Buyer-Supplier Collaboration in New Product Development Between Two Equally Powerful Firms: A Case Study of ABB and SKF

Abstract

Collaboration in new product development (NPD) is becoming ever more important as firms specialize and rely on suppliers to provide the latest technology. Most studies on supplier involvement are of collaborations between a powerful buyer and a less powerful supplier, and taking the buying firm's perspective. In contrast, this study focuses on a collaborative NPD project between two equally powerful firms, including both firms' perspectives. A case study of a project between ABB and SKF was conducted. It is shown that not only is the supplier selection important, but it is also important for the buying firm to have an attractive project to motivate the supplier to join the project. Such attractions include business opportunities and learning possibilities. However, these learning possibilities could be viewed as harmful by the buying firm. Particularly when considering that the supplier was equally powerful. Fear of knowledge spillover that could make it possible for the supplier to become a future competitor could hinder the collaboration. These fears were avoided mainly through trust built during prior history with the supplier project.

Collaboration with Suppliers and Lead Users in New Product Development and Open Innovation: Empirical Evidence from Jordanian Companies

“…Powerful suppliers maybe reluctant to share their knowledge and competencies with their suppliers (Johnsen, 2009). Furthermore, the buying firm may regard its suppliers as potential competitors and, thus restrict the level of knowledge sharing and collaboration (Melander, 2014). Some firms fear that their shared confidential knowledge maybe leaked to competitors through the involved suppliers (Al-Zu'bi et al, 2015).…”

“…Some firms fear that their shared confidential knowledge maybe leaked to competitors through the involved suppliers (Al-Zu'bi et al, 2015). Lastly, and perhaps most importantly, only suppliers who are genuinely motivated will enter into such lengthy and sometimes unproductive collaborations (Melander, 2014).…”

“…Supplier involvement in new product development is expected to yield many benefits for the buying company. Melander (2014) argued that companies collaborate with suppliers in NPD in order to get access to new or advanced technology that the suppliers may have. Such technological integration may open new opportunities for the buying firm in designing and developing new products by incorporating the supplier's technology as complementary to internal technology (Takeishi, 2002).…”

“…Suppliers are usually selected on the basis of their technological or/and relational capabilities (Feng et al, 2010). Supplier experience and specialization of the needed parts and components is another important selection criterion (Melander, 2014). Furthermore, a strategic supplier collaboration requires early involvement in product development, risk sharing, commitment, supplier knowledge, and trust (Bensaou, 1999).…”

Building Relationship Between Oem Customers and Suppliers in Product Innovation Development Processes in B2b Market Authors:

“…Many companies monitor activities of suppliers using Supplier Performance Card, collecting data, and conducting appropriate benchmarking rankings take into account their technical quality, timeliness, cost reduction, technological development, the rate of implementation by the supplier of new solutions (adaptation time changes in the process, the product), the possibility of introducing a new product, the reaction rate (for RFQ / preparation of the offer, the complaint / reported a technical problem, the implementation of corrective / preventive), flexibility (adapting to changes in customer orders, changes in the economic environment), improving environmental impact (reducing the consumption of materials / energy, reducing greenhouse gases, reducing waste generation and increase reuse of materials through the introduction of recycling), progress in the implementation of process improvement tools and products 25 . Many companies also assess suppliers on the basis of their level of management focusing on their system of certificates (which conformed the implementation of organizational standards like ISO 9001, ISO 14001).…”