Integrating product design into the supply chain

Figures & data

Figure 1. Characteristics of lean, agile and leagile supply chains

Figure 2. RBV based on (Hart, 1995)

Table 1. Opportunities and challenges of integrating product design and the supply chain according to prominent literature

Literature evidence	References
Opportunities
Reduction of production costs	Hum and Sim (1996); Petersen et al. (2005); Pusa and Rajshekar (2004); Khan and Creazza (2009)
Compression of time-to-market	Demeter (2012); Fine (1998); Hum and Sim (1996); Jüttner (2005); Khan and Creazza (2009); Mason-Jones and Towill (1998); Stalk and Hout (1990)
Proficiency of serving customers	Barros, Barbosa-Póvoa, and Blanco (2013); Blackburn (2012); Demeter (2012); Faisal et al. (2006); Stalk and Hout (1990)
Reduction of supply chain risks	Demeter (2012); Jüttner (2005); Khan and Creazza (2009); Mason-Jones and Towill (1998); Pusa and Rajshekar (2004); Zsidisin and Smith (2005)
Challenges
Internal challenges
Isolation of functions	Ballou et al. (2000); Cousins and Menguc (2006); Doyle and Broadbridge (1999); Kotler and Rath (1984)
Generation of mutually inclusive benefits	Ding et al. (2011); Doyle and Broadbridge (1999); Kotler and Rath (1984)
External challenges
Integration of upstream tiers	Barratt (2004); Ding et al. (2011); Fawcett and Magnan (2002); Lummus et al. (2001); Petersen et al. (2005); Quesada et al. (2008); Tan et al. (2002); Van Hoek, Harrison, and Christopher (2001); Wagner and Hoegl (2006)
Integration of customers	Barratt (2004); Ding et al. (2011); Kaulio (1998); Lakemond and Berggren (2006); Lummus et al. (2001); Sandmeier et al. (2010); Sharifi and Pawar (2002); Tan et al. (2002); Van Hoek et al. (2001)
Geographical distance of SC partners	Barson et al. (2000); Holmström et al. (2006); Khan and Creazza (2009); Narasimhan and Nair (2005); Sharifi and Pawar (2002); Tan et al. (2002); Terwiesch et al. (2001)
Industrial espionage	Barson et al. (2000); Ballou et al. (2000); Quesada et al. (2008)

Table 2. Sample case description

Company name	Industry	Product
Sireneco (Global company)	Alarm system-manufacturer	Alarm and fleet control systems for automotive manufacturers
Interco (Global company)	Non-woven textile supplier	Non-woven textiles for automotive interiors
Rubberco (Global company)	Footwear rubber-manufacturer	Rubber soles for outdoor, work, fashion and orthopedic applications
Plastco (Global company)	Plastic polymer-manufacturer	Plastic polymer membranes and laminates for sport, law enforcement and military apparel.
Texco (Global company)	Textile-manufacturer	Cashmere garments and blankets, merino, silk and cotton products
Wallco (Global company)	Ceramic tile manufacturer	Wall tiles for retailers, DIY and house developers

Table 3. Overview of the validity and reliability of the research, adapted from COSMOS Corporation, as cited in Yin (2013)

	Tactic	Research phase	Action taken
Construct validity	Multiple	Data collection	Undertake interviews and review additional documentation
	Chain of evidence	Data collection	Recorded and transcribed interviews along with notes
	Participants review draft	Write-up	Case reports were reviewed by research participants
Internal validity	Pattern matching	Data analysis	Patterns were identified across data
	Explanation building	Data analysis	Areas were reciprocally explanatory
	Content analysis	Data analysis	Analysis was based on interview transcripts
External validity	Alternate theories within single cases	Research design	Alternate theories were evaluated against findings
	Replication logic in multiple cases	Research design	Logic was cross matched between cases
Reliability	Interview protocol	Data collection	Interviews were undertaken in an identical fashion
	Case database	Data collection	All findings were entered into a database

Figure 3. Stages in research methodology

Table 4. Types of data collected

Company name	Types of data collected
Sireneco	Interviews, observation
	Archival documents, annual report and business strategy reports
Interco	Interviews, observation
	Company documents, annual reports
Rubberco	Interviews, observation
	Annual report
Plastco	Interviews, observation
	Archival documents, finance reports
Texco	Interviews, observation
	Archival documents
Wallco	Interviews, observation
	Annual report and business strategy reports

