Slide 8.

Purchasing product innovation, supplier involvement and development

Table 8.1 Differences between innovation and kaizen
Characteristics

Innovation

Kaizen

Focus

Large, short-term, radical changes in

products

Small, frequent, gradual

improvements over a long time

Expertise

Leading edge breakthrough

Conventional know-how

Sources

Scientific or technological discovery

or invention

Design, production and

marketing

Capital requirements

Substantial investment in equipment

and technology

Relatively modest investment

Progress

Dramatic breakthroughs

Small incremental steps

Results

Spontaneous

Continuous

Risks

High

Low

Involvement

Corporate activity

Individual or small team

Recognition

Results

Effort process

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

Slide 8.2

Purchasing product innovation, supplier involvement and development

Stages of New Product Development
Initial concept
Feasibility studies
Preliminary design
Prototype testing
Finalised product
Piloting of product and production

Release for commercial manufacturing

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

Slide 8.3

Purchasing product innovation, supplier involvement and development

Design of Products
Special Consideration Given to:

1
2

Increased efficiency and

economy in use of materials,
energy and other resources
Minimisation of pollution

Take full account of end disposal

Recycled packaging

Reducing long-term harm to

environment

Ensuring planned life of product

is appropriate

Minimising nuisances such as

noise or odour
Safety hazards

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

Slide 8.4

Purchasing product innovation, supplier involvement and development

Purchasing Orientation

Design Orientation

Minimum acceptable margin of quality, Wide margins of quality, safety and

safety and performance
performance
Use of adequate materials

Use of ideal materials

Lowest ultimate cost

Limited concern for cost

High regard for availability

Limited regard for availability

Practical and economical parameters,

specification, features and tolerances

Close or near perfect parameters,

specifications, features and tolerances

General view of product

Conceptual abstraction of product

quality

Cost elimination of materials

Selection of materials

Concern for JIT delivery and supplier

relationship

Concern for overall product design

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

Slide 8.5

Purchasing product innovation, supplier involvement and development

Early Supplier Involvement in the New Product Development Process

ESI has been defined:
A practice that brings together one or more selected suppliers with a
buyers product design team early in the product development process.
The objective is to utilize the suppliers expertise and experience in
developing a product specification that is designed for effective and
efficient product roll-out.

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

Slide 8.6

Purchasing product innovation, supplier involvement and development

Purchasing in the Future
Advantages

Problems

Reduced development time

Release of confidential business

information

Improved specifications

Technology sharing

Enhanced quality

Cost and pricing sharing

Lower development costs

Decision making

Access to new technology

Ownership of IPRS

Joint problem solving

Teamwork

Interchange of Knowledge

Accountability

Improved manufacturability

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

Slide 8.7

Purchasing product innovation, supplier involvement and development

Supplier Development
Any activity that a buyer undertakes to improve a suppliers performance
and/or capabilities to meet the buyers short- or long-term supply needs.
General steps in a
supplier development
program
Identify critical supplies

Form cross functional team

Meet suppliers top
management team

Identify critical suppliers

Agree how gaps can be

bridged

Appraise performance

Set deadlines

Determine gap

Monitor improvements

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005

Slide 8.8

Purchasing product innovation, supplier involvement and development

Supplier Associations
Aims and Objectives of Kyoryoku Kai

Improve abilities and

skills of supplier

Increase trust
Keep in touch with
market developments

Produce a uniform
supply system

Facilitate flow of
information

Enhance the reputation

of customer
Increase length of
business relationships

Lysons & Farrington, Purchasing and Supply Chain Management, 7th edition, Pearson Education Limited 2005