scispace - formally typeset
SciSpace - Your AI assistant to discover and understand research papers | Product Hunt

Proceedings ArticleDOI

A Risk Management Approach for Collaborative NPD Project

07 Jul 2016-pp 1-5

TL;DR: The objective of the paper is to establish the process making the ling between network design, NPD project planning and risk management in order to have an overview of the repercussion of the network design on N PD project.

AbstractTo be competitive, a new product should present an innovative advantage while being achievable. To ensure the success of a New Product Development (NPD) project, specific skills and resources are required. Most often, if a product is complex, a unique company doesn't have all the competences to provide the complete product. In this case alliances must be formed to create a collaborative network that work on the new project. Depending on the selected partners, different possible innovation level can be reached. This decision also influences the uncertainty and the risk of the project. It is difficult to assess the risk level of a NPD project especially when the collaborative network is new. In this paper we address the topic of alliance making in NPD and we present a reading frame of the projects by taking into account the type of innovative projects, the possible network and the risk that are obviously inherent. The originality of the paper is to consider correlate decisions focused on the collaborative network and on the risk management in innovation context. The objective of the paper is to establish the process making the ling between network design, NPD project planning and risk management in order to have an overview of the repercussion of the network design on NPD project.

Summary (2 min read)

Introduction

  • Keywords—new product development; project management; collaborative network; risk management; innovation.
  • Higher requirements for the products lead to the need for constant innovation for company’s competitive advantage.
  • External knowledge sharing appeared in collaborative network and forms an open innovation system [4] with advantage and difficulties.
  • To identify the risks and propose a risk management plan, the objective of this work is to propose a reading frame for collaborative NPD project.
  • Therefore, in this section, the authors define these particular notions.

A. The innovation and its effect on the project

  • NPD collaborative project has four main steps: Requirements specification (including idea genesis), Product design, Product implementation, and Commercialization.
  • This steps are formalized as a sequential process (stage-gate process), or a concurrent, iterative one (Vee cycle) [8].
  • In the Evbuomwan et al.’s [10] classification the level of originality is obtained by routine design, to redesign and non-routine design.
  • Du to the innovation, NPD project are risky.
  • The types of collaborations are described in the next section.

B. Collaborative network and partners election

  • 1) Definition NPD project may imply a “co-development alliance “[13] or “Technology development alliances” [14], with the purpose of improvement in technology and know-how, for example agreements for joint R&D, simultaneous engineering, licensing, joint design and/or technology commercialization.
  • Those involve the sustained joint creation of property and knowledge for the partners, requiring them to bring in resource and work together on a constant basis [15].
  • Schumpeter [16], contrary to the standard neo-classical theory, point out the endogenous character of technology and innovation (mainly in-house R&D).
  • In unilateral alliance one partner provides founds to another partner for specified R&D development.
  • Innovation level is directly proportional with novelty gain.

C. Risk management in Network

  • Firms trying to be innovative develop new ways of doing business.
  • The performance risk is usually shared by making alliances but the relational risk appears only if an alliance is made [27].
  • Tornatzky and Fleischer [28] framework highlights the three main elements of a firm’s context influencing the process by which it adopts and implements technological innovation: Organization, Technology, and External Task Environment.
  • Other kind of risks, exogenous of network, are possible.
  • They are mentioned below but are not considered in this work.

D. Finding

  • Depending on the innovation level of the project and on the collaboration involved in the development, different risks are possible.
  • The strategies needed to manage risk and to success the project different on the type of the considered risks.
  • To identify risks and propose adapted risk treatment strategies, is necessary to be able to characterize a project following the three dimensions presented in the literature review (Innovation level, collaborative network and type of risks).
  • First the authors formalized the process to build the risk management plan.
  • This process uses the characteristics of the project to achieve efficient plan.

A. Risk management in collaborative project design

  • During the NPD project is designed, risks are studied.
  • The level of innovation drives the manager to develop incrementally the new product based on existing products or a radically different one.
  • The planning of the project and the associated project can have to be reviewed.
  • These works do not considered the effect of the alliance selection on the planning and on the risk.
  • Therefore, risk treatment strategies generally conduct to review the product design or the project planning as well as to modify the collaborative network.

B. A structuring frame

  • The innovation level with the incremental or radical innovation.
  • The type of risk with the relational and the performance risk.
  • The cube obtained presented in figure 3 show in each cells the intersection of this decomposition.
  • Each cell represent contexts where the project will be carried on and for which risk treatment strategies have to be proposed.