Table 5. Opportunities of the integration of product design and the supply chain according to sample companies’ experience

Company name	Reduction of production costs	Compression of time-to-market	Proficiency of serving customers	Reduction of supply chain risks
Sireneco	(+) Advanced knowledge of technical features for securing purchases of components; reduce purchasing unit costs of components	(+) “Fast track” for the supply of the moulded plastics (3 week supply lead time saving)	(−) Notwithstanding the presence of the product champion, vehicles often present some “hidden” compatibility problems that, often unknown or not pointed out can create pitfalls in serving customers.	(±) Integration allows coping with demand variability and components availability. However, sudden changes can result in longer set-up times with potential shortage of production/delivery capacity
Interco	(−) Poor production process flexibility; missed opportunity to reduce purchasing unit costs of raw materials	(−) Lost opportunity to compress time due to sequential product design process and lack of communication and integration among functions.	(−) Difficulties to vary the production rhythms and to adapt to new market demands. This is also due to the lack of visibility on the actual market demand and customers’ needs	(−) Poor data and information sharing leading to a poorly responsive supply chain
Rubberco	(+) Reduction of scraps, capacity to handle variations	(+) Reduction of the sampling time (e.g. from 18 to 5 days for the most innovative produced sole)	(+) Better alignment to customers’ expectations in terms of service level led to expansion of the market share in the US; installation of a new technological centre for R&D to rapidly react to customer requirements	(+) Integration of product design and the SC leading to a higher degree of agility staying closer to customers (establishing a R&D centre in China) and implementing a production scheduling optimiser.
Plastco	(+) Reduction of alterations or reduction in unstable design parameters	(+) Reduction of design lead times from 35 to 10 weeks	(+) Lever for gathering crucial customer requirement information for the customization of products at an early stage	(+) Integration of product design and the SC to cope with disruptions in the manufacturing and delivery processes arising through (reduced) changes in the production plan.
Texco	(−) Constrained production capacities	(−) Sampling as a lengthy and costly bottleneck.	(−) Aligning the sampling activities closely to customer needs is deemed a symptom of a poor integration of functions, leading to a reduced ability to meeting customer requirements.	(+) Integrating design for orchestrating the supply chain; training scheme so that designers spend time confronting with the production/supply chain issues they have to deal with
		(+) Tailor aspects of the supply chain to specific features of the product itself (lean vs. agile)
Wallco	(−) Unfeasibility of productions due to technical constraints neglected in the design phase; products to be redesigned or discarded; constraints in the suppliers’ selection	(−) Lost opportunity to compress time due to sequential product design process.	(−) Scarce responsiveness due to long lead times for sourcing products and to unavailability of materials, as well as to lack of internal and external communication	(−) Business working at the very last second within the supply chain; reacting to disruptions connected with capacity constraints only by outsourcing part of the production to its subsidiaries located in the UK

Notes: (+) Positive outcome, (−) Negative outcome and (±) Neutral outcome.

Table 6. How sample companies confronted the challenges of the integration of product design and the supply chain

