree of supplier respons-ibility for the development should be adapted so thatthere are suppliers that can do the development. Alterna-tively, suitable suppliers may be found through marketresearch and/or by motivating suppliers to develop theknowledge and products the manufacturer needs.

3.2. Determining the horizontal axis, the development risk

The development risk for each building block * thehorizontal axis * can be determined on the basis ofa number of questions. In fact, based on interviews withdevelopment engineers at PMS, "ve questions seem cru-cial in determining the sequence in which building blocksneed to be dealt with in the development process:1. To what extent does this building block make an

essential new contribution to the functionality of theoverall system, as compared with previous systems?

2. To what extent does this building block determine thetechnical speci"cations and the design of other build-ing blocks?

3. To what extent does the development or ordering timefor (components from) this building block determinethe throughput time of the entire development projectat the manufacturer (&is it on the critical path')?


2The primary reason to select Media Richness Theory is that it goesbeyond most other communication theories: it does not only explaincommunication behaviour, it also provides normative statements re-garding the type of behaviour that is expected to be e$cient ande!ective under particular circumstances (Fulk and Boyd, 1991).

4. How many di!erent technologies are used in thisbuilding block (&internal complexity')?

5. To what extent are the production technologies orcomponents of this building block new, and/or is theapplication of these technologies/components new forPMS?Each question may be accompanied by a (3 or 5-point)

ordinal answering scale. The higher the combined scoreon these "ve questions, the higher the development risk.

3.3. (Re-) positioning in the Supplier Involvement Portfolio

By determining the values on the horizontal and verti-cal axes, steps 1a and 1b, it becomes possible to positionthe building block in the Supplier Involvement Portfolio(see Fig. 1). This indicates the di!erent types of supplierinvolvement and the sequence in which suppliers are tobe involved. When both the supplier's responsibility fordeveloping the component and the risk associated withthat development are high (Strategic Development), it isimportant to involve that supplier early in the develop-ment project. Subsequently, the involvement of suppliersfrom respectively the Critical Development, the Arm's-Length Development and the Routine Developmentquadrants is required.

Finally, the actual distribution of all relations acrossthe Supplier Involvement Portfolio may also induce re-de"nitions of supplier development responsibility. Forexample, if this distribution is biased towards many(time-intensive) Strategic Development types of involve-ment, there may be a need to reconsider the positioningof some of the supplier-component combinations in thatquadrant.

4. Deploying the Supplier Involvement Portfolio

Up to this point, the four types of supplier involvementdistinguished in the Supplier Involvement Portfolio havenot been discussed in much detail. Therefore, this sectionprovides a more comprehensive description of the fourtypes of involvement. This description also includesguidelines for e$cient and e!ective communication be-haviour in the situations concerned. However, as theseguidelines are based on Media Richness Theory (Daftand Lengel, 1984,1986; Ten Pierick and Beije, 1998), it isuseful to "rst introduce brie#y the line of reasoning inthis theory.

4.1. Media Richness Theory

Media Richness Theory (MRT) suggests that (1) com-munication media vary in their information-carrying ca-pacities, and (2) for e$cient and e!ective communicationto occur, communication behaviour should match in-formation-processing requirements2. The "rst proposi-

tion is re#ected in the continuum of information (or media)richness (Daft and Lengel, 1984); the second propositionis known as the matching hypothesis (Fulk and Boyd,1991).

4.1.1. Information richness continuumBased on the work of Bodensteiner (1970), Daft and

Lengel (1984,1986) proposed that communication mediacould be placed along a continuum of information rich-ness (see Fig. 2). They de"ned information (or media)richness as the capacity of a medium to overcome di!er-ent frames of reference, clarify ambiguous issues orchange understanding within a time interval. A medium'srichness is determined by a blend of four of its character-istics: (1) the capacity to provide (immediate) feedback;(2) the type(s) and number of cues and channels utilised;(3) the degree of personalisation; and (4) the variety oflanguages used.

According to these criteria, face-to-face is the richestmedium, followed by telephone, addressed written docu-ments (e.g. letters and memos), unaddressed writtendocuments (e.g. bulletins and #yers) and, "nally, numericdocuments (e.g. quantitative computer output).

4.1.2. Matching hypothesisOrganisations are information-processing systems

(Tushman and Nadler, 1978). They gather and interpretinformation in order to reduce uncertainty and equivo-cality (Galbraith, 1973; Weick, 1979). Uncertainty meansabsence of information (Daft and Lengel, 1986). It is `thedi!erence between the amount of information required toperform the task and the amount of information alreadypossesseda (Galbraith, 1973, p. 5). A typical response fororganisations facing uncertainty is to increase theamount of information processing and communication(Daft and Lengel, 1984; Galbraith, 1973; Tushman andNadler, 1978).

Equivocality means ambiguity. It is the extent to whichinformation is unclear and suggests multiple and con#ict-ing interpretations (Weick, 1979). While uncertainty istypically reduced by increasing the amount of informa-tion processing, equivocality reduction cannot beachieved by simply processing more information; it re-quires the processing of &rich' information by the selec-tion of &rich' media (Daft and Lengel, 1984).

