Outsouring development and life-cycle management

Over the last few decades, we have seen the development of open supply chains for production. These supply chains are now quite mature in terms of balanced relationships between OEMs and suppliers, as well as in terms of the associated business models and ways of working. The expectation over the next few decades is that we will begin to see a similar development towards open supply chains for Development and Life-cycle Management (D&LCM;).

Outsourcing D&LCM; involves three challenges. First, outsourcing development requires the Original Equipment Manufacturer (OEM) and the supplier to agree on fair risk-reward schemes for the risks associated with innovation, including technology risks, warranty on design, and intellectual property. After outsourcing development, outsourcing life-cycle management - the second challenge - is often a relatively small step, but its implications are significant, as it will impact virtually all disciplines in both organizations. So again compensation and risk-reward schemes are required, in order to create a win-win situation for both parties. The third challenge, managing the cooperation between OEM and supplier, can easily become as complex as managing an alliance between companies, requiring great strategic alignment, a high level of operational integration, and comprehensive contracts.

This book is a practical guide for OEMs and suppliers to manage their relationship in this specific type of alliance, from its first development project right through to its full implementation. It introduces the subjects and terminology relevant for this type of cooperation in a way that all involved disciplines will (need to) understand it, including product management, development, operations, service, sales, purchasing, and legal. Then it presents a step-by-step plan to implement and manage the cooperation, with many practical tools and real-life examples. This book's in-depth, multidisciplinary approach makes it an ideal general management tool for innovation managers, especially those in the high-tech industry, who are considering outsourcing part of their development.