A product centric examination of PD/SC alignment decisions at the nexus of product development and supply chains

• Date: 08 May 2017
• Published date: 08 May 2017
• Pages: 634-655
• DOI: https://doi.org/10.1108/IJLM-04-2016-0112
• Author: Dirk J. Primus,Euthemia Stavrulaki
• Subject Matter: Management science & operations,Logistics

A product centric examination of

PD/SC alignment decisions at the

nexus of product development

and supply chains

Dirk J. Primus

Bryant University, Smithfield, Rhode Island, USA, and

Euthemia Stavrulaki

Department of Management, Bentley University, Waltham, Massachusetts, USA

Abstract

Purpose –This study applies a product centric view to examine three product development (PD)

decisions that relate to a new product and its supply chain (SC): product design, sourcing strategy

and product delivery strategy (PDS). The purpose of this paper is to expand the understanding of

alignment decisions in this area to include concurrent compatibility between product design, SC strategy and

market conditions.

Design/methodology/approach –The study leverages existing theory to identify the key dimensions of

alignment between product design, SC strategy and market conditions in a conceptual model. Using survey

data from 124 new PD projects collected from various industries, the authors then empirically test the impact

of multiple alignment decisions on new product introductions (NPIs) performance.

Findings –The results suggest that one specific project-level design parameter (interface intensity) is a key

alignment dimension for product design decisions. Specifically, the authors find that alignment between

interface intensity and sourcing strategy, as well as between interface intensity and clock-speed improves NPI

performance. Additionally, the authors find evidence that three-way alignment between PDS, interface

intensity and market volatility will benefit NPI performance.

Research limitations/implications –Because the study is cross-sectional and conducted at the project

level, future work should continue this line of inquiry with longitudinal exams and across a families of

development projects.

Practical implications –The findings inform the deliberate management of the PD/SC interface and

provide managers with quantitative benefits of concurrent alignment decisions.

Originality/value –This study identifies and addresses important deficits in the understanding of

concurrent alignment between product design, SC strategy and market conditions.

Keywords Alignment, Supply chain strategy, Market conditions, Product design

Paper type Research paper

1. Introduction

In the hypercompetitive business environment of the twenty-first century, “it is supply

chains that compete, not companies”(Christopher and Towill, 2001) and “new products

are the lifeblood of the corporation”(Lambert and Cooper, 2000). Accordingly, competitive

advantage increasingly emanates from effective management of supply chains (SC) and

product development (PD), as well as their interaction. More specifically, the performance

of new product introductions (NPIs) has been linked to the nexus of PD and the SC

(Srivastava et al., 1999; Simchi-Levi et al., 2008). This paper is concerned with a product

centric view of the intersection between PD and the SC and its relationship with NPI

performance. Precisely, we focus on three major project-level decisions during a PD

activity that also concern the SC domain (Krishnan and Ulrich, 2001): (1) product design,

(2) sourcing strategy and (3) product delivery strategy (PDS); we refer to (2) and (3)

together as SC strategy. We examine the benefits of making product design and SC

strategy decisions concurrently with external market conditions, such as industry

clock-speed and market volatility.

The International Journal of

Logistics Management

Vol. 28 No. 2, 2017

pp. 634-655

© Emerald PublishingLimited

0957-4093

DOI 10.1108/IJLM-04-2016-0112

Received 30 April 2016

Revised 18 July 2016

Accepted 15 August 2016

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0957-4093.htm

634

IJLM

28,2

Prior related literature has recognized the links between SC strategy decisions,

product design choices and market conditions and has also investigated the performance

impact of their alignment (Hayes and Wheelwright, 1979a, b; Ulrich, 1995; Fisher, 1997;

Novak and Eppinger, 2001; Olhager, 2003; Payne and Peters, 2004; Rogers et al., 2004;

Simchi-Levi et al., 2008; Pero et al.,2010).However,existingworkinthisareatypically

focuses on pairwise alignment between two decision variables (e.g. alignment between

product design and SC strategy or alignment between SC strategy and market conditions).

Thus, there is no comprehensive theoretical model that identifies the key dimensions of

concurrent two-way and three-way alignment decisions between market conditions,

SC strategy and product design. In addition, empirical work that tests alignment decisions

involving market conditions, product design and SC decisions concurrently at the project

level does not exist. To address this gap, we first leverage existing alignment theory to

propose a conceptual model that identifies the key dimensions along which SC strategy,

product design and market conditions must connect to enhance NPI performance. We then

develop testable hypotheses to examine concurrent pairwise alignment, as well as

concurrent three-way alignment between SC strategy, product design and market

conditions. Finally, we empirically test our hypotheses using survey data of new PD

projects collected from various industries. To our knowledge, this is the first integrated

conceptual framework and the first empirical study to consider how SC strategy and

product design choices as well as market conditions should be aligned and how such

alignment should impact NPI performance at the project level.

Our study and its findings can benefit the deliberate management of the intersection of

PD and SC management in a number of ways, including:

•emphasizing that achieving compatibility between product design, SC strategies and

market conditions is a complex multidimensional task, which requires a broad

managerial horizon;

•empirically identifying one specific project-level product design parameter (interface

intensity) as a critical decision variable when linking PD and SC;

•empirically confirming that aligning a specific product design parameter (interface

characteristic) with a product’s industry clock-speed or with sourcing strategy will

benefit NPI performance;

•empirically confirming that concurrent (three-way) alignment between PDS, product

design and market volatility will benefit NPI performance; and

•quantifying the expected effect of alignment on NPI performance based on our

empirical results.

We begin the paper with a review of the literature that establishes the theoretical

foundations of this study (Section 2). We then discuss in detail how SC strategy,

product design and market dimensions should be aligned, which leads to the development

of our hypotheses (Section 3). Next, we present our research methods (Section 4), discuss

the results (Section 5) and we conclude (in Section 6) with limitations of the work and

the implications for research and practice that is concerned with the introduction of

new products.

2. Theory on alignment between product, SC and market characteristics

A review of the literature associated with the alignment between product, SC and market

characteristics establishes the theoretical foundation of our work. The general tenet of

extant theory in this area is that compatibility between characteristics of the product, the SC

and the market will have a positive performance impact. In our review, we provide a focused

635

Product centric

examination of

PD/SC