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MultiCraftInternational Journal of Engineering, Science and Technology

Vol. 5, No. 2, 2013, pp. 49-64

INTERNATIONAL

JOURNAL OF

ENGINEERING,

SCIENCE AND

TECHNOLOGY

www.ijest-ng.com

www.ajol.info/index.php/ijest2013 MultiCraft Limited. All rights reserved

Benefits of aligning design and supply chain management

A. Brun1*, S. Bolton

2, C. Chinneck

3

1*Department of Management, Economics and Industrial Engineering, Politecnico di Milano, ITALY2Centre for Competitive Creative Design, Cranfield University, UNITED KINGDOM

3Centre for Competitive Creative Design, Cranfield University, UNITED KINGDOM

*Corresponding Author: e-mail: [email protected], Tel +39-02-23992799, Fax.+39-02-23992700

Abstract

Supply Chain Management (SCM) is a cohort of tools and techniques supporting effective management of operations

(logistics and production activities) along the whole supply chain. Demand Management (DM) is now a multifaceted discipline

with tools and techniques that are used to align design with corporate strategy, manage quality and consistency of designoutcomes across businesses, create new user experiences and differentiate organizations products and services against

competitors. In this scoping paper, we argue that the role of a design and supply chain manager is distinctive but interconnected

within front-end product-focussed manufacturing activities. It is at this stage that we believe DM and SCM should be betteraligned in order to help firms to be more successful in their efforts to identify new product opportunities. This paper discusses

the research findings from the review of five companies to help better understand current practices, identify emerging problems

associated with the misalignment of DM and SCM, and to gain insights on the tangible benefits of better integration of DM and

SCM within front-end activities. The paper concludes by establishing a clear and focussed future research territory informed bythe case study findings.

Keywords:Design Management, Supply Chain Management, Alignment, Differentiated Innovation

DOI: http://dx.doi.org/10.4314/ijest.v5i2.4S

1. Introduction

Modern design and supply chain management are relatively new domains of scientific research in the development of

management practices. After Forrester seminal work (1961), first papers mentioning Supply Chain and Supply Chain Management

actually appeared in the 80s, with Kraljic arguing that, purchasing must become supply management (1983), while Oliver andWebber advocated Logistics being elevated to loftier, strategic levels to become Supply Chain Management (1982). Parallel to

these activities in the early 1980s, key players such as Farr, Alexander and Gorb started to see the role of Design Management(DM) as a potential strategic asset for businesses (Cooper and Press, 1995). Three decades later both DM and Supply ChainManagement (SCM) have evolved.

The value of design for front-end product development has been increasingly recognised (Verganti, 2009) as well as it being

identified as an essential aspect of product innovation (Perks et al, 2005). The effective use of design can contribute positively tobusiness performance (Bruce and Bessant, 2002; Chiva and Alegre, 2009). Perks et al, (2005) have identified three possible roles

for design: (1) design as a functional specialism; (2) design as an integrated multifunctional team; and (3) design as a product

innovation process leader. The use of design and designers to help transfer and integrate knowledge has also been argued (DellEra

and Verganti, 2009). Designs ability to help organizations to strategically and tactically differentiate, integrate and transform

innovation opportunities is well established (De Mozota, 2002). Lockwood and Walton (2008) argue that when business objectivesand appropriate design strategies are aligned, the combined capabilities area is a powerful force.

The first step of the New Product Development (NPD) process (the so called fuzzy front-end) determines which projects will

be executed. Quality, costs, and timings are mostly defined during the front-end. At this early stage, the effort to optimize is low

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Brun et al./ International Journal of Engineering, Science and Technology, Vol. 5, No. 2, 2013, pp. 49-6450

and effects on the whole innovation process are high (Smith and Reinertsen, 1991; Verganti, 1999). It is at this stage that we

believe DM and SCM should be better aligned in order to help firms to be more successful in their efforts to innovate.

The role of the design and supply chain managers are distinctive but interconnected within a product-focussed manufacturing

context. The design manager is requested to design and develop new products that create value, differentiates themselves from

competitors, maximises company capabilities and resources to deliver the business objectives. The design manager needs to ensurequality and consistency of design outcomes across the company and innovatively use internal and external capabilities in new

ways to deliver innovation and commercial success.

The supply chain manager is generally given a product (or range of products) which the company wants to market andprovided with information which enables him to forecast future demand and identify networks of production and warehousing

facilities, either owned by their own company or by third parties. The supply chain manager has the role of coordinating the

activities of a number of actors, all along the supply chain, in the realization of a production and distribution plan that fulfils

market requirements. This role requires a profound knowledge of capabilities and resources of the involved actors. Should thiskind of knowledge be available at the fuzzy front-end, it might dramatically help to unlock new product development

opportunities, and to avoid risks of selecting not-viable options. This latter concept indicates that the benefits of better alignment

between DM and SCM could be an interesting and still quite unexplored research domain.

In a sport analogy, we argue that the DM and SC manager are like a manager and coach of a football team. They devise thebest strategy and tactics to play against an opposing team, assigning roles and positions on the pitch to every player in order to

coordinate them towards a common goal. In this analogy, the players are the company assets (production facilities, product range,

but also suppliers and other partners along the Supply Chain), while strategy and tactics are the DM and SCM tools andtechniques. The problem is that even the most sophisticated strategies will not help improve performance if your team is a bunch

of amateur players, especially when playing against an all-stars team. That is like saying that a supply chain made up by poorlyperforming suppliers will never be a winning one, even applying the most sophisticated Supply Chain Planning and Control tools.

