A Self-Critique of Purchasing and Supplier Involvement in New Product Development

Author(s):

Dr. Michael A. McGinnis, C.P.M.
Dr. Michael A. McGinnis, C.P.M., Professor of Marketing & Supply Chain Management, University of South Alabama, Mobile, AL 36688-0002, 334/460-7907
Mr. Rafeekh Mele Vallopra
Mr. Rafeekh Mele Vallopra, Applications Engineering, National Instruments, Austin, TX 78759-3504, 512/795-8248

85th Annual International Conference Proceedings - 2000 

Abstract. In a CAPS study the authors examined a wide range of issues in purchasing and supplier involvement in new product development(1). One of the results of this research was the identification of variables that effect new product success when purchasing and suppliers are involved in the new product development process; and when they are not. Based on our research we developed a self-administered exercise that can help managers evaluate new product success in their business units.

The purpose of this exercise is to provide managers with insights into the level of involvement of purchasing and suppliers in their business unit's new product development process. It also provides insights into the effectiveness of this involvement. While this exercise will provide useful managerial insights to those who complete and score the questions that appear in the exercise, the results should not be considered as definitive or prescriptive.

INSTRUCTIONS

The exercise is comprised of four parts. Part A is a series of questions concerning your perception of your business unit.

• In Part B you score the results of your responses to Part A.
• In Part C you chart the results of Part B.
• In Part D you interpret and critique the results charted in Part C
• When completing this exercise please keep in mind the following definitions:

BUSINESS UNIT refers to the company or division that you identify with in your job.

NEW PRODUCT refers to new products being marketed by your business unit to consumers, industrial customers, and or resellers.

NEW PRODUCT DEVELOPMENT PROCESS refers to the procedures that guide the conceptualization, design, engineering, production, and sourcing of a new product.

PART A. PLEASE WRITE THE NUMBER OF THE RESPONSE TO EACH QUESTIONS THAT BEST REFLECTS YOUR BUSINESS UNIT IN THE SPACES PROVIDED, USING THE FOLLOWING KEY:

1 = STRONGLY DISAGREE; 2 = DISAGREE; 3 = NEITHER AGREE NOR DISAGREE;

4 = AGREE; AND 5 = STRONGLY AGREE

There are no "right" or "wrong" answers to any of these questions. What is needed is your frank and honest response. DO NOT LOOK UP ANY INFORMATION IN YOUR BUSINESS UNIT'S RECORDS. Answers based on your perceptions and recollections are all that is needed.

1. In our Business Unit, the "typical" new product meets or exceeds its sales objectives.
   
   
2. In our Business Unit, the "typical" new product meets or exceeds its profit objectives.
   
   
3. In our Business Unit, the "typical" new product meets or beats its time-to-market schedule.
   
   
4. My Business Unit responds quickly and effectively to changing customer or supplier needs compared to our competitors.
   
   
5. My Business Unit responds quickly and effectively to changing competitor strategies compared to our competitors.
   
   
6. My Business Unit develops and markets new products quickly and effectively compared to our competitors.
   
   
7. In most of its markets my Business Unit is a strong competitor.

   Do suppliers participate in the New Product Development Process in your Business Unit? YES NO IF "YES," GO TO QUESTION 8. IF "NO," GO TO PART B.

8. .Purchasing plays a major role in the New Product Development Process.
9. Purchasing becomes involved in the New Product Development Process at the concept stage.
10. Purchasing plays an important role in New Product Development cross-functional teams.
11. Purchasing takes a leadership role in New Product Development cross-functional teams.
12. Purchasing plays an important role in identifying suppliers that offer technologies that give our Business Unit competitive advantages.
13. Supplier efforts are closely coordinated with our Business Unit's New Product Development Process.
14. Supplier integration into the New Product Development Process is carefully controlled in our Business Unit.
15. Our Business Unit carefully evaluates whether new technology is better developed by ourselves or with a supplier.
16. Our Business Unit carefully evaluates whether new product time-to-market objectives can best be achieved by ourselves or with a supplier.
17. Our Business Unit carefully evaluates whether new product quality objectives can best be achieved by ourselves or with a supplier.
18. Our Business Unit works closely with suppliers to achieve target cost objectives during the New Product Development Process.

