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The 3 Key Advantages of Early Supplier Involvement

Published: Sjaak Janssen

In case you desire to outsource the development and/or production of a mechatronic machine, it is wise to involve a system supplier early on in the process as Early Supplier Involvement (ESI) poses major advantages.

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Increasingly more often, OEMs work together with a system supplier that enables them to outsource the production of a machine or module. Nevertheless, the system supplier is often involved once the OEM has finished the majority of the development process. By doing this, the OEM disregards many optimization opportunities. One capitalizes on three key benefits by making the most of Early Supplier Involvement during the concept phase of new product development:

advantage #1: cost price reduction

During new product development, a business case often fails to deliver a positive outcome (initially). This regularly stems from certain concept choices that are being made early in the development process.

When an OEM chooses to involve a system supplier later on in the process, these concept choices have already been made. This implies the costs for components and materials – which account for 70 to 80% of total costs – are already defined. The picture underneath represents this situation. This is a shame; by utilizing the knowledge and expertise of a system supplier in the realm of new product development, one significantly reduces costs. Involvement of a system supplier during the concept phase enables an OEM to buy the right materials – on the basis of the chosen concepts – at acceptable costs.

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advantage #2: More efficient production process and improved manufacturability of the product

As a system supplier, MTA focuses on optimal manufacturability of the product at hand. In this so-called industrialization process, a well aligned supply chain is pivotal, especially when it comes to critical parts that are most expensive. Because of extensive experience in the field of engineering and manufacturability, the right materials can be selected. This guarantees an efficient production process.

 

advantage #3: shorter time to market

By being the first one to introduce a new product, one outperforms the competition. Time to market is critical due to fierce competition and pressing time constraints. In this, ESI positively influences the lead time of the production process. The involvement of a system supplier in an early stage of the process results in a relatively shorter iterative process during the development of the module, ensuring timely achievement of the desired result. This enables speedy initiation of the production process, which has a positive influence on market share.

 

win-win-win

The three abovementioned advantages are highly intertwined. By focusing on purchasing the right materials, one not only saves costs (advantage #1). The right selection of materials results in an improved manufacturability of the product and a more efficient production process (advantage #2). Logically speaking, the third advantage (a shorter time to market) belongs to the equation as well; improved manufacturability and a more efficient production process result in a shorter lead time and an accelerated launch into the market.

Employment of Early Supplier Involvement allows timely identification of project risks in the realm of cost price, manufacturability and lead time. This enables targeted management of risks that may be diminished or even eliminated.

 

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