The team realised that by attempting to align DM and SCM within the front-end product design development (PDD) process

was like encouraging a football team manager and coach to:

- Study the strengths of current teams players as a whole and devise how more can be achieved with them

- Identify weak positions and look for potential new players, months in advance before the beginning of the season

- Make the team more competitive by improving the approach to how they play the game, not just in terms of sheer resultsbut also in terms of playing in a more attractive style

- Improve team spirit and develop a shared sense of purpose

Talented players like high-quality resources in a Supply Chain are paramount to achieving good results (Brun and Pero,

2011), however there is no such thing as a best location for a plant or the best supplier. The same site for a final assembly plant

could be described as good or bad depending on a distribution chain's specific needs. Accordingly, purchasing from a supplier withscarcely used production resources could result in the process becoming overly expensive, yet the same supplier could play astrategic role when it comes to creating volume flexibility to exploit upcoming market opportunities (Lee, 2004; Swafford etal,

2006). Similarly product design features that are popular in one region (Europe) are not guaranteed to deliver success in another

(Asia).

Therefore, improving team spirit, seeing issues and opportunities quicker and moving earlier - namely, before the beginning ofthe season - could help remove constraints (if the team budget allows it of course) and improve the quality of play, thus creating a

more competitive team. We believe this to be a real shift of paradigm:

- The old paradigm is represented by a traditional sequential approach where SCM starts when design ends: SCM strives to

maximize logistic performance to produce and market a given (i.e. already designed) product range; with DM trying to

maintain quality and consistency of design outcomes throughout its development. This traditional approach has frequently

led to a conflict of ideas and beliefs, leading to missed communication and opportunities - misalignment. In the proposed

football analogy, this would be like improving the performance of an existing team by getting the players to know theirbest positions, to play more as a team and being more resilient in tougher games.

- In the new paradigm SCM and DM are adopted earlier in front-end product design and development activities, as early as

the idea management process, where design requirements, manufacturing opportunities and constraints are communicatedearlier in the process. This new approach is a structured way for using supplier skills to identify innovation opportunities,

screening concepts (taking into account supply chain constraints) and aligning design and operations. In the footballanalogy, this corresponds to developing a more competitive style of play, where the manager and coach introduces new

players to maximise team strengths, enabling them to play the game in a more balanced and attractive way.

The purpose of this scoping paper is to identify current gaps in the academic literature and explore the associated spaces

through a series of five cross-category explanatory case studies. These case studies aim to identify the problems and impacts

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associated with the misalignment of DM and SCM and gain insights on the tangible benefits of better integration of DM and SCM.

This is discussed within the context of front-end activities in order to establish a clear and focussed future research territory.

This paper is relevant to academics and practitioners who operate in product-focussed manufacturing contexts, where design

attributes, material qualities and manufacturing processes are essential factors in achieving market success. As shown by previous

research, such contexts as the fashion and luxury industry proved to be an extremely promising field of application (Brun et al,2008; Brun and Castelli, 2008; Castelli and Brun, 2010). Interaction currently takes place in practice between DM and SCM, but

there is presently a lack of detailed understanding of these best practices due to a shortage of descriptive studies in current

publications, particularly in the field of DM.The paper is structured as follows, Section 2 provides a concise literature review to help define the scope of our research and

highlight current gaps in existing scientific research; Section 3 discusses the methodology that has guided the research study. The

findings from five exploratory cross-category pilot case studies are detailed and presented in Section 4; two case studies highlight

the problems of misalignment and three feature the benefits of aligning DM and SCM. The final section 5 presents the discussionand conclusions of this scoping project, concluding by outlining potential future research directions.

2. Literature Review

A succinct literature review is presented that defines both supply chain management (SCM) and design managements (DM)

functions and primary benefits. The reviews main focus is on presenting and discussing the potential benefits and impacts of

aligning design and supply chain management practices in relation to front-end product development activities.

2.1 Supply chain management:We define a supply chain (SC) as a network of production sites, warehouses, distribution centres,and final retail outlets, which are geographically distributed. Each node within the supply chain forwards the process of raw

material and component procurement, physical transformation of parts into sub-assemblies and into finished products while finally

delivering the products to final customers. This is a physicaldefinition of Supply Chain, in line with many early works (Lee andBillington, 1992; Swaminathan et al, 1996), and opposed to logicaldefinitions of Supply Chain (such as the one in Womack and

Jones, 1996), considering the SC as composed by flow of orders and/or that of materials rather than the physical sites constituting

the network (or chain).

Throughout the second half of the twentieth century, managers became increasingly aware that being able to react to changes incustomer needs and wants is paramount for a firm aiming to survive in an ever more fierce competitive arena. Now that firms have

to react to a fast moving market, the ability to manage, in a co-ordinated fashion, a set of interdependent activities, which extend

far beyond the boundaries of the single enterprise is becoming vital (Cooper and Ellram, 1993). Christopher (1982; 1993) wasamong the first to argue the strategic role of logistics, while Cooper and Ellram preached the shift of paradigm from traditional

channel logistics to Supply Chain Management.

The literature on supply networks, supply chains, supply management and supply chain management encompasses anextremely wide panorama of books and papers, as a result of the research effort carried out since the publishing of the first papersin the early 80s (Christopher, 1982; Oliver and Webber, 1982; Kraljic, 1983). As discussed in a recent literature review

(Giunipero et al, 2008), academic studies on SCM focus on a variety of domains, ranging from ICT systems to physical logistics

and distribution management, to planning, to supplier relationship management.

Today more than ever, managers up to CEO level are conscious that attaining an efficient supply chain management system isimportant for their firms (Cooper and Ellram, 1993). They are becoming more aware of new prerequisites for survival (Lee, 2004)

and are striving to measure performance at the supply chain level (Ittner and Larcker, 2003; Brun et al, 2009). In the following

section 2.3, we will see how research on Supply Chain Management is more and more hybridising with researches from otherdisciplines.