C. Risk management

  • For each cell of the cube the literature identify different risks and possible treatment strategies.
  • These sets are provided in order to drive the decision maker in the identification of the risks and in the risk treatment strategies to provide a risk management plan.
  • Pharmaceutical companies establish alliances to develop new medicine.
  • The problematic addressed in this paper is to help the manager building a risk management plan to make the project robust to the risks.
  • This work gives a macroscopic vision of the influence of the innovation and alliance on the project risk level.

Did you find this useful? Give us your feedback

...read more

Content maybe subject to copyright    Report

HAL Id: hal-01591960
https://hal.archives-ouvertes.fr/hal-01591960
Submitted on 25 Sep 2017
HAL is a multi-disciplinary open access
archive for the deposit and dissemination of sci-
entic research documents, whether they are pub-
lished or not. The documents may come from
teaching and research institutions in France or
abroad, or from public or private research centers.
L’archive ouverte pluridisciplinaire HAL, est
destinée au dépôt et à la diusion de documents
scientiques de niveau recherche, publiés ou non,
émanant des établissements d’enseignement et de
recherche français ou étrangers, des laboratoires
publics ou privés.
A risk management approach for collaborative NPD
project
Ioana Filipas Deniaud, François Marmier, Didier Gourc, Sophie Bougaret
To cite this version:
Ioana Filipas Deniaud, François Marmier, Didier Gourc, Sophie Bougaret. A risk management
approach for collaborative NPD project. ICIMSA 2016 - International Conference on Indus-
trial Engineering, Management Science and Applications, May 2016, Jeju Island, South Korea.
�10.1109/ICIMSA.2016.7503986�. �hal-01591960�

A risk management approach for collaborative NPD
project
Ioana Filipas Deniaud
Strasbourg University
BETA
Strasbourg, France
deniaud@unistra.fr
François Marmier
Toulouse Univ., Mines Albi
& Strasbourg Univ., BETA
France
marmier@mines-albi.fr
Didier Gourc
Toulouse University
Mines Albi
Albi, France
gourc@mines-albi.fr
Sophie Bougaret
Pharmaceutical R&D
Management Consulting
Company - Manageos,
Francarville, France
sophie.bougaret@wanadoo.fr
Abstract—To be competitive, a new product should present an
innovative advantage while being achievable. To ensure the
success of a New Product Development (NPD) project, specific
skills and resources are required. Most often, if a product is
complex, a unique company doesn’t have all the competences to
provide the complete product. In this case alliances must be
formed to create a collaborative network that work on the new
project. Depending on the selected partners, different possible
innovation level can be reached. This decision also influences the
uncertainty and the risk of the project. It is difficult to assess the
risk level of a NPD project especially when the collaborative
network is new. In this paper we address the topic of alliance
making in NPD and we present a reading frame of the projects
by taking into account the type of innovative projects, the
possible network and the risk that are obviously inherent. The
originality of the paper is to consider correlate decisions focused
on the collaborative network and on the risk management in
innovation context. The objective of the paper is to establish the
process making the ling between network design, NPD project
planning and risk management in order to have an overview of
the repercussion of the network design on NPD project.
Keywords—new product development; project management;
collaborative network; risk management; innovation.
I. INTRODUCTION
Future success of a company often requires that firms offer
regularly new products. In order to reach fundamentally better
products, lower costs, and basically new product features,
technological innovations are needed [1]. Higher requirements
for the products lead to the need for constant innovation for
company’s competitive advantage. In the same time the
complexity of technology needed to innovate has increased
and NPD costs are exploding [2]. Firms with diversified
networks usually hold major advantages through access to a
rich knowledge base. Ritala and al [3] show that the external
knowledge sharing increased firm-level innovation
performance. External knowledge sharing appeared in
collaborative network and forms an open innovation system
[4] with advantage and difficulties.
Nightingale [5] point out that NPD simultaneously implies
defining the product to be created (What do we do?), defining
the project to implement (How do we do it?) and the actors in
charge of different activities (Who does what?). The NPD
project contains a set of activities that must be carried out to
meet design objectives. The innovation level of the future
product involves a creative capital [6]. The NPD is the result
of a collaborative process between resources belonging to
different functions of the same company (internal
development) or between different companies working
networked [7]. Both innovation level and collaborative
network are sources of risks.
To identify the risks and propose a risk management plan,
the objective of this work is to propose a reading frame for
collaborative NPD project. The originality of this work is to
consider the type of project, the type of collaboration and the
type of risk in order to help choosing the risk treatment
strategies.
The paper is structured as follow: first, we present of short
literature review on NPD Project and its characteristics,
second we propose a process and a reading grid helping to
define a risk management plan and then finally, we present our
conclusions
II. N
EW PRODUCT DEVELOPMENT PROJECT
A NPD project is characterized by an innovation level,
most often the time by distributed skilled resources between
partners and by a high level of risk. Therefore, in this section,
we define these particular notions.
A. The innovation and its effect on the project
NPD collaborative project has four main steps:
Requirements specification (including idea genesis), Product
design, Product implementation, and Commercialization. This
steps are formalized as a sequential process (stage-gate
process), or a concurrent, iterative one (Vee cycle) [8]. Several
authors distinguish three NPD project types according to the
initial innovation level. In the Gero’s classification [9] defined
the design output can be creative, innovative or routine. In the
Evbuomwan et al.’s [10] classification the level of originality
is obtained by routine design, to redesign and non-routine
design. In reality, it is often not possible to define precisely the
boundaries between theses types of design. For example, a

