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To Integrate Or Not to Integrate—That Is the Question

Date posted: February 24, 2015

Of all the questions set forth by the Bard, there’s no doubt that the most recollected is that posed in the Nunnery Scene of Hamlet:

To be, or not to be, that is the question—
Whether ’tis Nobler in the mind to suffer
The Slings and Arrows of outrageous Fortune,
Or to take Arms against a Sea of troubles,
And by opposing, end them?

For today’s manufacturers, the question seems to be to integrate or not to integrate, for as heightened competition ramps up the pace of product development—and supply and value chains are increasingly extended, nuanced, and critical to competitive vigor—the integration of new product development and launch (NPDL) and supply chain practices appears to be essential for successfully navigating the sea of challenges the global business environment poses.

A recent SCM World research report speaks to this concern:

Early involvement of supply chain in product development has long been known to improve key metrics of innovation success, including cost, speed, and the ultimate profitability of newly introduced products. SCM World survey data shows that most supply chain organizations believe new product development and launch (NPDL) is now an essential capability.

The survey breaks down companies into two categories: innovation integrators, who consider NPDL an essential part of supply chain, and innovation isolators, who say that NPDL is not a part of supply chain. Compare the two:

  • Innovation integrators
    • Are more accountable for revenue growth, and even share prices.
    • Are managing more demand complexity.
    • Have deeper and better supply network visibility.
    • Are more advanced in using social networks to inform supply chain strategy.
  • Innovation Isolators
    • Are deeply siloed in their approach to organizational design.

The study found three key principles that work to improve design for profitability, all of which depend on integration of NPDL with supply chain: platforming (i.e., managing complexity with base designs and add-on modules to offer variety without entailing completely new development projects), supplier engagement in innovation (i.e., reducing the total number of suppliers while investing more deeply in relationship management and trust building to facilitate joint technology or capacity development), and NPDL orchestration (i.e., coordinating all involved to deliver on schedule every piece of the new product launch). These will be foundational elements for successful innovation going forward.

Expect solution providers to devise tools to help the implementation of these integration practices. A good example is E2open’s Design for Manufacturing module.