Collaborative new product development supply chain

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When we think of supply chain, we think of manufacturing and the problem of various materials suppliers feeding a chain that leads to the manufacturing of goods.

The same supply chain concept is applied to product development today with the ever increasing complexity of technology products and global market distribution. We called this a development supply chain.

Typically this is characterized by customers and suppliers of product development teams that lead to the integration of sub-components into a system at the end of the chain closest to the final customer.

The problem...

The fundamental problem with the "chain" is that the development teams are typically in separate companies with sometimes competing or conflicting objectives. These customer/supplier relationships breakdown and become adversarial. Sometimes the worst offenders are the teams in different divisions of the same company.

We have found a solution to this supply chain problem we call the Collaborative Development Supply Chain (CDSC). This system treats each group in the chain as yet another level of a single integrated team. The glue that holds it together is the planning process, the schedule is refreshed together with each level of the team every week.

This solves the communications problems (of non-co-located teams in separate companies), identifies the touch-points between teams, and forces a new level of openness that causes "real" information to flow up and down the chain. It connects, through a single thread, each level to the end customer. Trade-offs are made and risk is shared through the chain in order to deliver on time.

Further, customer requirements are prioritized at the system level and this information (and decision criteria) is shared down to each level of the chain in the form of prioritized product requirements. Product definition is not a mystery in CDSC, but rather it is shared. Since each level knows the priorities they are able to make trade-offs at their levels in the context of the complete system.

This is a brief case study about a recent project we worked on (below). The information presented was somewhat changed in order to protect confidentiality of the companies involved. Some day, this will make a great HBS case study as it involves and exciting new emerging market. For now they remain anonymous. Their names or products are less important than the basic concept of vertical integration which is common place in industries such as aerospace, but not as well understood in the technology manufacturing world.