complex product is composed by different sub-systems [11].
One of sub-systems maybe corresponds to innovative design,
while another is routine design. Therefore, this should be
considered to be only a broad classification. In reality it is a
continuum.
Du to the innovation, NPD project are risky. Innovation
demands coordination and cooperation between partners in
NPD. The types of collaborations are described in the next
section.
B. Collaborative network and partners election
To realize a collaborative work a form of cooperative
arrangement, named “strategic alliance”, must to be done
between partners [12].
1) Definition
NPD project may imply a “co-development alliance “[13]
or “Technology development alliances” [14], with the purpose
of improvement in technology and know-how, for example
agreements for joint R&D, simultaneous engineering,
licensing, joint design and/or technology commercialization. It
can be done in particular bi-lateral relations or in clusters and
during each step of the project, alliances can by done. Those
involve the sustained joint creation of property and knowledge
for the partners, requiring them to bring in resource and work
together on a constant basis [15]. Depending on project time
(moment) the company that initiates the collaborative process
may seeks partners with a strong creative potential (in initial
phases) towards simple subcontractors (at the end of the
project).
Many theoretical frameworks dealing with strategic
alliances with very different perspective of innovations; in
neo-classical theories, technology or innovations are simply
assumed to appear, from time to time, resulting from
economically exogenous processes. Schumpeter [16], contrary
to the standard neo-classical theory, point out the endogenous
character of technology and innovation (mainly in-house
R&D). Gnyawali and Srivastava [17] discus about network
orientation and they identified two possibilities: acquisition
and co-development. In acquisition, network is viewed as
means to get specific resources of the other firm to enable to
pursue its own innovation in NPD. In co-development
orientation network is viewed as a way of pursuing innovation
together with its partners in joint NPD. Several typology of
collaboration was proposed in literature [15; 18; 19]. Figure 1
we present our synthesis of those typologies.
Strategic
Alliances
Equity
Alliances
Nonequity
Alliances
Bilateral
Alliances
Unilateral
Alliances
Supplier
partnership
Joint
R&D
Joint
produc on
Joint
Marke ng
and
produc on
Distribu on
agreement
Licensing
agreement
R&D
contract
Crowdsourcing
Joint
venture
Minority
equity
Alliances
Fig. 1. Alliances typology
2) Innovation in network
Firms pursuing innovation must maintain a balance
between learning from external (exploration) and internal
sources (exploitation). Too much exploitation is unlikely to
lead to higher-order learning, whereas too much exploration is
expensive and may produce many underdeveloped concepts
and ideas [20]. This supposes the capability to make alliances
with other firms with it’s risk-taking propensity to devote
resources to projects. Since 1960, in the R&D alliances, firm
increasingly prefer contractual partnership to joint venture
[21]. To encourage innovation in NPD, two types of non-
equity alliances (figure 1): unilateral alliance (R&D
contract…), bilateral alliance (joint R&D…).
In unilateral alliance one partner provides founds to
another partner for specified R&D development. In this
case there are no knowledge sharing between partners
and innovation level tends to be low;
In bilateral alliance, partners combine their knowledge.
“Novelty gain” increases with cognitive distance
between partners [22]. Innovation level is directly
proportional with novelty gain.
3) Strategy of alliance selection
Emden et al [13] identified three conditions for the
creation of value in co-development network:
Strategic alignment focuses on selecting partners with
maximum potential to collaborate. This implies
motivation correspondence and goal correspondence
between all network partners.
Technological alignment focuses on selecting partners
with maximum potential for creating technological
synergy. Partners must have either an innovative
technology or expertise in certain domain.
Relational alignment focuses on selecting partners with
maximum potential to sustain the relation-ship.
In NPD, few firm’s specific resources may lead to firm’s
competitive advantage [23]. However, “the ‘do it yourself’
mentality in technology and R&D management is outdated”
[24]. A network is realized by pooling the various resources/
competences of the partners. Das and Bing-Sheng Teng [12]
propose an integrated resource based view of strategic
alliances, identifying four types of resources that the partners
bring to an alliance: Financial, Technological, Physical and
Managerial.
C. Risk management in Network
Firms trying to be innovative develop new ways of doing
business. R&D activities usually connote higher risks for
firms. However, depending on the partners and on the
different resources shared in an alliance (financial,
technological, physical, managerial) different risks are
possible. Two types of risks in alliances have been identified
in the literature: relational risk end performance risk [26; 12;
15]:
Relational risks are those regarding cooperation (eg.
partners opportunistic behaviour).