Drawing on the ideas of MRT, we continue to discussguidelines for the relationships distinguished in the Sup-plier Involvement Portfolio. By way of introduction, itmay be stated that (in general) equivocality is primarilyassociated with the degree of development responsibility


Fig. 2. Information Richness Continuum. Source: Daft and Lengel (1984: 197)

held by the supplier. Uncertainty, on the other hand,may be caused by development risk (i.e. uncertaintyprimarily perceived by the manufacturer) and by thedegree of supplier development responsibility (i.e. uncer-tainty primarily perceived by the supplier).

4.2. Strategic Development

Strategic Development is characterised by a high de-velopment risk and a high degree of supplier responsibil-ity for the development. Using functional speci"cationsas a starting point, the supplier is asked to preparea &global design' of the building block. It is for this reasonthat the supplier of the building block from the StrategicManagement quadrant is the "rst to be involved in themanufacturer's development project.

As the supplier is involved already in a conceptualstage, most information is imprecise and vague. Thisinevitably leads to a high level of equivocality. In addi-tion, at this stage, the risks associated with the project arehigh for both parties. The manufacturer is confrontedwith a high development risk and therefore wants to beclosely involved. The supplier perceives a high level ofuncertainty because it does not know exactly what themanufacturer wants. As a result, especially at "rst, thecollaboration needs to be close and interactive. That is,a lot of details (technical as well as commercial) have tobe discussed and both parties have to check whether theyunderstand each other correctly. Hence, regular verbalcommunication is necessary so that both parties canexplain to each other what is desirable and what ispossible. Furthermore, the two parties must discuss theproblems and solutions that arise as a result of a lack ofexperience of working together. In addition, face-to-facecontacts are also important for the exchange of knowhow and experience (Ten Pierick and Beije, 1998). Fi-nally, as there are various kinds of information to beexchanged (e.g. technical, commercial and planning in-formation) and because information exchange must notdelay the development project, &rapid' communication isneeded. Communication lines should be short so that, for

example, development engineers from both sides cancommunicate directly with each other.

For PMS, the case of an Italian supplier of generatorsegments may illustrate these guidelines. This supplier* which had not been used before by PMS * had todevelop a new building block on the basis of functionalrequirements. These requirements were faxed to Italy andclari"ed during several phone calls. After some months,the supplier sent a prototype to PMS. However, thisprototype did not comply with PMS expectations. Thisled to the decision to drastically change the communica-tion pattern: a series of face-to-face meetings was ar-ranged * involving a number of people from severaldepartments from both parties* to discuss the di!erentrequirements. In addition, other contacts (i.e. telephone,fax and e-mail) were intensi"ed. Eventually, after anothercouple of months, the supplier delivered a prototype thatmet the requirements of PMS.

4.3. Critical Development

In the case of Critical Development the supplier in-volvement is characterised by a high development riskand a low degree of supplier development responsibility.Often, this involves possible interfaces, connecting piecesand transmission mechanisms, but also near-standardpurchasing parts that determine to a large extent the&global design' of other building blocks. Since these prod-ucts determine the further progress of the developmentproject, the manufacturer needs information from thesupplier at an early stage. There is a need to obtainsu$cient information about what is and what is notpossible with regard to di!erent solutions for technicalproblems so that choices can be made and the develop-ment of other building blocks may proceed.

In this situation, the manufacturer asks the supplier forconcrete information. As a consequence, the level ofequivocality is probably low and therefore &lean' mediacan be used. The level of uncertainty* as perceived bythe manufacturer* is high: the manufacturer lacks a lotof information. On the other hand, the supplier * as


information provider* does not perceive any uncertain-ty. As a result, the amount of communication is limited.Moreover, the topics of information &exchange' mostlyconcern market information (e.g. the costs of di!erentoptions) and technical details. Therefore, the functionaldisciplines typically involved in the communication arepurchasing and development.

An illustration of the segment Critical Development isthe product category of bearings. As bearings have a sig-ni"cant impact on the functionality of PMS systems (e.g.with regard to the speed of rotation), PMS requiresinformation from the supplier at an early stage of thedevelopment of a new building block. However, PMS isusually able to specify exactly the kind of information itneeds (e.g. questions like &Is it possible to meet thesespeci"cations?'). Therefore, most of the time, telephoneand fax are used in the communication with suppliers.Moreover, it is probably clear that generally the initiativelies with PMS.

4.4. Arm's Length Development

In the case of Arm's-Length Development a large partof the development is contracted out to the supplier, butthe development risk is considerably lower than it is inthe case of Strategic Development. The di!erence withStrategic Development is that the development is con-tracted out in a more formal manner and the relationshipis considerably less close. As in the situation of StrategicDevelopment, the supplier receives rather &vague' in-formation. This implies a high level of equivocality andthe necessity to use rich communication media. However,the need to exchange information is lower than in thesituation of Strategic Development. That is, although theuncertainty is high for the supplier (because of the need toknow exactly what the other party wants), the manufac-turer experiences low levels of risk and uncertainty andtherefore does not feel a strong urge to be closely in-volved. Hence, after the transfer of the functional speci-"cations and the &global design', the information&exchange' takes place mainly upon the initiative of thesupplier. Finally, the functional disciplines involved atthe manufacturer's site are mainly development (withrespect to technical issues) and sometimes purchasing(for co-ordination purposes).

