Advantages and Disadvantages of Involving Supply Chain Partners in Development of Products and Services

ADVANTAGES AND DISADVANTAGES OF INVOLVING SUPPLY CHAIN PARTNERS IN DEVELOPMENT OF PRODUCTS AND SERVICES

Introduction

In a continually changing and pressuring market environment, in terms of higher customer expectations to deliver high quality products and services to a lowest possible cost and with competitors lurking around the corner to jump on the first opportunity to get the upper hand, a way of retaliating and prospering is by engaging in collaborations with fellow members of the supply chain. Advantages can be derived from such collaborations, but so can disadvantages.

Advantages

Unique competencies: A huge advantage of engaging in strategic alliances with supply chain partners is to be able to utilize the unique competencies each and every partner holds (Kotelnikov, n.d.). These competencies combined create a synergy which hopefully results in "a design of products, [and services, better suited to] meet customer needs and quality expectations" (Crow, 1996) compared to developing them alone. Prabha (2008) adds to this by saying that in order to survive and prosper in an ever evolving, uncertain and turbulent environment, high involvement innovation is becoming increasingly important to increase the individual organization's "innovative capacity" (Prabha, 2008).

Time and cost saving: In today's rapid changing and profit driven environment there is a need for rapid development processes and efficient/cost effective solutions to be able to get to market with the lowest possible cost before the competitors to gain a competitive advantage. Involving several supply chain partners in a development process can enable this through each supply chain partner saving "a lot of time and money by working on separate components of a project at the same time" (University of Liverpool/Laureate Online Education, 2012). In events of developing totally new products or services which require a whole new set of capabilities, collaborating with partners who already have these capabilities, saves a lot of money and enables a more competitive price. Crow (1996) shares this view and adds to this the design of processes, since they go hand in hand. He also shares the same view time wise stating such collaborations reduce "cycle time or time-to-market" (Crow, 1996) for developed products and services. One has to have in mind that all of this is the case for a well functioning partnership. Collaborations of the opposite kind can have the opposite effect.

High productivity: Crow (1996) shares another benefit of such collaboration which is high productivity facilitated through more "producible designs" (Crow, 1996) and less changes in design which is disturbing to the development process.

Disadvantages

Risky: Prabha (2008) mentions that the