Performance risks are those regarding future states of
the alliance objectives (eg. objectives are not achieved).
In NPD alliances, both relational risk end performance risk
tend to be high [25]. The two sets of risks present an inverse
evolution of level with the increase of the number of partners.
The performance risk is usually shared by making alliances
but the relational risk appears only if an alliance is made [27].
The greater the number of previous alliances between the
same partners, the lower will be the perceived relational risk.
The collaborative experience also has an influence on the risk
level. The greater the asymmetries between partners, the
higher will be the perceived relational risk [15].
The technology knowledge helps solving technical problems.
This point is a key factor of the risk level in NPD project.
However, other factors exist. Tornatzky and Fleischer [28]
framework highlights the three main elements of a firm’s
context influencing the process by which it adopts and
implements technological innovation: Organization,
Technology, and External Task Environment. In the same
ideas Wohlfeil and Terzidis [1] identified different critical
success factors in technological innovation splited in three
categories: Target market, organization and Technology. All
this factors generate risks.
Other kind of risks, exogenous of network, are possible.
They are mentioned below but are not considered in this work.
These external risks depend on target market:
Market barriers: high capital demand, patent situation,
image requirements, lack of appropriate location,
resources or suppliers, economy of scale.
Environmental context: technology support
infrastructure, social, political (government regulation),
economic, legal, etc.
D. Finding
Depending on the innovation level of the project and on
the collaboration involved in the development, different risks
are possible. The strategies needed to manage risk and to
success the project different on the type of the considered
risks.
Consequently, to make the project robust to the possible
risk, strategies of risk management have to be anticipated. To
identify risks and propose adapted risk treatment strategies, is
necessary to be able to characterize a project following the
three dimensions presented in the literature review (Innovation
level, collaborative network and type of risks).
III. A
DECISION SUPPORT APPROACH
To help in designing risk management plan, we take into
account innovation and risks aspects in collaborative NPD
project.
First we formalized the process to build the risk
management plan. This process uses the characteristics of the
project to achieve efficient plan. Second, to categorized
projects, we propose a structured frame of these
characteristics. Third, based on the identified project category,
we propose a table making the correspondence with their
possible risks and associated treatment strategies to define risk
management plan.
A. Risk management in collaborative project design
During the NPD project is designed, risks are studied.
Figure 2 presents the macro process leading to the risk
management plan design. This one starts from the
specifications. The first constituting process consists in
defining the deliverable and a macro vision of the project
planning. The level of innovation drives the manager to
develop incrementally the new product based on existing
products or a radically different one. Since the knowledge
capitalisation helps to be efficient, incremental innovation can
be quickest than radical ones. It has a huge influence on the
result of this process.
The second process consists in selecting the different
partners, if needed, to achieve the project. In innovative
product development presenting research the three main types
of collaboration are the crowdsourcing, the joint R&D and the
R&D contract to develop products. Mainly due to the skills of
the selected partners the product design can change. The
planning of the project and the associated project can have to
be reviewed.
The third process aimed to develop a risk management
plan. After having identified the different risks, strategies of
treatment are proposed for each one of them. These strategies
induce modification of the planning to prevent risks and or
correct the effect of possible occurrences. [29] proposes a
project management approach based on a synchronized
process of project schedule and risk management. This
synchronized process has been used for decision-making
support in variant of project selection [30] and for product
selection in [31]. These works do not considered the effect of
the alliance selection on the planning and on the risk.
Therefore, risk treatment strategies generally conduct to
review the product design or the project planning as well as to
modify the collaborative network.
Specifica on
NPD
Project
design
Risk
management
plan
Collabora ve
network
selec on
Risk
management
Fig. 2. The macro process of risk management plan design
This macro-process conducts then to position the project or
a phase of the project in the structure proposed in the next
section.
B. A structuring frame
Three characteristics are therefore considered here. The
innovation level with the incremental or radical innovation.
The network, with the Crowdsourcing, the Joint R&D project.