2.2 Design and design management: Design in its integrative capacity is a resource that can improve new product development

processes, user-orientated models and fuzzy front-end activities (De Mozota, 2008). The fuzzy front-end, a term made popular by

Smith and Reinertsen (1991), is considered as the first stage of the New Product Development (NPD) process, or what Murphy andKumar (1997) call the start date of team alignment. Designs importance to fuzzy front-end activities are based on its ability to

play an active role in making direct contact with customers and end users to unlock hidden innovation.

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Figure 1.Design business relationship

The integration of design thinking into organizational innovation processes is now becoming more critical to business success

(Brown, 2009). This belief is reinforced by Neumeiers (2009) assertion that innovation is a numbers game, with the winners being

the companies that can increase the total number - if not the percentage - of viable options (see Figure 1). De Mozota (2008) earlycites design as a source of increased sales, better margins, improved brand value, greater market share, better return on investment

(ROI) and deliverer of socially responsible design. Designs importance to business growth can be attributed to five interrelated

factors:

1. Design has the potential to bring to bear the tactical delivery of improved performance and company growth through

innovation;

2. Design has the ability to help organizations to differentiate, integrate and transform innovation opportunities into

competitive advantage, helping organizations to distinguish themselves as superior to others;3. Design thinking has the capability to help solve complex problems and increase the likelihood of more compelling,

creative and disruptive ideas;

4. Design has the capacity to help improve an organizations ability to cope with change, interpret new markets and help

them review their position within new and emerging markets;

5.

User-centered design approaches have the capacity to develop a deeper understanding of users at the fuzzy front-end,enabling organizations to unlock hidden innovation.

No single definition exists for design management (Cooper et al, 2008). This is partially owing to the fact that DM

encompasses several different design disciplines, ranging from product, environmental, information, identity and service design. In

addition DM has also started to encompass business design innovation, also referred to as design thinking. What is common is that

DM aims to link design to business and vice versa (Topalian, 2003; Boria de Mozota, 2003), with the Design ManagementInstitute defining design management as the business side of design (Design Management Institute, 2012).

DM has evolved from a project management function into a strategic tool. London (2002) advocates that the role of design

management is responsible for defining product values to be met, translating them into a design brief and guiding designers

understanding of the requirements. In organizations that see the design as an asset, DM now operates at an operational, functionaland strategic level according to Cooper et al, (2008), contributing to the value of the business through building brand equity,

differentiation and product quality.

DM techniques help organizations to align their business objectives to their design strategies in order to generate multiplesolutions, thus enabling more strategic choicesto be made for the business (see Figure 1). Tactically, DM plays a crucial role in

managing the quality and consistency of design across the spectrum of a companys outputs - ranging from products, to the brand

identity through to communication materials. DM activities and techniques also aim to deliver new consumer experiences and

differentiated concepts (products and services) that create value.

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Figure 2.DM and differentiated innovation

These core activities of alignment, management and enhancement, correspond with SCM objectives. When focussing on

product design management, the potential synergy with SCM becomes stronger. DM in a product-focussed manufacturing context

concentrates on creating differentiated concepts that require strong interaction with research and development, manufacturing andmarketing to maximise internal and external capabilities and opportunities (see Figure 2). It is in this domain where improved DM

and SCM can create added value.

2.3 Aligning design and supply chain management practices:The critical role of suppliers in product development activities haslong been recognised and analyzed as a potential source of innovation for many years (Von Hippel, 1987). Literature on the topic

is extensive and encompasses a number of different streams of research that have been investigated from both an innovation

management and supply chain management perspective. Several differences can be identified from the emerging streams of

research. For instance, research into SCM and Operations Management (OM) contributions have recently focused on the analysisof how to shape buyer-supplier relations to improve process efficiency more than product effectiveness (Van Hoek and Chapman,

2006) while in the innovation management stream, current contributions are looking at a broader set of performance parameters

but tend to focus on single project-based innovation activities. Despite these differences, a growing integration between the twofields of research has been observed and some recent contributions are stressing the importance of aligning SCM and product

innovation activities (Pero et al, 2010) along with integrating design and other processes within companies and supply chains

(Khan and Creazza, 2009).

An observed trend in product design and development processes is the increasing reliance on external resources. As far asR&D and technology management activities are concerned, the increasing relevance of external sources of innovation has been

reflected in the open innovation paradigm (Chesbrough, 2003; Gassmann, 2006). Given this trend, several authors have analyzed

the so-called develop or buy decisions. These decisions are typically made when aiming to design and develop an existing

product or component (Ulrich and Ellison, 1999).

Handfield et al, (1999) have identified a series of drivers to support managers when choosing whether to involve a supplierearlier or later on during the NPD process (e.g. product complexity, kind of relation with the supplier). Early Supplier Involvement

(ESI) literature identifies a positive impact on performances even though some results are contradictory (Hartley et al, 1997). Thelevel and depth of supplier involvement and responsibility are critical decisions that an organization has to make when selecting

and attempting to embed suppliers within NPD processes, and has been explored in depth via key studies by Spina et al, (2002),Roy et al (2004) and Petersen et al, (2005). In addition, Handfield and Lawson (2007) conducted a study with 134 industrial firms

and proposed that early supplier integration (ESI) in product development is an important coordinating mechanism for decisions

that link product design, process design, and supply chain design together.Lack of integration with suppliers can result in problems concerning the continuity and the quality of supplies, which are

crucial factors for companies. Their analysis showed that there can be major benefits for companies through coordination and the

sharing of concepts and information in achieving agility (Khan and Creazza, 2009). An aligned SCM-NPD process has several

benefits including increases in the companys capability to react and reduces inefficiencies in the supply chain, such as excessiveinventories, withdrawals, and mark-downs or lost sales (Khan and Creazza, 2009).

