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THE IMPACT OF EARLY SUPPLIER INVOLVEMENT (ESI) ON THE EFFECTIVENESS OF A MANUFACTURING FIRM

A CASE STUDY OF MULTIPLE INDUSTRIES LIMITED

CHAPTER ONE

1.0 Introduction.

This chapter introduced the core concepts of supplier development. It tended to bring out the background, problem statement, objectives, research questions, scope and significance, purpose, limitations of the study which is to be undertaken by the researcher.

1.1 Background of the study.

As organizations become and more competitive so is supplier Early supplier involvement is increasingly being recognized as a key business driver, Organizations focus on their own competencies and increasingly expect their suppliers to deliver innovative and qualitative products on time and at a competitive cost. Buyers must ensure that their supplier capabilities match their expectations in order to compete in the competitive market. Krause et.al (2012).

Agrawal M. K and M. H (2009) state that in order to embrace organizational competitiveness, buyer organizations need to have early supplier involvement in their business in order to cater for critical elements of supply profitability. This will further help improve on the degree of supply profitability thus relieving the buying organizations of the possible dangers of stock outs such as production break downs among others.

Lysons, (2006), in his book of “purchasing and supply chain management” asserts that when suppliers are incapable of meeting the specific needs of the buyer (organization), and the buyer is assured that the particular supplier has desired traits in the preferred supplier, then the buyer is at liberty with three alternatives which include; bring the outsourced items in house and produce internally, change to a more capable supplier or improve the existing supplier’s capabilities; which concept is known as development of a supplier. All the three strategies work, however the choice for the next course of action largely depends in the critical dimensions of price, volume of purchase or strategic nature of the procured item.

Early supplier involvement (ESI) has been advocated as a means of integrating suppliers’ capabilities in the buying firm’s supply chain system and operations. Partnerships with suppliers were formed together to take advantage of their technological expertise in designing and manufacturing (Dowlatshahi, 2008).

In addition, nowadays, designing the relationship between customers and suppliers is very important and essential to sustain competitiveness within the marketplace. Liker, et.al. (1998), leading companies need more specific guidance in defining the optimal timing and integration of suppliers.

Great benefits and advantages can be obtained if suppliers are involved in the customer’s product development as early as possible. Huang and Mak (2010), proposed that the rationale is that suppliers frequently possess vital product and process technology that can lead to improvements in product design and the new product development process itself. A cross-national study by Clark (2009) showed that much of the Japanese advantage in concept-to-market time was attributed to supplier involvement in the NPD process.

Smith and Zsidisin (2012) also proved that by engaging suppliers early in product design, the organization has recognized significant cost savings and enhanced its competitive position. ESI has come to be considered a critical activity since that 80 percent of the products’ cost are locked during the design phase. And organizational contribution from ESI includes obtaining leverage with the supply base, improving design capabilities and instituting internal documentation of best practices for organization learning.

Early supplier involvement has beneficial to both suppliers and buyers. Benefits of ESI practices include reduced development costs, early availability of prototypes, standardization of components, visibility of the cost performance tradeoff, consistency between design and supplier’s process capabilities, reduced engineering changes, higher quality with defects, consistency between product tolerances and process capabilities, refinement of the supplier’s processes, availability of detailed process data, reduced time to market, early identification of technical problems, reduced supplier’s engineering time, acquisition of supplier’s production capacity and supplier innovation (Bonaccorsi and Lipparini, 2014).

Multiltiple industries is faced with numerous challenges affecting its performance this study therefore intends to investigate into impact of early supplier involvement (ESI) on the effectiveness of a manufacturing firm a case study of multiple industries limited.

1.2 Problem Statement

Organizations that can master the essential processes required in generating new products to market stand to foresee competitive benefits that may lead to faster product lead time, improved quality, lower cost, higher market share, and greater intellectual property. Rapid technological development, shorter product life cycle, clock speed competition, and increased outsourcing have prompted many firms to involve their suppliers early in their new product development activities (Mikkola and Larsen, 2003), The increasing level of end-product complexity, combined with myriad product choices, makes early involvement with a few key suppliers vital, (McKeefry, 2010).

The available literature lacks specificity on ESI implementation plans and their results (Dowlatshahi, 2009). Moreover, it is believed that extensive problems exist with ESI implementation are still hidden and awaited to be disclosed. Such obstacles have more or less led most manufacturers not to attempt implementing ESI, this study therefore intends to investigate into the impact of early supplier involvement (ESI) on the effectiveness of a manufacturing firm a case study of multiple industries limited.

1.3 Purpose of the study

The purpose of the study is to examine the impact of early supplier involvement (ESI) on the effectiveness of a manufacturing firm a case study of multiple industries limited

1.4 Objectives of the study

To examine the benefits of early supplier involvement on effectiveness of manufacturing firm at multiple industries.
To establish the relationship between early supplier involvement and effective performance.

To examine the factors that determines the effectiveness of a manufacturing firm.

1.5 Research questions

What are the benefits of early supplier involvement on effectiveness of manufacturing firm at multiple industries?
What is the relationship between early supplier involvement and effective performance?

What are the factors that determine the effectiveness of a manufacturing firm?

1.6 scope of the study

1.6.1 Content scope

The study seeks to discover the following; the benefits of early supplier involvement on effectiveness of manufacturing firm at multiple industries, the relationship between early supplier involvement and effective performance and the factors that determine the effectiveness of a manufacturing firm.

1.6.2 Geographical scope

The study will be carried out at multiple industries.

1.6.3 Time scope

The research will cover a period of three years from 2013 to 2016to enable the researcher attain relevant secondary data on the topic, while the field study will cover a period of two months to attain relevant primary data.

1.7 Significance of the study

The researcher will get the opportunity to apply his classroom learnt research skills and theory in practical experiments.

Once the study is concluded, the management, staff and customers of the organization will use the findings to improve their Early supplier involvement and under taking of successful buying.