Supplier Involvement in New Product Development: A Case Study from the Semiconductor Industry

By Vayvay, Ozalp; Cruz-Cunha, Maria Manuela | E+M Ekonomie a Management, July 2016 | Go to article overview

Supplier Involvement in New Product Development: A Case Study from the Semiconductor Industry


Vayvay, Ozalp, Cruz-Cunha, Maria Manuela, E+M Ekonomie a Management


JEL Classification: L21, L23, L25, M11.

Introduction

For the last years, global competition has strengthened the significance of a company's ability to introduce new products, while responding to increasingly dynamic markets with customers rapidly changing needs, and thus claiming for shortening the time required to design, develop and manufacture, as well as for cost reduction, increased reliability, quality improvement and sustainability. In this context, Arms are implementing a wide variety of different techniques, management processes and development strategies in their quest for shorter development cycles and permanent business alignment with the market requirements (Cunha & Putnik, 2006).

Competition in the global world has dramatically increased throughout the last three decades because, among other factors, (1) technology is complex and changes rapidly, and it is nearly impossible for any company to possess all the technical expertise needed to develop a complex product on time; (2) the amazing developments in information and communication technologies (ICT) that provided unprecedented ease of connection, communication and collaboration in real time with any point in the world, and hence unprecedented efficiency in global design, management, information and decision making processes, and (3) the global geopolitical changes that, from the business point of view, provided a global free market both of clients, suppliers and subcontractors.

The shortening of the cycle time as a means of introducing new products more quickly into the market gave the involvement of suppliers in the design phase a fundamental importance, along with the sharing of information and responsibility with suppliers (Carlile, 2002; Hou et al., 2006; Olson et al., 1995; Page, 1993; Ragatz et al., 1997; Tomek & Chromcova, 2002; Twigg & Slack, 1999; Veryzer, 1998). New Product Development (NPD) is a must in this global competition. NPD is a process that intends to assure competitiveness and innovation, as the launch of a new product or service will put the company to a better position than competitors (De Brentani et al., 2010).

The main purpose of the paper is to demonstrate the importance of supplier involvement in NPD, buyer-supplier relationships and their effects on buyer's NPD process, highlighting the benefits of supplier involvement, the barriers, the strategic aspects and industry aspects. The theory presented in the paper is supported by a case study performed in 2012 in a company of the semiconductor industry sector (designated as "the Company"). Companies in semiconductor industry follow many NPD processes in shorter time scales; the technological changes happen fast, while projects are complex and require special expertise. Companies invest in R&D resources and capabilities, and tend to be involved with different partners to satisfy the market needs and trends.

The case study represents the NPD process in The Company. The Company is a supplier itself and develops, manufactures and delivers high technology products to the buyers, who deliver consumer products to the communications, digital, computer, automotive and industrial areas. Besides helping to understand NPD in the semiconductor industry, the contribution and findings of this work are clear: the results achieved confirm the findings of studies referred in the literature review, and confirm that the semiconductor industry sector requires a closer and more complex relationship structure with suppliers. In this sector, design and production are linked together with special expertise, performance, quality and cost criteria. The Company's NPD process is involving the buyers, the suppliers and the competitors at various levels (definition of technological roadmap, R&D in manufacturing technologies, alliances with equipment and CAD-development suppliers, etc.).

Section two introduces the theory related to the topic, section three introduces some information about the semiconductor industry and section four introduces the case study. …

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