The type of risk with the relational and the performance risk.
The cube obtained presented in figure 3 show in each cells the
intersection of this decomposition. Each cell represent
contexts where the project will be carried on and for which
risk treatment strategies have to be proposed.
Network
type
R&D
Contract
Joint
R&D
Crowd
sourcing
I
n
n
o
v
a
o
n
l
e
v
e
l
Risk
Performance
Rela onal
1
2
5
4
6
7
3
8
9
12
11
10
I
n
c
r
e
m
e
n
t
a
l
R
a
d
i
c
a
l
Fig. 3. The macro process of risk management plan design
C. Risk management
For each cell of the cube the literature identify different
risks and possible treatment strategies. The table 1 presents for
each cell of the cube examples of risks and associated
treatment strategies. These sets are provided in order to drive
the decision maker in the identification of the risks and in the
risk treatment strategies to provide a risk management plan.
TABLE I. Risk example and strategies for each cell of the cube
Ce
ll
Characteristics of
the project
Risks Strategies
Innov. Net. Risk
1 Radica
l
Cro
wd
S.
Per
f
o.
Non lead users integration Users integration
Intellectual propriety
rights sharing
(Hagedoorn, 2003)
Patenting
2 Radica
l
Joint
R&
D
Per
f
o.
Low resources flexibility
Difficulty to adopt
technology by partners
(Feasibility & Maturity)
Joint-Patenting
3 Radica
l
R&
D
Cont
.
Per
f
o.
Financial shortfall
Non profit
No appropriate Time-to-
market
No appropriate Time-to-
launch
Enhance profit likelihood
Improve managerial
efficiency
System engineering
implementation
4 Increm
ental
Cro
wd
S.
Per
f
o.
Non
equity Share
Imitation
Incomplete contracts
Non Disclosure
Agreement
Licensing
Patents
5 Increm
ental
Joint
R&
D
Per
f
o.
Not sufficient use in
alliance (by partners/by the
firm itself)
Low utility (low
benefit/cost)
Enhance utility by license
used in network
Physical resources
flexibility
6 Increm
ental
R&
D
Cont
.
Per
f
o.
Financial shortfall
Non profit
No appropriate Time-to-
market
No appropriate Time-to-
launch
Improve managerial
efficiency
Enhance profit
SWOT analyse
7 Increm
ental
Cro
wd
S.
Rela
t.
Low authority
Imitation
No trust
Non Disclosure
Agreement
Memorandum of
Understanding
8Increm
ental
Joint
R&
D
Rela
t.
Accidental knowledge
leakage
Intentional knowledge
leakage
Core competency lose
Placement of Managers
in alliance key positions
Long term Contracts
Partners integration
9Increm
ental
R&
D
Cont
.
Rela
t.
Non
equity Share
Lose of control
Financial Control
Long term Contracts
1
0
Radica
l
Cro
wd
S.
Rela
t.
No efficiency
Unstable collaboration
Short term, recurrent
contracts (conditioned by
previous performances)
1
1
Radica
l
Joint
R&
D
Rela
t.
Accidental knowledge
leakage
Intentional knowledge
leakage
Core competency lose
Improve managerial
efficiency
1
2
Radica
l
R&
D
Cont
.
Rela
t.
Non
equity Share
Lose of control
Improve managerial
efficiency
Short term, recurrent
contracts (conditioned by
previous performances)
IV. ILLUSTRATION
To illustrate our proposal, we develop the case of the new
drug development. NPD projects in pharmaceutical laboratory
consist in developing new medicine for the treatment of
human diseases. The attrition level is exceptionally high; less
than one-in-ten projects launched in development is a
technical success. The nine others are sacrificed in the no-go
process [32]. These projects are innovative, costly but very
risky. The development of a new product in the
pharmaceutical industry has to go through a precise succession
of phases, which take between 7 and 12 years depending on
the level of innovation and the disease targeted. Paul et al.
indicate that the cost of a new drug development is average
873 M$.
Pharmaceutical companies establish alliances to develop
new medicine. The type of alliance depends on the level of
innovation, the availability of competences and the type of the
company (big pharma, middle pharma, start up). When a
laboratory starts a new development, decisions on strategic
alliances have to be taken. In this context, strategic alliance is
a relationship where two laboratories contribute. They bring
different but complementary resources and capabilities to
achieve a common objective. One of the most common
bilateral alliances observed in the pharmaceutical sector is
made by a small laboratory, or start up that own a patent and
the first proof of effeicience. A collaboration with a big
compagny will provide the budget to go deeply in the tests and
development. The risks are shared and the project is
contractualised [33]. Therefore, in this collaborative situation,
the height following cells of the cube can be observed: 2, 3, 5,
6, 8, 9, 11, 12. One of the main identified risks is therefore the
absorption of the startup by the big company.
V. C
ONCLUSIONS AND PERSPECTIVES
When designing a NPD Project, the decision maker goes
through different and successive decision to make innovative
product. In this paper we consider the innovation type, the
collaboration and the risk management. The problematic
addressed in this paper is to help the manager building a risk
management plan to make the project robust to the risks.