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Khan et al, (2012) conducted a fashion retail case study which found that aligning product design and the supply chain was not

only important for improving competitive advantage, but also greatly improved supply chain resilience and responsiveness. The

authors state that supply chain responsiveness can be enhanced by reducing non-value adding activities, compressing time to

market and working more closely with strategic partners (Khan et al, 2012). In their case, aligning design and the supply chain

improved supply chain resilience by expanding and internalising the design process to work closer to procurement teams and otherkey business functions.

Misalignment between product design and the supply chain should be improved in order to leverage supply chain capabilities,

enhance the effectiveness of new product launch and improve firm performance (Van Hoek and Chapman, 2006). The alignmentbetween NPD and SCM has been suggested to lead to an improvement in supply chain performance (Caplice and Sheffi, 1994).

For example, delivered variety is the number of different products delivered by a company to the market and is defined in

relationship to efficiency and responsiveness (Brun and Pero, 2012). If the delivered variety does not keep pace with the

customers orders, then the firm can face backlogs, stock-outs or overstocks (Pero et al, 2010). Practices and tools such as VMI(Vendor-Managed Inventory) or information sharing are recommended to achieve a higher level of collaboration and integration

between the client and their suppliers (Hill and Scudder, 2002).

Design plays a strategic role which impacts the total supply chain (Abecassis, 2006; Ragatz et al, 1997) and is much more than

creating novel ideas or making aesthetic product changes (Khan et al, 2012). Empirical results by Caridi et al, (2008) show that anincreased innovativeness of NPD projects results in higher complexity due to the configuration, collaboration and coordination

required along the supply chain. Pero et al, (2010) suggest that firms striving for NPD-SCM alignment should never set the values

of product design variables at levels calling for the highest supply chain complexity. They go on to state that in order to achievealignment, firms may not only match product features with the supply chain, but also long-term (supply chain configuration and

collaboration) and short-term decisions (supply chain coordination). This is referred to as internal alignment (Pero et al, 2010).

3. Research scope, aim and methodology

Based on the evidences from the existing literature, we decided to launch an interdisciplinary research project to investigate the

benefits of better integration between product design and supply chain activities. This involved putting together teams of experts in

the domains of Design Management (UK) and Supply Chain Management (Italy). This cross-disciplinary team started from the

assumption that design is aimed at creating value; on the same level, all of the activities along the supply chain are also meant toadd value whilst delivering products or services to final customers. Therefore with co-creation, DM and SCM can work together

to generate even greater value.

The bringing together of DM and SCM disciplines highlighted the need to comprehend each others vocabularies andlanguages, an important issue which has been identified by several authors. During the evaluative brainstorming sessions of the

pilot study data, the group used analogies such as the previously discussed football team analogy as a way of establishing a

common ground between team members (Hey et al, 2008). The research team decided to focus to the following research questions:

RQ1 What could be the negative consequence of poorly aligned SC and DM processes?

RQ2 What kind of benefits could be achieved through improved SC-DM integration?

RQ3 What are the current practices in terms of attempts of aligning DM and SCM?

RQ4 Which kind of approaches could be adopted to prevent problems of misalignment or to exploit benefits ofalignment?

In order to answer to the first two research questions, an exploratory case study was identified as the most promising approach.This would allow us to establish current practices, seek new insights and generate ideas and hypotheses for new research (Robson,

2002). To achieve the above objectives, the study examined five companies. The criteria for selecting each exploratory case study

company were based on six measures. Each selected company had the following common factors:

(1) They Operate in Different Industry Sectors: cross-category approach provides the opportunity to observe whether the emergingissues are common in multiple industries.

(2) They Operate in Global Markets: a global criterion suggests that they are dealing with local and global innovation drivers.

(3) They Utilise Supplier Capabilities as Part of Their Business Strategy: implies that supply chain capabilities are an active and

important part of day-to-day business activities.(4) They Attempt to Use Design as a Differentiator: implies that design is seen as one of the key considerations in their business

development strategy.(5) They Operate from Multiple Business Locations: alignment and cross-functional activities are already present.

(6) Their Turnover was Greater than 50m+ (Individual or Group): suggests that they have present an infrastructure and resources

to operate DM and SCM activities.

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Data was collected through semi-structured direct contact interviews (Robson, 2002) with multiple top managers in each

company, supported by the collection of secondary data from websites, company reports and other available information. The

semi-structured interviews adopted a think aloudprotocol (Pervan and Maimbo, 2005) which encouraged interviewees to

articulate and discuss the problems associated with alignment and misalignment of DM and SCM and the exploration of tangible

benefits of better integration within front-end activities more fluently.The adopted research methodologies focussed on reducing internal bias by capturing data from multiple sources in order to

better triangulate the findings (Yin, 2003). For example, in each case, a manager from the design and product development

department and another manager from the operations, purchasing or supply chain management department were interviewed. Theobserver triangulation method (Stake, 1995) was used in order to improve the reliability of data collection and interpretation.

Interviews were recorded and analyzed by two different researchers (Voss etal, 2002). Consideration was also given to ethics

(Singer and Vinson, 2002). A protocol was established in relation to how sensitive results were handled and by whom, getting

informed consent, and the process of providing feedback on emerging issues.The research team, through brainstorming activities and Root Cause Analysis, analyzed the collected data. This allowed a

generalization of results, in terms of problems and benefits, that could generally be associated with the way DM and SCM

processes interact. These results were also supported by the findings from the literature review (Abecassis, 2006; Ragatz et al,

1997). When possible, such brainstorming sessions also involved the company managers in fact, we believe that workingalongside design professionals can help supply chain professionals to expand their knowledge and vice versa.

4. Exploratory Case Studies Findings

The purpose of this section is to articulate and present the findings from the exploratory case studies. Table 1 summarises theproject framework in terms company selection criteria, areas of investigation and emerging DM and SCM alignment issues.

Table 1. Exploratory Pilot Case Studies Summary

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The exploratory pilot case study findings suggest that misalignment is a two-way street between DM and SCM functions.

