PROJECT TITLE :

Supplier Involvement and Contract Design During New Product Development

ABSTRACT:

Early supplier involvement (ESI) infuses upfront provider resources and experience to accelerate the analysis and development (R&D) timeline, and allow for risk sharing. Successful implementation of ESI during a new product development setting, however, remains elusive because of the intricacy of interfirm collaboration whereas managing unproven technology and market uncertainty. Extending from prior ESI studies on supplier choice, resource integration, and relationship management, we tend to propose game theoretical contracting strategies to realize manufacturer objectives, like predictable style timelines, sufficient supplier commitment, and radical in-method innovations. Taking into account numerous project factors, like revenue forecast, technical uncertainty, market competition, and team capability, we have a tendency to propose an incentive compatible mechanism primarily based on real choice analysis to suggest that project stage to best engage the provider. The supplier, in turn, will follow our analysis to determine whether or not to participate, and if so, the acceptable level of resource commitment. The equilibrium analysis provides managerial insights into a way to best balance the time-to-market mandate with the need for accruing vital innovations through offer chain partnerships.