Product design has a significant impact on supply chain cost (Cargille & Bliss, 2001). Pressures to reduce production and delivery lead-times have raised the level of mutual dependencies in the product development process and the necessity for strategic coordination (Hong et al., 2009). The level of integration proposed requires a concurrent engineering approach (Khan & Creazza, 2009; Hong et al., 2009). In fact a concurrent approach will enhance the speed and confidence of decision-making at the product design stage to increase product profitability (Cargille & Bliss, 2001) and can result in more consumer-focused processes (Kincade et al., 2007). This is particularly applicable in volatile markets where competition is intense. Concurrent engineering increases the supply chain’s responsiveness and results in more complex interdependencies between it, the product and the process.
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The proposed solution to complexity is the three-dimensional concurrent engineering (3DCE) approach; a model first suggested by Charles Fine in his 1998 book Clockspeed (Fixson, 2005). This model suggests that the traditional approach of matching product with process should also include supply chain variables. This should be further supported by decision support systems to manage the complex array of decision variables (Singhal & Singhal, 2002; Blackhurst et al., 2005; Huang et al., 2005; Ogulin, 2014). However, 3DCE is only considered appropriate for descriptive studies. For analytical studies, the model needs refinement. Its over-emphasis on product modularity and under-emphasis on product life cycle are among its limitations (Voordijk et al., 2006).
3DCE is currently conceptual, deterministic and mostly based on two rather than all three aspects of 3DCE (Ellram et al., 2007). The proposed benefits of simultaneously coordinating the design and distribution of products make the pursuit of a practical 3DCE solution worthwhile. Concurrent engineering can facilitate mass customisation (Kincade et al., 2007). For example, apparel product development activities need not be linear; it can be achieved simultaneously to support postponement of finishing processes. Any concurrent engineering approach should be consistent with the level of product novelty (Singhal & Singhal, 2002).
Involvement of the supplier from the early stages of new product design helps to improve alignment of product, process and supply chain, as shown by (Ragatz et al., 2002; Petersen et al., 2005; Rungtusanatham & Forza, 2005). It can have a benefit in terms of cost, quality and delivery lead times. Besides involving suppliers at an early stage, it is further argued that logistics providers should also be consulted. The aim is to minimise logistics costs (Zacharia & Mentzer, 2007) and optimise inventory planning (van Hoek & Chapman, 2007). Consequently, the required supply chain responsiveness discussed above is achievable. This obviously fits with the 3DCE debate already discussed.
Involving multiple stakeholders in product design does, however, have drawbacks. The stage at which suppliers are involved, and the responsibility they are given requires careful consideration (Petersen et al., 2005). Inter-organisational compatibility and transnational concerns are evident. Studies investigating Italian supplier integration into US and Japanese automotive product design highlight that the level of involvement is not necessarily transferable (Zirpoli & Caputo, 2002). Each buyer-supplier relationship is, therefore, different. When involving multiple suppliers in the design process, an overarching
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coordination strategy is essential to manage the various relationships (Hong et al., 2009). Specific considerations for a coordination strategy include product modularity, product complexity, technological uncertainty, and a supplier’s technical capability.
Lack of integration, communication and information sharing between partners will constrain the responsiveness of a supply chain. Lack of integration of product design with upstream suppliers affects continuity and quality of supply issues. Poor downstream integration can result in inaccurate market knowledge and failed new product launches (Khan & Creazza, 2009). Integrating product design with supply chain management is, therefore, critical to achieving core business objectives. Adopting a design-centric perspective across an extended enterprise is, therefore, recommended.
The extant literature generally agrees that integrating the product design function with the conventional business functions of supply chain management, will result in effective supplier integration and improved supply chain performance. Proposed benefits include the following: precise, accessible and distributable product information (Huang et al., 2010), advance notice of design changes (Swink & Song, 2007), a more flexible design process (Abecassis-Moedas, 2006), improved product performance and conformance (Abecassis- Moedas, 2006; Swink & Song, 2007). Yet, much of the extant research focuses merely on optimising product availability at launch and a more holistic perspective of the product life cycle should be adopted (van Hoek & Chapman, 2007). For such an integration to be successful, effective communication and cooperation among participants when developing a new product is essential. An increase in organisational complexity is likely (Swink & Song, 2007), and hence the integration of product design with supply chain management should be strategic (Stavrulaki & Davis, 2010), with senior product development managers at the helm (Koufteros et al., 2002) of cross-functional teams (Khan & Creazza, 2009). This results in changing boundaries in the value chain via knowledge transfer (Abecassis-Moedas, 2006). Vertical integration is an effective strategy. In the fashion industry, some retailers control product design, and this practice has resulted in shrinking time-to-market, increasing supply chain responsiveness and reducing risk (Khan et al., 2008).