Profits can be affected, if DM does not consider SC issues earlier enough in their design decision-making and brand reputations

can be damaged if SCM activities do not ensure the required quality. More positively, the findings imply that well aligned DM and

SCM activities create increased competitive advantage, enable competitor differentiation and help generate more innovative design

options. The following subsections unpack the emerging misalignment and alignment issues through the case study reviews.

4.1 Misaligned DM and SCM case studies: From the five exploratory pilot case studies, two highlighted potential problems

stemming from the poor alignment between design development and supply chain processes. Specifically the misalignment relatedto the impact of material choices on net profit (FashionCo) and the cost of product quality failure on brand value (Sport-GoodsCo).

The two pilot case studies also provide two different perspectives on misalignment, as one is driven by misaligned DM issues and

the second by misaligned SCM factors.

4.1.1 FashionCo: impact of material choice and product range on net profits:FashionCo is a family owned Italian fashion brand

operating in the global menswear market. Their product development and supply chain processes are driven by seasonal

collections, divided into into two seasons; Fall/Winter and Spring/Summer. The process starts when the designers create a

collection, prototypes are then developed and final selected designs are manufactured. In parallel, the selling campaign starts withprototypes being exhibited in fashion shows, whilst the designer managers and brand managers try to forecast which items will

become best sellers.

The output of the selling campaign is a portfolio of orders signed by customers, where the total dollar value of the order signedis simply referred to as gross. For the bestselling items, the supply department starts to purchase raw materials (yarn, fabric,

trim) and contracting suppliers for outsourcing the production of partially or finished goods, before the end of the sellingcampaign; this is called blind buying. After a formal order confirmation, from the customer, the planning department calculates

the exact quantities of materials required to buy and goods to manufacture.

After the purchase of the raw materials, production takes place in either internal or outsourced facilities and the finishedproduct is delivered to the customers. The total dollar value of invoices is called net. For a number of reasons, the net is

significantly lower than the gross: on average, 10-15% of the gross or potential turnover is lost due to a number of problems.

Misalignment issues emerge when collections are designed based on specific unique materials, creating an inability to source

sufficient material at the right quality and quantities to fulfil orders, resulting in reduced finished goods orders to customers. In thefashion industry, the misalignment of DM and SCM creates a big opportunity cost for companies due to the peculiar cost structure

of the fashion industry which has very large, fixed costs and up front investments.

It is important here to stress that the part of the organization reporting to the design director is an extremely powerful forcewithin the fashion-oriented organization. The whole design and supply chain process is driven by design decisions, and most of

these choices are made at a supply chain level which adapt to constraints arising from design choices rather than independent

decisions aimed at optimizing the whole end-to-end process. The problems from a management standpoint are as follows:

A. Missing Raw Materials (when production of ordered products is not possible, orders are cancelled)

Purchasing minimums. If the total amount of a certain fabric needed to produce the ordered suites is not enough to reach

the minimum order quantity, the sourcing department can decide not to buy the raw material at all. Therefore

understanding these constraints are consequence of better aligned DM and SCM.

Long procurement lead times. Quite often, especially with suppliers not rated as reliable grade A suppliers, orders can

take up to six months to be delivered. Unexpected delays are also common.

Errors in bill of material. Garment fabric consumption is estimated based on actual usage in prototyping. Factors such asunpredictable fabric behavior or extra scraps in cutting (depending on the apparels size) can result in a wrong estimation.

Poor quality. Customarily, the purchasing department purchases an extra 6% of material to face potential raw materialquality problems. Some batches of materials can result in a scrap rate that is substantially higher than expected.

B. Quality

Completing a quality check of purchased materials takes time. If quality checks are rushed or skipped altogether defects might not be detected at quality control.

There may be internal manufacturing defects and due to delivery constraints, there is often no time to rework.

Conducting a final quality control is also very time-consuming. Some shipments could be delayed because of lengthywaits at the QC inspection department. Delays in shipment could also lead to order cancellation.

C. Order Feasibility

Checking order feasibility is quite a complicated process; therefore it is possible for a manufacturing facility to not have

enough production capacity to process all the signed orders.

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D. Commercial Issues

Besides the above mentioned issues, all related with the supply chain management domain, there can be other commercialissues which include:

the customer cancels the order without any explanation;

the customers shop closes; the administration department decides to cancel an order signed by a bad payer.

The problems reinterpreted in the light of poor design/SCM cooperation include:

Designing too wide a collection without knowing the minimum purchasing quantities imposed by fabric suppliers, results

in order cancellations due to the inability to purchase and produce low selling items. It is therefore important that morefront-end alignment between DM and SCM takes places to reduce this problem;

Deciding on the choice of fabric that could sell more this season, and then looking for a supplier able to produce that

fabric, will potentially result in a short-term relationship with a large number of suppliers. Longer term relationships can

prove to be beneficial, in helping to gain control of costs and quality. Partner suppliers can also contribute to designactivity by proposing new innovative materials and processes helping innovate and create better integration between SCM

into DM activities;

Aligning better DM and SCM activities has the potential to help design collections that can better balance available

production capacity with creative design options. For example, it is in effective to launch a large number of designs

requiring a very specific production skills (e.g. vowen suede) if there is a lack of production capacity which create a

bottleneck, limiting sales.

4.1.2 SportsGoodsCo: cost of quality on brand value:The unnamed Sports-GoodsCo is the sales and marketing arm of a Chineseholding company based in Hong Kong. Established in the early 1990s, it started life as an original equipment manufacturer

(OEM), then developed into an original design manufacturer (ODM) focussing on designing and marketing sports and fitness

equipment for major retail chains and brands in the USA and Europe. Sport-GoodsCo established its own dedicated manufacturing

facility with a research and development capability in China in order to support its growth aspirations.