Citations
More filters


08 Nov 2014
TL;DR: A knowledge representation schema for design called design prototypes is introduced and described to provide a suitable framework to distinguish routine, innovative, and creative design.
Abstract: A prevalent and pervasive view of designing is that it can be modeled using variables and decisions made about what values should be taken by these variables. The activity of designing is carried out with the expectation that the designed artifact will operate in the natural world and the social world. These worlds impose constraints on the variables and their values; so, design could be described as a goal-oriented, constrained, decision- making activity. However, design distinguish- es itself from other similarly described activities not only by its domain but also by additional necessary features. Designing involves exploration, exploring what variables might be appropriate. The process of explo- ration involves both goal variables and deci- sion variables. In addition, designing involves learning: Part of the exploration activity is learning about emerging features as a design proceeds. Finally, design activity occurs within two contexts: the context within which the designer operates and the context produced by the developing design itself. The designer’s perception of what the context is affects the implication of the context on the design. The context shifts as the designer’s perceptions change. Design activity can be now characterized as a goal-oriented, con- strained, decision-making, exploration, and learning activity that operates within a con- text that depends on the designer’s percep- tion of the context.

1,626 citations


Book
19 Feb 2018
Abstract: Exploration and Exploitation is a key text for scholars and business practitioners interested in promoting economic well-being and sustainable growth. March’s work promotes the preservation of companies’ competitiveness and sustainability in the fluctuating market environment by maintaining a balance between exploration and exploitation processes. He explicates that this balance depends on the interchange between the adaptive capability of the company, predictability and consistency, competition, anticipations, level of risk, learning, socialization dynamics within the organization, and the overall environmental turbulence. These intricacies make March’s text invaluable.