Nevertheless, while supply chain integration has a positive impact on market performance, it does not necessarily result in customer satisfaction (Swink et al., 2007). Although it positively affects overall business performance, it does not influence manufacturing
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competitiveness at the plant level. This is contextualised when we consider that product architecture must complement the level of vertical integration (Novak & Eppinger, 2001; Fixson, 2005). In-house production is preferred when products are complex. Product modularity combined with the relocation of value adding activities and reduced supplier number, will decrease the required level of vertical integration (Pero et al., 2010). Table 3.3 summarises the works of different authors on the product and supply chain alignment as discussed above.
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Table 3.3: Product Design and Supply Chain Alignment
Author Approach Result
Hobday (1998)
Complex Products and Systems (CoPS) play a major role in shaping the organisational structures and industrial coordination
Reduced uncertainty of information in the production process which will lessen the risk and difficulties in coordination and project management.
Novak & Eppinger (2001)
Product complexity and vertical integration interface
Coordination of product engineers design and purchasing agents will result in these sectors performing better.
Salvador et al. (2002)
Coordination of product process and supply chain design; right type of product modularity should be selected based on manufacturing attributes (Production Variety and Volume)
This approach will enhance the firms' overall performance.
Singhal & Singhal (2002)
Effective management of marketing/operation is an interface by making product components based on customer demands more compatible.
This concurrent engineering will result in successful design and manufacture of a product.
Fixson (2005)
In this research a three-dimensional concurrent engineering (3D-CE) framework is offered, based on the product architecture characteristics for simultaneous management of product, process and supply chain.
This framework enables the manufacturers to assess their operational, strategic advantages according to the anticipated product architectures. It will also help the manufacturers in line with product-operation strategic planning.
Ellram et al. (2007)
Necessity of concurrent engineering of product, process and supply chain design.
3D-CE will enhance organisational effectiveness by increasing profitability and NPD success.
Jüttner et al. (2007)
Supply chains must be set up to match product characteristics and customer requirements. As products proceed through their life cycles, the supply chain requirements dramatically change.
Careful matching of products to pipelines thereby enables maximisation of the appropriate order winner and market qualifier characteristics.
Kaipia & Holmström (2007)
Differentiate supply chain planning for products with different demand features and in different life-cycle phases.
Differentiating supply chain planning by product type or product item so that streamlined, or automated, planning approaches can be introduced.
Khan et al. (2008)
In industries product design is a competitive advantage leading to better coordination and collaboration between the product designers and suppliers, which is crucial.
This strategy will facilitate the product development process; it will decrease the supply chain risk and disruptions and reinforce the supply chain agility and improve performance.
Pero et al. (2010)
We have to set the variables of the product design in the levels which minimize the supply chain complexity and on the other side supply chain complexity should be adjusted to the product characteristics.
Successful new product development and improved supply chain performance.
Chiu & Okudan (2014)
The authors used a graph theory-based optimisation method to propose a mathematical programming model enabling simultaneous optimisation of both product design and supply chain design
Incorporation of supply chain design into new product development should take place at the stage of supplier selection so that improved performance is the outcome.
Roh et al. (2014)
SEM model defines the drivers, strategy, and practices of a responsive supply chain and the performance outcomes.
The effective implementation of a responsive supply chain requires a careful definition of a responsive supply chain strategy in terms of the product range and frequency and innovativeness of the product offerings.
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In conclusion, we have identified product innovativeness, structure complexity and product modularity as the main product design characteristics that have a significant impact on the supply chain. Table 3.4 summarises the product design characteristics considered to be critical to supply chain strategy and complexity in the extant literature reviewed.
Table 3.4: Product Design Characteristics impacting on Supply Chains
Product Characteristics (P agh & C oop er 1998) (Hob d ay 1998) (N ovak & E p p in ge r, 2001) (Hua n g e t al., 2002) (Sal vad or e t al. 2002) (Sin gh al & S in gh a l, 2002) (Olh age r 2003) (A p p elq vist e t al. 2004) Pe ro e t al. ( 2010) Product Innovativeness * * * Product Structure Complexity * * * * * * Product Modularity * * * * Product Range * * *
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3.8 SUMMARY
The relationship between product characteristics and supply chain has been the pre- occupation of various supply chain scholars. In this chapter, the literature on alignment of the supply chain with product demand and product design has been investigated. Only a few have investigated how the supply chain’s alignment with product demand or design characteristics can help the supply chain adapt to an optimised level of complexity.
There is a minor commonality in these two groups of studies as they investigate these relationships separately. Some researchers have emphasised the direct impact of product demand on supply chains and operational performance and in particular on impact of product demand characteristics on supply chain strategy, while others have used product design to examine the impact of these characteristics on supply chain structure and design. Therefore the key findings of this chapter are as per below.
No research on the supply chain alignment has yet investigated the simultaneous impact of product demand and product design as interlinked drivers of supply chain design. This approach assists in understanding the antecedents of complexity in terms of the role of product demand and design as facilitators of firms’ capability to adjust to transformations in the global business settings.
Product demand volatility, product variety and product life cycle are identified as main the main product demand characteristics impacting on the supply chain.
Furthermore product innovativeness, product structure complexity and product modularity emerge as the main product design characteristics that have an impact on supply chain operations.
Chapter 4 presents the theoretical framework which addresses the identified research problem.
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