In 2006, small and medium sized enterprises (SMEs) were seeing increased pressure on margins, particularly in the Pearl RiverDelta. Regional Chinese Government initiatives were encouraging SMEs to look to develop their own brands. The predisposition

of many SMEs at that time was to incrementally develop their core capabilities to facilitate the development of their own branded

products servicing existing markets. A technique adopted by SMEs was piggy backing existing client intellectual property andtheir routes to market (Bolton, 2009). This approach habitually led to the fracturing of relationships, resulting in the loss of core

business. For many SMEs the fear of lost business, frequently halted any attempt to move towards own branded product

development.Sports-GoodsCo, having already invested in research and development capabilities, had used its additional skills to helped it to

gain an advantage in the ODM sport goods markets for steel fabricated products, namely fitness benches. Based on this success

and the prevailing climate, Sports-GoodsCo wanted to develop its own brand management (OBM). The main element of Sports-

GoodsCo business plan was the adoption of an outsourcing strategy (SCM) to build its brand business. The company had extensive

experience of sourcing products, combined with shipping and distributing products globally. The company aimed to deliver highquality products at competitive prices due to savvy sourcing. They established first and second tier partners to provide complete

products or components that could be assembled and or finished in its own facilities.

The business strategy was developed around servicing key gym club chains in Europe and the USA with competitive priced

offers, which were differentiated by high quality branding, design and product quality. This strategy was reliant on sourcing highquality supply chain partners who could deliver appropriate product quality at the right cost. The accessory market within the

sports and fitness industry is dominated by undifferentiated and low perceived value items unlike the equipment side of the market,

were design is used as a differentiator. This represented a potential big market opportunity for the company. In principle, thestrategy was based on the alignment of SCM and DM activities to create added value.

One of the key product lines within the sport and fitness market is the dumbbells/free weight product range. Sports-GoodsCoused design to build a quality brand identity, communication material and well-considered product design. They engaged European

partners with extensive experience of designing and developing sports fitness products to help develop the whole Sports-GoodsCo

product range. This raised the issues of internal design quality within the company and external perception of the brand. Theflagship product range was to be the polyurethane (PU) dumbbell range. The use of high impact materials would provide

performance advantages resulting in increased product durability. A unique numbering system was developed for the dumbbells

that made lettering easy to read from distance, provided a distinctive visual appearance and even incorporated embossed braille toaddress changing legislation in Europe. Design effort was spent on developing tri-colour molded end caps and detailing surface

finishes to create a high quality product.

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Sports-GoodsCo and its global sales teams were successful in winning business with the prototype and sample products. This

required the company to go to the next stage - full production, requiring the ramp up of both the supplier and internal capabilities.

Investment in molds needed to be made, suppliers agreed and trial samples sent to key accounts.

In order to discuss the case of the cost of quality on brand equityit is necessary to explain the nature of the problem that

occurred. What emerged was a breakdown in quality assurance procedures, on-site product inspection and testing. The problemwas not evident until it was in use under trial. The problem stemmed from the molds not being heated to a sufficient temperature

prior to molding. This was to ensure that air bubbles generated in the manufacturing process would be minimized; this failure

resulted in products being produced that had hidden faults (air bubbles around the edge of the product). When persistently dropped(as is common in gyms) PU material broke away from the edge of the product (where the build up of air bubbles had taken place)

leaving the product damaged and faulty.

The problems from a management standpoint are as follows:

A. Product Range Size (stretching internal capabilities)

Maintaining the depth and breadth of expertise of the team (DM and SCM) as the product range expanded, impacted on

maintaining the alignment between SCM and DM activities. As the product range and complexity of design increased (moremanufacturing processes), it was not matched in terms of enhanced SCM capabilities, which ultimately resulted in product

failure. Upholding and sustaining consistent day-to-day activities could have been achieved by better communication between

SCM and DM on emerging negative design issues.

B. Minimum Order Quantities (pressure to maintain unit price on small orders)

Failure to avoid eroding key supplier relationships, due to constantly changing minimum order numbers (trust), impacted on thefinal product quality. More accurate planning was needed and more realistic alignment of design options required (volume

numbers). This would have prevented sales team frustration and over promising to clients.

C. Quality Control Procedures (weak quality assurance procedures and onsite testing)The inability to ensure adherence to procedural control in off-site situations resulted in failure.

D.Retaining High Quality Staff (high market demand for experienced and quality staff)

An identified external factor was the drain on resources and moral when continually investing in non-committed staff, who left

the company and SCM activities exposed. Retaining knowledge and expertise within the business to drive DM and SCMactivities is crucial to success.

E. Commercial Issues

The misalignment of SCM and DM had a negative impact on brand equity due cost of quality issues. It created mistrust withinthe sales team and ultimately resulted in customers cancelling orders

The problems reinterpreted in the light of poor SCM and DM cooperation include:

- Selecting manufacturing processes that required too high minimum order numbers for initial launch, impacting on design

strategy;

- Lack of alignment between SCM and DM procedures in pre-production and launch phases;

- Lack of stringent test procedures on-site in with suppliers to ensure product quality prior to shipping.

4.2 Benefits of aligning and integrating DM and SCM case studies: The remaining three exploratory case study companies

demonstrate the potential benefits of how aligning DM and SCM can improve idea generation, achieve more effective innovation,and enable risk avoidance. Each case study identifies specific benefits of improved alignment and integration between DM and

SCM:

- ShoeCo and their increased competitive advantage

-

MaterialsCo and their enhanced competitor differentiation- PackagingCo and their new innovative packaging design

4.2.1 ShoeCo and their increased competitive advantage: ShoeCo is a global shoe producer, selling its shoes directly to end

customers (even though they also use a wholesale distribution channel). ShoeCo has to compete in a traditionally design intensive

industry, and therefore naturally identified design as the key differentiating factor of its products. Notwithstanding its large andcontinuously evolving product range, ShoeCo has not manufactured anything since 2005 and relies on a network of external

manufacturers. The R&D function has quite an internal focus, and does not deal with the external supply network outside singleprojects activities. On the other hand, the company has a specific organizational unit, detached from the design and innovation BU,

that copes with the last development phases together with the NPD process that deals with external manufacturers. The product

development business unit is typically involved in later phases and is not involved in external activities.