Company name	Internal challenges		External challenges
	Isolation of functions	Mutually inclusive benefits	Integration of upstream tiers	Integration of customers	Geographical distance	Industrial espionage
Sireneco	(+) The chief executive officer acts as a product champion	(+) Dedicated reward system, devised by the CEO, with shared KPIs among functions	(+) Establishment of informal partnership with two suppliers of critical electronic condensers	(−) Confronting this issue by delaying customization of products	(±) Developed an intranet for allowing access to data for SC partners	(+) Patenting the most innovative products and adopting use-licenses for installed components
Interco	(−) Sequential product design process, limited communication between functions	(−) Misalignment of metrics for evaluating product design and supply chain functions	(−) No integration with suppliers	(−) Obtaining information and requirements from customers in a non-proactive way	(−) Passive experience; better outcomes when partners are closely located	(±) Mature adopted technologies, no threat felt about espionage in developing products
Rubberco	(+) Establishment of cross-functional teams made up of all relevant SC functions	(±) No alignment of metrics but overall evaluation on product design process performance	(+) Establish a partnership with key rubber suppliers and production outsourcing experts	(+) Integrate customers to some extent by locating operations physically closer to downstream partners	(+) Establishing an R&D facility in China, closely located to the key SC partners; adoption of real time communication ICT for virtual co-location	(+) Protect innovations by means of registering patents and use-licenses
Plastco	(+) Adoption of the “lattice-amoebic” organisational structure	(±) Independent but non-conflicting evaluation metrics for the principal functions included in the product design process	(+) Secure the sourcing process of polyester for developing new products by selecting few reliable and collaborative suppliers	(+) Order process reengineering for encouraging customers to advance orders and specifications	(+) Adoption of an enterprise-wide planning software with an interface developed to allow selected customers and suppliers to access data (virtual co-location)	(+) Registering patents and reinforcing a very strong brand well known worldwide
Texco	(+) Employ designers acting as project managers	(±) Designers acting as project managers deal with partially aligned metrics for product design and SC functions	(−) No integration with raw materials suppliers	(−) Obtaining information and requirements from customers in a non-proactive way	(−) Distant suppliers mainly represented by sheep farmers.	(+) Secure the supplies of superior quality raw materials and exclusive collaboration with designers
Wallco	(−) Sequential product design process, little cross-functional communication	(−) Misalignment of metrics for product design and SC functions	(−) No integration with raw materials suppliers	(−) Obtaining information and requirements from customers in a non-proactive way	(±) Except for catalogue product suppliers (20%), the other SC partners are mainly local	(±) The threat is felt for its high quality products, not in the design process or for innovations

Notes: (+) positive outcome, (−) negative outcome and (±) neutral outcome.

Table 7. Recommendations for maximizing opportunities of integrating product design and the supply chain

Recommendations	Opportunities	Examples	Challenges	Section reference
Develop a cross-functional approach to the supply chain	Increase in communication and visibility of critical data	Plastco—Adoption of an enterprise-wide planning software with an interface developed to allow selected customers and suppliers to access data (virtual co-location) Rubberco—Establishment of cross-functional teams made up of all relevant supply chain functions; adoption of real time communication ICT for virtual co-location	Aligning focus between relevant functions, particularly across organizational borders	4.1.2; 4.2.1.1
Erode functional silos	Increase in collaboration and focus efforts	Plastco—Adoption of the “lattice-amoebic” organisational structureTexco—Employ designers acting as project managers	Synchronizing functional key performance indicators and establishing effective communication	4.2.1.1; 4.2.1.2
Integrate key suppliers into the product design process	Increase in responsiveness to customer demand and reduction of supply chain risk	Sireneco—Establishment of informal partnership with two suppliers of critical electronic condensers	Identification of appropriate suppliers and relationship management	4.1.4; 4.2.2.1
Integrate key customers into the product design process	Increase in understanding of customer demand	Plastco—Order process reengineering for encouraging customers to advance orders and specifications	Generate customer interest in collaborating	4.1.4; 4.2.2.2
Recognise the supply chain capacities and capabilities	More informed operational decisions in fulfilling demand and reduction of supply chain risks	Rubberco—Close integration of functions, with detailed understanding of functional abilities	Establishing an overview of capacities and capabilities	4.1.1; 4.1.4
Introduce concurrent design practices	Reduction of time-to-market and production cost	Plastco—orchestrating close collaboration amongst the design team, the technical team, the procurement and manufacturing as well as suppliers	Reorganise the product design process along with production	4.1.2; 4.2.1.2
Locating operations close to key supply chain nodes	Increased visibility of supply and/or demand	Sireneco—Developed an intranet for allowing access to data for SC partners Rubberco—Establishing an R&D facility in China, closely located to the key SC partners; adoption of real time communication ICT for virtual co-location	Applicability (diverse markets, diverse suppliers) and ability (IT and infrastructure)	4.2.2.3
Mitigate against industrial espionage	Reduction of intellectual property risk, increase safety in collaboration	Texco—Secure the supplies of superior quality raw materials and exclusive collaboration with designers Sireneco—Patenting the most innovative products and adopting use-licenses for installed components	Relationship management, data protection	4.2.2.4

Figure 4. Centripetal and centrifugal forces of integrating product design and the supply chain

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