Scott has been offered a new position as supply management manager for a
new Deere & Company manufacturing facility of a yet-to-be-designed product (i.e.,
skid-steer loader). As part of his new job, he must make a proposal to identify specific
suppliers to integrate into skid-steer loader development process and specific ways to
effectively integrate these suppliers in order to meet aggressive target costs.
Immediate Issues
• To identify and define criteria for integrating suppliers into the early phases
of the skid-steer loader development process.
• To identify and specify critical principles, practices, and techniques for
integrating suppliers effectively into the early phases of the skid-steer loader development
process.
Basic Issues
• Why is supplier involvement important?
• Why should certain suppliers be integrated into the product development
process, particularly in the early phases?
• How should suppliers be integrated into the product development process?
• What structural and infrastructure support should be provided to ensure
effective integration of suppliers into the product development process?
Case Analysis
Early Supplier Integration Selection. The product development process is
responsible for the generation, specification, prototyping and finalizing of a
product that can be manufactured according to operational, marketing and financial
objectives. Research has consistently shown that involving suppliers in the product
development process can yield such benefits as improved product costing, faster product
development time and more effective and efficient operations. This case asks students to
first develop a set of criteria that can be applied to identify a subset of “critical” suppliers
from all suppliers who should be integrated early in the product development process.
While there are potentially a large number of different criteria, for this particular product,
there are, at least, four generic critical factors that should be considered in deciding
whether or not a supplier should be integrated [see Exhibit 1 for the Early Supplier
Integration Decision Scheme (ESIDS)].
Exhibit 1
Early Supplier Integration Decision Scheme
4
The first factor, Percent of final product value, refers to the relative value of a
supplied item – part, component, subassembly, etc. – to the value of the final product. When
the value of the supplied item relative to the final product value is high, the supplier should
be integrated early in the product development process.
The second factor, Impact on final product reliability, refers to the extent to
which a failure in the supplied item compromises the primary functionality of the final
product. When a supplied item failing can significantly compromise the primary