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The main benefit for ShoeCo from enhanced alignment was their increased competitive advantage through their focus on

design and interaction with external manufacturers in their supply chain. This can be achieved in a number of ways but in their

case, clearly establishing which business unit deals with which external manufacturer is a practice which has the benefit of solid

lines of communication and defined responsibility. As it could be easily understood, the role of the design function in their SupplyChain activities is crucial. All in all, design has to play more strategic role than R&D in ShoeCo due to their fiercely competitive

industry.

4.2.2 MaterialsCo and their enhanced competitor differentiation: MaterialsCo is a global decorative surface material supplier,

selling laminates to building and construction companies, furniture manufacturers, architects and end customers. The largest part

of the production process is carried out internally. Unlike ShoeCo, MaterialsCo is operating in a commodity market. Yet, as hard

and technical features of the products are relevant, they are not key to winning orders within its sector. MaterialsCo also identifieddesign as being their key differentiating factor. MaterialsCo aim to innovate in a proactive way, where they receive input from

customers before proposing innovative materials.

The company relies on both the design and the purchasing teams to cope with opportunities that emerge from their existing

supplier base. The role of the designer becomes even more crucial in looking for innovation opportunities in new suppliers withintheir industry, mainly through participation in trade shows and exhibitions. Within the product development department, there is a

fair balance between the design and the R&D.

The main alignment benefit from the MaterialsCo case study was that they managed to differentiate themselves against theircompetitors. They achieved this through introducing new kinds of surface paper allowing for the design of a variety of different

finishes for the customer. This also had the benefit of creating different tactile sensations for the customer through these finishes,going beyond the colour and pattern only approaches of their competitors. The company was able to gain this differentiation by

being able to identify a potential design opportunity and capitalise on it through enhanced communication and engagement with its

technological supply chain.

4.2.3 PackagingCo and their new innovative packaging design: PackagingCo is a global metal packaging supplier, which

develops, produces (mostly in owned facilities) and sells metal packaging to key drink and food brands. As in the previous cases,

the company is trying to use design to differentiate their products in a commodity market, even though specific innovationactivities typically start from the brief of a customer. Similarly to MaterialsCo, also in PackagingCo the design and the purchasing

teams are relentlessly analysing the evolution of supplier skills and capabilities in order to identify innovation opportunities.

In this case, the main benefit of DM and SCM alignment was the realisation of a new innovative packaging design.PackagingCo was able to introduce this innovation through exploiting fresh opportunities in new materials and production

equipment within their supply chain. Both MaterialsCo and PackagingCo rely on both the design and the purchasing teams to cope

with opportunities that emerge from their existing supplier base. The role of the designer becomes even more crucial in looking forinnovation opportunities in new suppliers within their industry, mainly through participation in trade shows and exhibitions.

4.3 Critical analysis: The results from the analysis of the five case studies demonstrate:

- on one hand, the risk associated with managing of design and supply chain activities in an independent (sometimes

sequential) way,- and from the other hand the potential benefits of how aligning design and supply chain management can improve idea

generation, achieve more effective innovation, and enable risk avoidance.

Each of the three success story case studies identified specific benefits of improved alignment and integration between DMand SCM: competitive advantage, differentiation, and innovative design. All of the companies in the study advocate the growing

importance of soft, aesthetic and emotional features of products as real winning factors in their own markets, despite the fact that

they are all in different industries. By generalizing the result of the two cases of poor integration, we came up with the following

list of potential improvement areas:

Variety management: designing an overly large range of products would create excess costs in the supply chain

Match between design requirements and available capabilities

Assessing market demand before setting up large scale production facilities

Balancing production capacity (among suppliers/over time)

Putting the right emphasis (and managerial focus) on the introduction of new processes and procedures

The last three case studies have shown that real, long lasting competitive advantages can be built and sustained through the

synergy between design, technology and the supply chain. Each company has established a different balance between design and

R&D within their product development departments. In particular, design plays a predominant role in ShoeCo; in MaterialsCo, theR&D unit is also very important; whilst PackagingCo is a very technology focused company with only a small internal design

studio. A good part of the effort put into the technology side of the product development process is aimed at enhancing different

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design opportunities that can be translated into soft and emotional features and characteristics of the products. For instance,

MaterialsCo manages to make a step forward against its competitors through the introduction of new kinds of surface paper that

allows the design of different finishes in terms of tactile sensation for the customer. Similar examples can be found in

PackagingCos recent innovations, when new materials and new production equipment have allowed the realisation of innovative

packaging designs. These cases show that analysing suppliers capabilities and new technological opportunities arising along thesupply chain could facilitate the discovery of design opportunities and design is now acting as an enabler.

The literature review has identified gaps in terms of tools and processes that have not yet been widely adopted in an integrated

way; for example, SCM tools in the front-end process of design related activities and vice-versa with design-intensive activities inthe SCM domain. Bringing SCM into front-end processes could result in two kinds of benefits: on one hand, being aware of SC

processes (and constraints) during the early concept development stages will help in the avoidance of risks such as unfeasibility as

well as costly and time-consuming design revisions. On the other hand, the current emphasis is on the realization and launch of

products while the adoption of SCM tools and techniques could help support the generation of new ideas. This will require thealignment and integration of PDD and SCM processes. In summary, the five case studies show that DM and SCM are interlinked

and dependent on each other to deliver value to the end customer.

