The development of project risk metrics for robust concurrent product development (CPD) across the supply chain

Abstract

Many companies report that they can attain a competitive product development advantage from strategic relationships with key suppliers, but even the successful relationships are not without their challenges. Industry has expressed a need for robust concurrent product development (CPD) practices to include supplier issues. Unfortunately, most of the practices currently available provide little to quantitatively analyze the product development process and to identify risk as a direct result of supplier interactions. This study develops metrics that characterize product development project risk that results from supplier interactions by using the concepts of degree of design customization (DoDC) and coupling ratio (CR). A correlation analysis based on HP LaserJet development projects demonstrates that the proposed metrics for DoDC and CR are good indicators of the likelihood of product development efficiency. Furthermore, there was enough evidence to use the interaction term, the CR multiplied by the DoDC, as a risk index. An important implication of using the coupling assessment as part of the project risk assessment is that the same process can address both project and product risks. © 2005 Sage Publications.