AMR Project

Engagement of Suppliers in Product

Development process

Shailender Singh Negi

09Bm8046
Topics covered so far
Degree of Supplier involvement in product
development
Issues in the engagement with suppliers
Risk involved in the Engagement
Whether at all the companies have been benefitted
Design of Questionnaire for
Manufactures(Automobile manufacturer)
Degree of Supplier involvement
Traditional Subcontracting

Grey box strategy(Advanced Subcontracting)

Black box Parts strategy

Traditional Subcontracting
All design work and related problem solving was done
internally.
The supplier received detailed drawings and technical
specifications to be met for a component.
Only those parts which was not considered to
critically affect other parts of the overall project.
The supplier’s action domain is therefore limited to
meet these technical specifications.
 Suppliers worked on components with low interdependency
with the rest of the project.
Grey box strategy (Advanced Subcontracting)

The manufacturer, here, limited its own activities by selecting

an area of the project and delegating it entirely to the
supplier.
The supplier’s domain of action is therefore widened,
although limited to areas of potentially low influence on the
overall project.
In this type of relationship, the manufacturer tried to access a
specific knowledge domain of the supplier, without limiting
its potential outcome by a predetermined set of solutions.
 Suppliers are responsible for the whole problem
solving activity for highly critical components.
Black box Parts strategy

Despite the potentially high influence on the overall

project, suppliers are given freedom to define the
solution starting from the concept design domain and
then moving to the functional parameter domain.
Components developed according to these
arrangements have been identified as “black box”
parts.
Supplier involvement—potential benefits and critical factors
Partnership relation can afford the involved parties
access to complementary skills
Economies of scale in joint research
Access to new technologies or markets
Risk sharing and access to knowledge located outside
the boundaries of the firm
Engineering capabilities in the supplier network allow
the firm to benefit from the suppliers’ know-how,
thereby, reducing the development time
Simply adopting the techniques suggested in the literature
Supplier involvement—Drawbacks and potential risks
will not necessarily reduce development time or lead to
technical success in the project.
Supplier involvement could affect product development
time negatively, especially when markets and technologies
are rapidly and unpredictably evolving.
General view that collaboration makes product development
more costly, more complicated
Joint development projects are less efficient, more time
consuming and more difficult to control and manage.
Legal issues involved in joint development.
Technological competence.
Suppliers’ co-operation with other manufacturers and
own suppliers.
Factors were identified as critical for a successful outcome

Openness and matching of expectations.

Long-term strategy for involvement.
Coupling between production and product
development
Project management.
Pro-active supplier.
SELECTION OF STRATEGY IN AUTOMOBILE
INDUSTRY
Technical complexity of the product
• R&D required
• Number of components to be sourced
• Tight specifications

Availability of the technical know how

• Technical expertise of R&D department
• Manufacturing capabilities
• Experience in design field
SELECTION OF STRATEGY IN AUTOMOBILE
INDUSTRY
Legal complexity
• Legal binding on contract
• Custom regulation in case of import of tech and
equipments
• Government policy, rules and regulations
Supply chain parameters
• Quality and quantity of component
• Lead time
• Delivery requirements
• Flexibility and adoptability
Questionnaire for
Manufactures(Automobile manufacturer)
A Questionnaire has be designed to assess the
effectiveness of supplier in product development. Each
item is based on five point Likert scale. The questions
are based on following factors.
Supplier Knowledge
Supplier Trust
Team work
Value to the customer
Questionnaire
Questionnaire.xlsx