51 citations


Journal ArticleDOI
TL;DR: A model is developed that allows determining the impact of the following factors on the product cost: the reliability of the manufactured products and the term of their warranty, and the reliability level probability of failure of the product unit cost.
Abstract: The relevance of this study is determined by the fact that, in modern conditions, the manufacturers of high-tech products offer long-term warranty service for their products aiming at receiving the consumer. In turn, the frequency of warranty service depends on the probability of trouble-free operation of the product in a certain time interval. However, increasing the uptime of the products and increase the warranty period results in increased costs. Therefore, the purpose of this study is to develop a model that allows determining the impact of the following factors on the product cost: the reliability of the manufactured products and the term of their warranty. To achieve the goal of the research there has been determined the content of warranty service, has been introduced the integrated indicator of quality warranty services, and has been shown the level of products reliability as a dependence from the costs of their manufacturing and warranty service. The novelty of this study is estimation of the manufacturer's cost depending on the way of providing the warranty service, either by repair, or by complete replacement of the failed product. The research results provide competitive advantages to manufacturers of high-tech products since it enables to find the efficient period and intensity of the warranty service. Keywords cost structure warranty servicing warranty period reliability level probability of failure of the product unit cost JEL Classification M21 Introduction Every company is fighting for the consumer under the circumstances of modern market economy. To attract and retain consumers of their products, companies develop and offer a huge range of additional features that make the produced product more attractive. These features include favorable terms and conditions of payment, flexible system of discounts for customers, as well as a system of products warranty. The consequence of technical progress is the production of increasingly high-tech devices and mechanisms there are various requirements towards the level of their reliability. Consumers need assurance that the product will perform satisfactorily over the useful life of the product. There are many different aspects to warranty and these have been studied by researchers from many different disciplines. The higher the reliability requirements towards the product are, the higher the quality of warranty service is. In their turn, these aspects affect the manufacturer's costs. The warranty servicing costs vary from 2-10% of the sale price depending on the product and the manufacturer. As a result, warranty and product reliability are very important in the context of new product development (Deniaud et al. 2016). Reliability of a product conveys the concept of dependability, successful operation or performance and the absence of failures. It is an external property of great interest to both manufacturer and consumer. Unreliability (or lack of reliability) conveys the opposite. A more technical definition is the following: * The reliability of a product (system) is the probability that the product (system) will perform its intended function for a specified time period when operating under normal (or stated) environmental conditions (Blischke and Murthy 2000). * The reliability of a product gets determined by the decisions made during the pre-production stages (Front-end, Design, Development) and the production stage of the product life cycle (Murthy and Djamaludin 2002). Both warranty and reliability have received a lot of attention over the last fifty years (Murthi 2008). The area of warranty has been studied by researchers from many different areas such as economic, engineering, statistics and more. A number of techniques have been used as a method in solving warranty problem. In past few years, there has been an increased used of statistical methods instead of soft computing methods in warranty related applications. …

2 citations


Cites background from "A Risk Management Approach for Coll..."

  • ...As a result, warranty and product reliability are very important in the context of new product development (Deniaud et al. 2016)....

    [...]


References
More filters

Book ChapterDOI
Abstract: Understanding sources of sustained competitive advantage has become a major area of research in strategic management. Building on the assumptions that strategic resources are heterogeneously distributed across firms and that these differences are stable over time, this article examines the link between firm resources and sustained competitive advantage. Four empirical indicators of the potential of firm resources to generate sustained competitive advantage-value, rareness, imitability, and substitutability are discussed. The model is applied by analyzing the potential of several firm resources for generating sustained competitive advantages. The article concludes by examining implications of this firm resource model of sustained competitive advantage for other business disciplines.

43,350 citations


"A Risk Management Approach for Coll..." refers background in this paper

  • ...In NPD, few firm’s specific resources may lead to firm’s competitive advantage [23]....

    [...]


Book
01 Mar 2003
Abstract: The article reviews the book “Open Innovation: The New Imperative for Creating and Profiting From Technology,” by Henry Chesbrough.

8,640 citations


Journal ArticleDOI
Abstract: This article examines the developmental process of cooperative interorganizational relationships (IORs) that entail transaction-specific investments in deals that cannot be fully specified or controlled by the parties in advance of their execution. A process framework is introduced that focuses on formal, legal, and informal social-psychological processes by which organizational parties jointly negotiate, commit to. and execute their relationship in ways that achieve efficient and equitable outcomes and internal solutions to conflicts when they arise. The framework is elaborated with a set of propositions that explain how and why cooperative IORs emerge, evolve, and dissolve. The propositions have academic implications for enriching interorganizational relationships, transaction cost economics, agency theories, and practical implications for managing the relationship journey.

4,785 citations


01 Jan 1988

4,040 citations


Book
01 Jan 1984
Abstract: This is the second, enlarged and updated edition of Pahl & Beitz which has established itself as a key text in Engineering Design. The translation is by Ken Wallace of the University of Cambridge with the assistance of Lucienne Blessing and Frank Bauert. In order to increase the chances of success for new engineering products, the design process must be carefully planned and systematically executed. For this to be possible, the design process must be broken down into phases and steps. This study lays down a strategy for this process and brings together the extensive body of knowledge about modern approaches to systematic design. No other book in English provides so detailed and thorough an approach to engineering and design methodology.

3,044 citations