Identifying the optimal strategy for suppliers’ involvement in product design: A case study

Abstract

In order to increase efficiency and improve competitiveness, manufacturers around the globe are focusing on developing their core businesses. On the other hand, standard activities of engineering are optimally accomplished outside the borders of the firm; thus outsourcing of non-core businesses has become lately a common practice. Product design is considered as one of the most important phases in a product’s life cycle, since the majority of most critical decisions in terms of products’ overall performance are considered during the Research & Development (R&D) phase. Involving suppliers in a firm’s R&D offers significant benefits in various directions, such as feasibility, practicability, sustainability, competitiveness and innovativeness. However, selecting the optimal outsourcing strategy is not an easy decision. On the contrary, it is most challenging since it encompasses a number of different and in many cases mutually conflicting criteria. This paper presents a methodological approach for the selection of the optimal outsourcing strategy for a manufacturer’s R&D. The methodology is based on outranking multicriteria methods and more specifically ELECTRE III. The approach is illustrated and validated through a real world case study of a Greek olive oil producer.

Keywords: product design; suppliers; R&D; outsourcing strategy; multicriteria analysis, ELECTRE III