Architectural innovation in product development through early supplier integration

The paper explains how an important opportunity exists to pro‐actively integrate suppliers at an early stage in the concept exploration and definition stages of product development. Research suggests that the concept of architectural innovation can be extended so that product features are matched with the associated specialized technical skills of partners in the development team. In addition to the establishment of integrated product teams, key enablers include: long‐term commitment to suppliers; co‐location; joint responsibility for design and configuration control; seamless information flow; and retaining flexibility in the definition of system configuration. Important contributing factors include: supplier‐capability‐enhancing investments; target costing; and incentive mechanisms. To promote innovative outcomes in military and government programmes, attention is drawn to the importance of governments championing closely‐knit customer‐supplier relationships. Firms can build enduring competitive strength by leveraging the specialized knowledge bases of their supplier networks. Two case‐studies provide lessons to improve current approaches to the creation of long‐term partnerships, or strategic alliances, with suppliers.