Drawing on the study at PMS, a case illustrating thequadrant of Arm's-Length Development concerns a sup-plier of monitor ceiling carriers from Belgium. Based ona functional speci"cation and having a prior model at itsdisposal, this supplier had to design and subsequentlymanufacture a new generation of monitor ceiling carriers.To facilitate this process, there have been some meetings.However, most of the information was transferred bymeans of media such as telephone, fax and mail. More-over, the major part of the communication was initiatedby the supplier.

4.5. Routine Development

Routine Development is characterised by low develop-ment risk and little or no responsibility for the develop-ment being held by the supplier. The manufacturer drawsup technical or purchasing speci"cations, co-ordinates allchanges and monitors to ensure that all prototypes areon time so that the construction and testing of the (sys-tem) prototypes are not delayed. Further, the relation-ship consists mainly of the two parties keeping each otherup to date about any changes, costs and speci"cations.

In terms of equivocality and uncertainty, the commun-ication requirements are minimal. As the informationexchanged is concrete, there is no need to use rich media.Therefore, e$ciency considerations lead to the selectionof lean media such as fax, mail and e-mail. In addition,since the development risk is low and since both partiesknow what to expect from each other, there is no need tocontact each other frequently. Moreover, to economisefurther on communication costs, both parties can ap-point a contact person.

The case of Routine Development is illustrated by thetraditional purchasing process at PMS (and most otherorganisations). In this process, purchasers typically order&new' products by calling the supplier's sales representa-tive or by sending an order form (either by mail or fax) tothe latter. Furthermore, the purchasing o$cer monitorsprices, delivery times and changes in the product. Onlyon speci"c occasions are there additional contacts. How-ever, there is usually at least one face-to-face meetingeach year to &stay in touch'.

The guidelines for the di!erent types of supplier in-volvement are summarised in Fig. 3. Wynstra (1998)discusses additional aspects of the di!erent interfaces (e.g.the form of project organisation, the kind of agreementand evaluation).

5. Conclusion

The central argument of this paper has been that oneof the critical elements in reaping the potential bene"ts ofgiving suppliers a greater involvement in product devel-opment is de"ning the appropriate form of involvement.If manufacturers do not distinguish between di!erenttypes of supplier involvement, they may end up spendingas much time on co-ordinating and managing supplierinvolvement as they save by giving suppliers more devel-opment and engineering responsibility. The SupplierInvolvement Portfolio and the supplier interfaces itproposes do not only give indications of how to adjustco-ordination and management e!orts to the potentialbene"ts of involving a supplier early and extensively, butalso provide detailed recommendations on the form andthe intensity of communication with di!erent suppliers,based on project-speci"c considerations. In that sense,


Fig. 3. Guidelines for the interfaces in the di!erent collaboration relationships.

3Related to this point, it is useful to note that most existing models (seeSection 1) assume that the extent of involvement and the phase ofinvolvement are directly related: the more intensive the involvement, theearlier it should start (and vice versa). In our project management tool,on the other hand, the phase of involvement is the result of two aspects:(1) the extent of involvement (or degree of development responsibility)and (2) the degree of development risk. In other words, a high degree ofinvolvement does not automatically lead to early involvement (and viceversa); this also depends on the degree of development risk.

the paper "lls an existing lack of such tools. In addition,as argued previously, existing models or typologies onlydistinguish (static) supplier &roles' such as &proprietaryparts supplier', &black-box part supplier' and &detail con-trolled parts supplier' (Clark, 1989) or &mature' and &child'(Kamath and Liker, 1994). These typologies do not pro-vide su$cient guidance for di!erentiating supplier in-volvement in an individual development project. TheSupplier Involvement Portfolio distinguishes speci"c de-velopment situations rather than generalised supplierroles3.

At this stage, we can only present the results of usingthe ideas described in this paper on the level of individualsupplier relationships. We cannot yet compare di!erentnew product development projects with and withoutusing the portfolio approach because no developmentproject has been "nished yet in which the portfolio hasbeen deployed fully. Future research will investigate theimpact the use of the portfolio has on project e$ciencyand e!ectiveness. Nevertheless, initial experiences showthat the portfolio helps to improve supplier involvementin product development, by giving clear guidelines onhow to manage di!erent types of involvement.

Whilst the initial development of the portfolio and theinterface guidelines was based on "ndings from the PMScase study, pilot applications at other companies alsoseem fruitful (see Mevissen, 1999). This indicates that theunderlying factors for distinguishing di!erent types ofsupplier involvement may indeed be generic. However,depending on the speci"c context, variations or exten-sions of the Supplier Involvement Portfolio may be


necessary, such as a 3]3 matrix for a manufacturerdealing with very complex development projects (e.g. thedevelopment of a new aircraft).

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