Uncertainty in collaborative NPD: Effects on the selection of technology and supplier

Abstract

To gain competitive advantage, firms involve suppliers in New Product Development (NPD).However, uncertainty affects selection of suppliers and associated technologies, and selection outcomes in terms of commitment to one supplier or maintaining flexibility. We report on a case study of collaborative NPD with the aim to develop an energy storage unit. The case involved selection of both technology and supplier, where both were changed during the NPD. Drawing upon Hall et al. (2011), we analyze technological, organizational and commercial uncertainties. We demonstrate how technological, commercial and organizational uncertainties cause firms to seek flexibility rather than commitment to one supplier.

Governance of supplier collaboration in technologically uncertain NPD projects

“…Second, purchasing is not necessarily evolving into an ever-important function that is taking care of more and more tasks related to supplier involvement in NPD. Instead, purchasing's role sometimes needs to be more limited to focus on dealing with transactional issues (Melander & Tell 2014). This variability in the role of purchasing requires established cross-functional integration routines to make sure that R&D and purchasing can devise deliberate strategies at the start of the NPD project.…”

“…involving uncertainties about the outcomes of technology development and about the most suitable technology to be used. A high degree of technological uncertainty is considered to be a complicating factor in collaborative NPD projects as project outcomes cannot be predicted easily (Melander & Tell 2014).…”

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

“…The buying firm also had to consider the implications from having an equally powerful partner, in particular the possibility of the supplier becoming a future competitor (Melander and Tell, 2014). This was avoided by clearly stating the intentions of the project, discussing close collaboration and trusting in the supplier"s business plans for the future.…”

“…Previous studies on supplier involvement have focused on integration (Petersen et al 2005), coordination , joint location , technology roadmaps (Petrick and Echols, 2004), technological uncertainties (Melander and Tell, 2014), knowledge sharing (Tell, 2011), trust (Das and Teng, 1998), and a number of other related issues concerning supplier involvement in NPD projects. However, there is still much to be explored, particularly in collaboration between equally powerful firms taking both firms" perspectives (Johnsen, 2009).…”

“…Particularly in situations with uncertainty, studies indicate that technological competencies are not enough, firms also need to have cooperative competencies (Melander and Tell, 2014;Tyler 2001). It is important for firms to be able to collaborate easily within an NPD project.…”