Capturing Supplier Innovation - Single Case Study of how Kongsberg Automotive can Facilitate Supplier Innovations

Abstract: Background & Purpose: In today´s globalised and highly competitive markets, incumbents face rapid changes in their respective market and it has become a necessity to adapt to remain competitive. One market especially faced with disruptive changes is the automotive industry, an industry that might witness more changes in the next decade compared to the last 20 years. One company that is in the middle of the automotive supply chain is Kongsberg Automotive, the company that this report is based on through a collaboration between the researcher and the organisation´s purchasing department. The organisation has expressed a desire to enhance their innovative capabilities to increase their competitiveness, with one of the goals being how to incorporate supplier innovation. The researcher and organisation decided to limit the scope to enhance the possibility to find valuable answers which resulted in the following research questions. What is a supplier product innovation for KA-Group in the context of their 1-tier direct material suppliers? How can KA-Group facilitate early supplier involvement in new product development processes? and the sub-question, where in KAGroup´s product portfolio is early supplier involvement in new product development most applicable? Theory: The theoretical framework of the research has four main categories. Firstly, background with the aim to strengthen the choice of research, provide general information of the chosen research area and clearly depict the rationale of how the research questions were formed. Secondly, theory regarding supplier innovation is V described. Thirdly, theory regarding new product development and early supplier involvement is described. Lastly, the theory is summarised and linked to the research questions. Method: The method chosen to collect data for the empirical findings was a qualitative research strategy with an inductive approach, using semi-structured interviews with respondents being from both purchasing and R&D within Kongsberg Automotive. Results: A supplier product innovation stemming from a 1-tier direct material supplier can be, an innovation in one of the direct material segments, Electronics, Metal, Plastics & Textile and Raw Material, in the form of an incremental, radical or competence-enhancing innovation, that contributes to enhanced abilities to create new products or technologies, which addresses a need in the market, with the end result of increased profitability. Kongsberg Automotive can facilitate early supplier involvement in new product development projects, by involving strategic or important suppliers that display innovative capabilities and shares needed expertise and know-how before the concept phase, which will result in operating benefits and diminishing the problems and errors that occur during the concept and development stages. Further, through the early supplier involvement model, it can be concluded that the organisation has the necessary knowledge of mentor suppliers to involve them strategically in the product categories in which technological change is not changing fast and supplier design expertise exists and is needed. Further, mentor suppliers can be involved early in all product categories except Powertrain & Chassis and the consumer-oriented market in Off Highway, based on their technological change in the market being fast, which might create lock-in effects with the supplier that results in the possibility of the product being rendered obsolete before or when it reaches the market.