Supply chain product co‐development, product modularity and product performance. Empirical evidence from Hong Kong manufacturers
| DOI | https://doi.org/10.1108/02635570710816739 |
| Pages | 1036-1065 |
| Published date | 28 August 2007 |
| Date | 28 August 2007 |
| Author | Antonio K.W. Lau,Richard C.M. Yam,Esther P.Y. Tang |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Supply chain product
co-development, product
modularity and product
performance
Empirical evidence from Hong Kong
manufacturers
Antonio K.W. Lau and Richard C.M. Yam
The Department of Manufacturing Engineering and Engineering Management,
City University of Hong Kong, Kowloon, Hong Kong, China, and
Esther P.Y. Tang
The Department of Management and Marketing,
The Hong Kong Polytechnic University, Kowloon, Hong Kong, China
Abstract
Purpose – This paper aims to examine how an organization can achieve higher performance through
integrating supply chain product co-development (SCPC) and modular product design.
Design/methodology/approach – Based on a comprehensive review of literature on product
development, supply chain management and system theory, the four proposed hypotheses concerning
the relationships among SCPC, product modularity (PM), manufacturing capabilities and product
performance (PP) were tested empirically through a sample of 251 Hong Kong manufacturers.
Findings – SCPC is found to have a direct and positive relationship with PM and PP. PM improves
flexibility and customer service and in turn PP.
Research limitations/implications – Given the cross-sectional nature of the study and the focus
on manufacturing industry, future research should replicate this study in different industries with
more longitudinal studies.
Practical implications – The study provides solid evidence that managers should involve their
suppliers, internal functional units and customers early in their design stages, especially in the
decisions relating to PM. The study has also demonstrated that product co-development affects PP in
both direct and indirect ways.
Originality/value – The present study empirically verifies the relationships between supply chain
integration and modular product design by means of SCPC and PM. Similar empirical research is
absent from the literature on relevant disciplines.
Keywords Supply chain management, Product design,Product development, Hong Kong
Paper type Research paper
1. Introduction
A growing body of literature has suggested that a firm will perform well if it has a
high-degree of supply chain integration (SCI) (Frohlich and Westbrook, 2001; Lee,
2000). SCI involves multiple business processes across supplier, customer and internal
functional units, e.g. supplier partnership, cross-functional teams, joint inventory
management, customer relationship management, demand management, etc.
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Industrial Management & Data
Systems
Vol. 107 No. 7, 2007
pp. 1036-1065
qEmerald Group Publishing Limited
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DOI 10.1108/02635570710816739
(Vickery et al., 2003; Stock and Lambert, 2001). Among these processes, product
co-development with suppliers (Ragatz et al., 1997), customers (Callahan and Lasry,
2004) and internal functional units (Clark and Fujimoto, 1991), i.e. supply chain product
co-development (SCPC), is critical for firm, to acquire resources and new ideas to develop
new products (Filippini et al., 2004; Ragatz et al., 2002; Clark and Fujimoto, 1991).
Modular product design is considered to be an effective approach for mass
customizationand cycle time reduction(Duray et al., 2000), which would improvestrategic
flexibility for manufacturers (Worren et al., 2002; Sanchez, 1995). The decision to
implement product modularity (PM) is an important aspect in modular product design
because different levels of modularity requiredifferent product design processes (Duray
et al., 2000; Ulrich, 1995). There is a continuum describing a product system’s degree of
separateness,specificity and transferabilityof product components,according to whether
the product systemsare loosely or tightly coupled (Schilling, 2000; Sanchez, 1995).
Although both SCI and modular product design are common practices adopted by
manufacturers, few empirical studies have explored their relationships (Fine et al., 2005).
Parker and Anderson (2002) pointed out that manufacturers need to determine the level
of PM within a framework of supply chain design; otherwise they may lose their
value-adding activities to their suppliers. Sako (2002) argued that modular product
design is critical to product, process and supply chain design and usually requires the
integration of designers, producers and consumers. Most of the literature on PM focuse s
on detailed, technical aspects of PM (Nobelius and Sundgren, 2002; Salvador et al., 2002).
Empirical testing of the relationship between PM and SCI is seldom used.
There is considerable discussion in relevant literature as to whether modular
product design and PM require closer SCI in product development (Lyons et al., 2006;
Nobelius and Sundgren, 2002; Sanchez, 1999; Fine, 1998). This debate, which has been
conducted at a theoretical level, can only be resolved by empirical studies on the
possible relationship between PM and SCI (Brusoni, 2005; Parker and Anderson, 2002;
Salvador et al., 2002).
The present study contributes to existing knowledge in two ways. First, this study
explores the relationships between PM, SCPC and the performance of a firm in a singl e
empirical study. The study is thus a response to the literature on supply chain
management and product development, both of which suggest that SCI and PM should
be analyzed in a comprehensive way (Mikkola, 2003; Salvador et al., 2002).
Second, many research studies found that SCI can directly improve company
performance (Lee, 2000; Frohlich and Westbrook, 2001), but there has been very little
discussion on the indirect effects of SCI on firm performance (Swink et al., 2006;
Vickery et al., 2003). It is interesting to see whether SCI can indirectly improve product
performance (PP) (Rosenzweig et al., 2003), mediated by PM. Thus, the present study
tests both the direct and indirect impacts of SCPC on PP.
2. Theoretical framework
SCI is defined as business processes to integrate suppliers, customers and internal
functional units in order to optimize the total performance of all partners in the supply
chain (Frohlich and Westbrook, 2001; Stevens, 1989). SCI involves three dimensions, i.e.
integration with suppliers, integration with customers and integration within the
company, it includes many business processes that cut across these three dimensions
(Rosenzweig et al., 2003; Vickery et al., 2003). SCI reflects multiple business activities or
SCPC, PM and
PP: empirical
evidence
1037
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