The Impacts and Requirements of Consumer-Focused New Product Development on Supply Chain Management
Licentiatavhandling, 2011
The purpose of this thesis is to explore the impacts and requirements of a consumer-focused
new product development on supply chain management. The issue is examined in a large indepth
case study of the Swedish furniture industry, with one wholesaler as the main case
company. The case company has changed its business strategy from being product-focused to
consumer-focused. The company has started to develop innovative products that are supplied
with a postponement strategy. The thesis focuses on how new product development and
supply chain management are connected at the case company, and how the new business
strategy affects sourcing, manufacturing, inventory, and distribution.
Investigations reveal that the consumer-focused new product development resulted in an
imbalance between demand creation and supply chain management. New product
development is the key process connecting the two management directions. The new business
strategy increased the amount of stock keeping units, which in combination with the decline
in economy in 2008 resulted in a bad alignment between the business strategy and the
sourcing system. This, in turn, resulted in inefficient inventory management. The new
products that were developed have high innovative value, but the value may be lost if the
retailers are not able to present the value to the consumers. The distortion of information that
reduces the value is illustrated with a value gaps model that also explains the importance of
demand creation across the supply chain, in order to fully utilize the potential of the supply
chain and new product development. Moreover, a model explaining the outcome of low
versus high collaboration with retailers, and obvious versus obscure product value, was
constructed, highlighting that consumer perceived value may be lost if the value is obscure
and collaboration is low.
The impact of the investigated new product development approach on supply chain
management is that the supply chain might lose efficiency and effectiveness if the supply
chain capabilities to support the new products are not considered. The main requirement is to
acknowledge that the partners in the supply chain play an important role, in order to preserve
the innovative value of the products and increase demand creation.
consumer-focused business strategy
supply chain management
value gaps
demand creation
new product development