ISSN: 1402-1757 ISBN 978-91-7439-XXX-X Se i listan och fyll i siffror där kryssen är LICENTIATE T H E SI S Jarkko Erikshammar Collaborative Product Development: a Purchasing Strategy for ErikshammarJarkko Small IndustrializedDevelopment: Product Collaborative House-building Companies Department of Civil, Environmental and Natural Resources Engineering Division of Structural and Construction Engineering ISSN: 1402-1757 ISBN 978-91-7439-329-3 Collaborative Product Development: Luleå University of Technology 2011 a Purchasing Strategy for Small Industrialized House-building Companies Jarkko Erikshammar Collaborative Product Development: a Purchasing Strategy for Small Industrialized House-building Companies Jarkko Erikshammar Luleå, November 2011 Luleå University of Technology Department of Civil, Environmental and Natural Resources Engineering Division of Structural and Construction Engineering - Timber Structures Printed by Universitetstryckeriet, Luleå 2011 ISSN: 1402-1757 ISBN: 978-91-7439-329-3 Luleå 2011 www.ltu.se “Häytyyhän se ihmisen hunteerata” Eila Mantere 1919–2005 ”The human being has to have time to think and reflect” A free translation from meänkieli: (lit. "our language") The language which is spoken around the valley of the Torneå River. Acknowledgement This thesis and its research have been written at the Timber Structure research group at the Division of Structural and Construction Engineering at Luleå University of Technology. The research has been financed by the research and development programs Lean Wood Engineering, funded by Vinnova, and TräIn funded by Tillväxtverket, seven municipalities, county administrative board, county council in Northern Sweden and Luleå University of Technology. I would like to thank my supervisor Professor Lars Stehn and second supervisors PhD Anders Björnfot and PhD Helena Johnsson for their support and intellectual challenges during my studies. I would also like to thank my colleagues for valuable insights and help with the process. I would as well like to thank the staff at BAC in general, and the managing director Gösta Gustavsson specifically, for their generosity, openness and trust. Many have been of great help but above all, my Maecenas at home. Jarkko Erikshammar Luleå, November 2011. I Abstract Purchasing, is an important part of the production process in industrialized house-building. Uncoordinated purchasing is one of the causes for low productivity increase within the sector. Traditional purchasing strategies, used by large construction companies, may not be applicable to small and medium-sized companies. It has been suggested that traditional purchasing strategies are not favorable for small industrialized house-building companies, because the relation between the buyer and the suppliers are characterized by short term project incentives rather that long term relationships. In order to secure low process variation in deliveries, quality and time, long term relationship in a form of supply chain collaboration is suggested. The position taken is that small and medium sized industrialized house-building companies could improve their supply chain process by developing products collaboratively with their customers, suppliers or both. Case studies to analyze the collaborative product development process have been conducted at small and medium sized industrialized house-building companies. The products developed in these cases have varied from simple to complex and the results have been studied from both the supplier and customer perspective in the industrialized house-building supply chain. The results indicate that the actors are valued differently. Value is an ambiguous term. Therefore, process improvements have been studied using ‘value stream mapping’ and simulated with a strategically selected performance measurement such as lead-time. Collaborative product development can be argued to increase purchasing process productivity. However, there are barriers, synthesized from supply chain management theory, that need to be addressed. Barriers to be taken into account in collaborative product development are that small companies have limited resources, that the legal structure does not support collaboration and that differences in maturity in ‘industrialized house-building thinking’ might hinder effective collaboration. However, the results do not conclusively prove or disprove the idea that collaborative product development can be used by small industrialized house-building companies. Further research into the application of purchasing and collaborative product development in the industrialized house-building and construction context with a dynamic model where time on market will affect what processes needed to be developed between the buyer and the supplier. III Sammanfattning Inköp, som är en viktig del a tillverkningsprocessen inom industriellt byggande, är en av orsakerna till låg produktivitetsökning inom branschen. Traditionella inköpsstrategier, som används av större företag, är kanske inte tillämpbara för små och medelstora företag. Det har påvisats att dessa strategier inte är gynnsamma då relationen mellan köpare och leverantör karaktäriseras av kortsiktigt projekttänkande istället för långsiktiga relationer. För att säkerställa en låg process variation i form av säkra leveranser, tid och kvalitet, föreslås samverkan inom värdekedjan. Ståndpunkten är att små och medelstora företag inom industriellt byggande skulle kunna öka produktiviteten i värdekedjan genom att utveckla produkter tillsamman med sina kunder och leverantörer. Fallstudier har genomförts hos små och medelstora industriella byggare inom professionellt inköp i syfte att analysera gemensam produktutveckling. Produkter som studerats, både från ett kunds och från ett leverantörs perspektiv, har varierat från enkla till komplexa. Resultaten indikerar att aktörerna ser olika på värde. Värde är mångtydigt begrepp. Därför har process utveckling studerats med värdeflödesanalys och genom att simulera ledtid som ett strategiskt mätetal. Gemensam produktutveckling kan hävdas öka inköpsprocessens produktivitet, men det finns hinder som måste beaktas. Hinder och krav som bör beaktas vid gemensam produktutveckling är att små företag har små resurser, den legala strukturen stöttar inte gemensam produktutveckling och olika mognadsgrader i industriellt tänkande mellan aktörer är också ett hinder. Resultaten varken bevisar eller motsäger inte på ett otvetydigt sätt att gemensam produktutveckling kan användas för små och medelstora företag. Vidare forskning tillämpningen mellan gemensam produktutveckling som en inköpsstrategi inom industriellt byggande i byggomgivningen krävs genom att utveckla en dynamisk modell som är beroende av hur lång tid produkten har varit på marknaden. V 1 INTRODUCTION............................................................................................................................. 1 1.1 BACKGROUND ................................................................................................................................1 1.1.1 A Need for Integration in Purchasing................................................................................. 3 1.1.2 Collaborative Product Development .................................................................................. 5 1.1.3 Improving Purchasing Productivity.................................................................................... 7 1.2 RESEARCH PURPOSE AND QUESTIONS ............................................................................................ 7 1.3 DEFINITIONS AND DEMARCATIONS................................................................................................. 8 1.3.1 The Research Project.......................................................................................................... 8 1.3.2 Supply Chain Management................................................................................................. 8 1.3.3 The Purchasing Process .....................................................................................................9 1.3.4 Small Business .................................................................................................................. 10 1.3.5 Large Contractors and Complex Projects ........................................................................ 10 1.3.6 Collaborative Product Development ................................................................................ 10 1.3.7 Productivity ...................................................................................................................... 10 1.4 THESIS DISPOSITION ..................................................................................................................... 11 1.4.1 Cover Paper...................................................................................................................... 11 1.4.2 Appended Papers I-III ......................................................................................................12 2 METHOD......................................................................................................................................... 13 2.1 RESEARCHER BACKGROUND ........................................................................................................ 13 2.2 RESEARCH STRATEGY .................................................................................................................. 14 2.3 RESEARCH DESIGN ......................................................................................................................