5. Conclusion and Further Development

This paper discussed the preliminary results of a cross-disciplinary research project, putting together teams of experts from the

domains of design management and supply chain management. The aim of the research is to investigate how better integrationbetween design and the supply chain could be mutually beneficial. The paper is therefore meant to be a scopingpaper that clearly

defines a research territory through gaps in the literature along with pilot case study support.The domains of DM and SCM have been identified as being important to delivering product success and contributing to

product innovation (Pero et al, 2010; Abecassis, 2006; Ragatz et al, 1997) however, it is less clear on how alignment can be

achieved. The role of DM has been identified as a potential key enabler for achieving good results, as far as managing buyer-supplier relations are concerned (Twigg, 1998; Khan and Creazza, 2009). This paper starts to fill this gap in the scientific literature

in this field by providing further insight into misalignment issues and tangible alignment benefits.

Our initial exploratory case study findings suggest that earlier and deeper alignment of DM and SCM activities in the front-end

have the potential to improve how companies:

Listen for innovation opportunities (awareness of SC capabilities/design needs) Look for innovation opportunities (ability to identify new and unused SC capabilities to generate new design possibilities) Communicate innovation requirements/operations constraints and limitations (starting discussions earlier and being able

to use each others language (DM and SCM) to communicate issues and opportunities more effectively)

Encourage new innovation efforts (connecting multiple SC capabilities together in new ways-from cost reduction to newdesign possibilities)

Figure 3: Four Sets of Activities

As shown in Figure 3, these practices can be directed towards both internal and external activities. This initial framework canbe used to identify priorities and to draw up a roadmap towards the maximization of the supply chain contribution to product

innovation, starting from DM and SCM practices, aimed at listening for innovation opportunities that come from actual suppliers.

This study is still exploratory and the size of the sample is a limiting factor. Our aim is to enlarge the sample so that it includes

different companies from similar industries within the UK and Italy so that a more comprehensive comparison between different

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country practices can be made. One of the more valuable contributions of this research is the identification of some urgent issues in

practice that further research could effectively address. Future research directions should include the identification of new ways to

provide incentives for DM and SCM alignment. Effective mechanisms to leverage creative supplier capabilities with approaches

that can provide increased production capacity would be one of the expected outcomes.

An important first undertaking of this research project involved bringing together two different fields of research and domainsof expertise, design management and supply chain management. We can now state that developing a common language is already

an achievement in itself. Moreover, a literature review has identified gaps in terms of tools and processes that have not been

widely adopted in an integrated way (e.g. SCM tools in front-end design related activities and, vice versa with DM activities in theSCM domain).

Bringing DM and SCM into front-end idea management processes could bring two kinds of benefits: firstly being aware of SC

processes (and constraints) during the early concept development stages will help in avoiding risks of unfeasibility as well as

costly and time-consuming design revisions and secondly, the adoption of SCM tools and techniques in DM practices could helpsupport the generation of new ideas. This will require the alignment and integration of PDD and SCM processes.

Future research directions are clearly defined below. This research team will keep exploring how to achieve greater co-

creation between DM and SC functions. In particular, the research will focus on the following issues:

1. Variety Optimization: Designing the right level of variety in order to both maintaining design meaning while

maximising product value and reducing production costs;

2. Assessing Existing Supplier Capabilities: in order to design products which are both simple and economical tomanufacture.

Future research should also provide support for the development of specific tools and routines to enhance communication

between SMEs and big corporations; most of all when a wide spectrum of innovation features has to be included in the innovation

dialogue. This should contribute to moving buyer-supplier dialogue from a pure delivery attitude into once which creates newinnovation.

Nomenclature

BU Business Unit

DM Design Management

ESI Early Supplier IntegrationIJEST International Journal of Engineering, Sciences and Technology

NPD New Product Development

OBM Own Brand ManagementODM Original Design ManufacturerOEM Original Equipment Manufacturer

PDD Product Design Development

PU Polyurethane

R&D Research and DevelopmentSCM Supply Chain Management

SME Small and Medium Sized Enterprise

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Biographical notes

Prof. A. Brun holds a PhD in Industrial Engineering and is an Assistant Professor at Politecnico di Milano, where he teaches Quality Management. His researchinterests are in the domains of Supply Chain Management and Quality Management, with particular focus on specific industries such as Luxury Goods,

Automotive, and the Service sector. He is also Director and Coordinator of executive trainings in Six Sigma and Luxury Management at MIP the business school

of Politecnico di Milano.

Prof. S. Bolton is the Director of the Centre for Competitive Creative Design (C4D), Cranfield University, United Kingdom. Professor Bolton specializes inhelping companies improve and develop their design capabilities and business performance. He has extensive experience of working in Europe, North America,

South America and Asia for local and global brands. He has advised and consulted leading global brands such as Rubbermaid, Hyundai Cars, Kia Motors,

Panasonic, LG Electronics, GP Industries. His insight and foresight lifestyle research is supported by Procter and Gamble and act as a thought leader in oral care,

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laundry and prestige product production. His work has been exhibited in the Design Museum in London, the Axis Gallery in Tokyo and the Pompidou Centre inParis among others. His work has been published in major design journals internationally in Europe, Asia and North America. Simon Bolton has worked nationally

and internationally promoting the role and use of design with organizations such as the Design Council, Industrial Design Society of America, Korean InternationalDesign Promotion and the Hong Kong Design Centre.

C. Chinneckis a PhD candidate in the Centre for Competitive Creative Design (C4D), Cranfield University, United Kingdom, where she also received her Master

of Design in Innovation and Creativity in Industry in 2010. She was awarded an iCASE award and her doctoral research is sponsored by the EPSRC and the

multinational, consumer goods organization, Procter and Gamble. Her current areas of research include Idea Management, Idea Generation, Design-DrivenInnovation, and Open Innovation.

Received October 2012

Accepted October 2012

Final acceptance in revised form November 2012

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