Best Practices and Common Pitfalls Associated with Suppliers Involvement in NPD

Involving suppliers in new product development provides organizations with a range of benefits, including shorter development time, better quality products, and lower cost of development. In this new in-depth article Dr Sanda Berar delves deeper into some of the best practices and the most common pitfalls associated with suppliers’ involvement in NPD.

Strategic technology suppliers provide organizations with access to key external technologies while also supporting open innovation. In turn, open innovation is seen as critical for increasing a company’s competitive advantage.

Seven case studies of NPD in one organization are discussed in the article.

This article sets out to explore some of the best practices and some of the most common pitfalls associated with suppliers’ involvement in new product development (NPD). To achieve this, seven case studies of NPD in one organization are discussed in the article. The discussion of the cases focuses on the role that project level factors play in shaping suppliers’ involvement in NPD.

Several factors are considered here:

  1. correct evaluation of supplier’s technology versus the product requirements;
  2. correct evaluation of supplier’s competence versus product requirements;
  3. trust between buyer and supplier;
  4. prior knowledge of supplier;
  5. complexity of suppliers’ delivery chain and of the R&D set-up;
  6. buyer-supplier power balance;
  7. supplier’s absorptive innovation capabilities.

If ignored or not properly acknowledged and managed, each of these factors has the potential to cause NPD failure. The case studies present practices through which the organization has been able to solve the development challenges and successfully launch the new products.

By Dr. Sanda Berar

About the author

Dr. Sanda Berar has over 15 years of experience in high-tech industry and holds a PhD in Economics and an MSc in Computer Engineering. She is presently with Nokia in Helsinki, heading the software department in a product unit. Previously, Sanda had worked in several high-tech companies in Romania. Between 1994-2000, she was a lecturer at Babes-Bolyai University, Romania. She also holds an honoree research fellow title with the University of Aberdeen, Business School, where she is involved in studies related to NPD.


  • Lucian Muresan

    Loved the article, it shows ‘PhD approach’ to analysis, and a very good choice of examples. In a way, the issues listed in the article and extracted in the summary are the ‘expected’ ones. In hindsight, after analysing it, one can say ‘what else is there’? Of course, those are the key factors and the relevant lessons learned. Still, often, the obvious is not obvious until the post-mortem analysis. Why are we blind in the middle of the execution when we ‘know’ all these issues. Is this just an academic exercise or what can I take into practice? Maybe the weight of the factors, even if they could all make or break? Maybe I’ll just print the factors and keep them in my pocket all the time :) …

    There is one thing I would have expected. Very often working with ‘others’ in the ‘platform leadership’, despite the differences from pure ‘outsourcing’, there still similar factors. The simplest point of ‘make or buy’ suggests that the financials should be included in the analysis. Most chosen examples suggests a certain level of partnership, often without the option to pull-out. In a ‘simple’ relationship with a supplier you sometimes have the option. It would be interesting to analyse the financial models: time & material, fixed cost etc… would they affect the supplier ‘commitment’ ?

    Thx for the article, good learning!!

  • sanda berar

    Thanks for your comment, Lucian!

    As you rightly said it, all the points here seem so obvious to the practitioners, but “often the obvious is not obvious until the post-mortem analysis”.
    I would say that what shall we still take into practice is the actual “awareness” of the threats – so that we don’t always need to “live” the painful lesson in order to learn from them …

    As about the impact of the financial models on the supplier’s commitment – that is surely something
    that could be studied, thanks for the question :)
    The main reason is missing from this study is actually that in the business unit described in the paper, during about 8 years of product development that are
    covered – there hasn’t been any case visible where the financial model would have impacted the product quality / product development time, once the contracts & terms have been agreed.

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