PLEASE PROCEED TO PART B

PART B. SCORING

1. New Product Success. Add your responses for questions 1, 2, and 3. Enter the sum here
2. Divide the sum by 3. Enter that score here
3. Business Unit Competitive Responsiveness. Add your responses for questions 4 through 7. Enter the sum here
4. Divide the sum by 4. Enter that score here
5. Purchasing's Role in New Product Development. Add your responses for questions 8 through 12. Enter the sum here
6. Divide the sum by 5. Enter that score here
7. New Product Development Strategic Evaluation and Control. Add your responses for questions 13 through 18. Enter the sum here
8. Divide the sum by 6. Enter that score here

PLEASE PROCEED TO PART C.

PART C. PLEASE CIRCLE THE NUMBER ON THE CONTINUUM THAT IS CLOSEST TO YOUR SCORE ON EACH OF THE SEVEN CATEGORIES.

PART D.INTERPRETATION AND DISCUSSION

1. Interpretation of Results

   Category scores that are near the mean value indicate that your perception of your business unit's situation is comparable to the average of those respondents whose "new product success" score is "high." Values near "positive" standard deviations indicate that your perception of your business unit's situation is above average compared to those respondents whose "new product success" score is "high." Values near "negative" standard deviations indicate that your perception of your business unit's situation is below average compared to those respondents whose "new product success" score is "high."

   The results of our research indicate that only "Business Unit Competitive Responsiveness" affects "New Product Success" when suppliers are not involved in the new product development process. When suppliers are involved two additional scales affect "New Product Success." They are "New Product Development Strategic Evaluation and Control" and "Purchasing in a Major New Product Development Role."

   If your business unit's suppliers do not participate in new product development you should have completed only categories , "New Product Success," and 2, "Business Unit Competitive Responsiveness." If your business unit's suppliers do participate in new product development you completed all four categories.

   Connecting the circled values should give you a visual picture of your business unit's perceived performance compared to business units that are "high" on "new product success."

   To examine a category more closely, you may want to examine your response to individual questions in that category. For example, assume your score for category 2, "Business Unit Competitive Responsiveness," was 2.75, well below average compared to those respondents whose "new product success" was "high." Further assume that your responses to items 4 through 7 were 2, 3, 3, and 3 respectively. Inspection of these items suggests that you perceive your business unit as not being not very strong in responding to changing customer and supplier needs, marketing new products quickly and effectively. In addition your business unit is weak in responding to changing competitor strategies.

   As a purchasing manager you might be able to influence responsiveness to changing supplier and customer needs through better coordination and cooperation between your business unit and its suppliers; and through better coordination and cooperation between purchasing and other departments within your business unit.

2. Critique

   In the space provided write a brief critique of each category as it applies to your business unit. Include in each category positive and negative comments, overall assessment, areas for improvement, and one or two suggestion for improvement.

1. New Product Success.
   1. Positive and Negative Comments
   2. Overall Assessment
   3. Areas for Improvement
   4. Suggestions for Improvement
2. Business Unit Competitive Responsiveness.
   1. Positive and Negative Comments
   2. Overall Assessment
   3. Areas for Improvement
   4. Suggestions for Improvement
3. Purchasing's Role in New Product Development (Applies Only When Suppliers are Involved in New Product Development).
   1. Positive and Negative Comments
   2. Overall Assessment
   3. Areas for Improvement
   4. Suggestions for Improvement
4. New Product Development Strategic Evaluation and Control (Applies Only When Suppliers are Involved in New Product Development).
   1. Positive and Negative Comments
   2. Overall Assessment
   3. Areas for Improvement
   4. Suggestions for Improvement
5. Please record a brief summary of the results of your analysis below:

CONCLUSION

This exercise provides the purchasing professional with a means of applying Center for Advanced Purchasing Studies sponsored research to his/her business unit. The insights from this exercise can be used two ways. First, they can be a starting point for self-critique. In this situation the self-critique is used as a starting point to assess organizational strategy, purchasing involvement, and supplier selection in new product development. Second, they can be used as a means of verifying previously developed insights. As with any other organizational evaluation technique, other evaluations should be used as a means of verifying its results. While this exercise provides managerially useful insights, its results should not be considered as unequivocal.

(1)McGinnis, Michael A., Rafeekh Mele Vallopra. Purchasing and Supplier Involvement: New Product Development and Production/Operations Process Development and Improvement. Tempe, AZ: Center for Advanced Purchasing Studies, 1998.

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