Collaborative new product development in a multi-customer context: challenges for Western auto component suppliers

In recent years there has been considerable interest in the role of supplie rs in the development of new vehicles. The reasons for this are not difficu lt to see - at the end of the 1980s Japanese auto makers were able to devel op new models more quickly, and with fewer engineering hours, than their We stern counterparts. Extensive involvement of suppliers in the development p rocess has been put forward as one explanation of this. It is significant that high supplier involvement in product development app ears to have evolved furthest in Japan, where many car makers enjoy close r elations with their 'keiretsu' suppliers. Attaining similar levels of invol vement in the West in environments characterized by independent suppliers a nd competitive bidding poses many challenges. This paper examines the ways in which suppliers are responding to these challenges. The paper describes the role of component makers in new product development, based on interview s with 16 automotive component makers and two car makers in the UK. The data confirm that Western car makers axe indeed making greater demands on the product development capabilities of suppliers, but at the same time as exerting severe cost-down pressure, One response to this on the part of the suppliers has been the adoption of internal organizational structures b ased around customer-focused teams. These address the need for suppliers to be customer responsive, but can create problems for suppliers in terms of internal integration and capability development.