Product Design Change and Supply Chain Risk

Introduction

When the product design is stable, the supply chain appears very effective and profitable. However, any attempt to change product design is likely to cause several positive and negative impacts. Theoretically, the immediate change of product design normally confuses the customers, which is likely to be a risk in the supply chain system. Over the years, some studies have developed a wide range of information that shows both positive and negative impacts of product design change (Zsidisin 2003). The purpose of this paper is to review some articles that report on empirical studies on this topic, to develop adequate information and knowledge on the possible outcomes of a product design change on supply chains. Does a change in product design present a scenario that increases risks in the supply chain?

The First Article Analysis

Li and Zhou (2011) have published an article in which he explores the impact of changing product design on supply risk chains. The purpose of publishing the article was to address the problems associated with product design changes in a supply chain, with special reference to the supply chain system in China. Also, the author wanted to identify dimensions of supply chain risks in the Chinese special-purpose vehicle industry. The researchers hypothesized that any change in product design that may harm the design is likely to affect customer behavior, which is also a risk to the supply chain.

The author chose a case study as the study method. The Chinese SPV industry was chosen as the case for the study, subjected to empirical analysis. According to the researcher, the task involved using the descriptive study to obtain data on the current situation of supply chain risk in the industry. The researcher chose semi-structured interviews as the data collection method for the study. Using this data, the researcher constructed a cause and effect diagram as a method of explaining and summarizing external and internal dimensions of risk in the Chinese supply chain.

According to the researcher, the study indicates that the Chinese SPV industry suffers from external and internal risk when a large-scale product design is implemented. The study indicates that both internal and external supply chain risks are evident, especially when one examines the industry from the manufacturers’ point of view. For instance, the article reports that customers-required change of product design is likely to lead to risk in supply, policy, and delivery systems. Also, a manufacturer’s change in the product design is likely to cause risks in production, information, planning, organization, and research and design. Whereas the former is an internal risk factor, the second is an internal risk factor. This implies that both external and internal factors that cause a change in product design are likely to risk the entire supply chain system in the Chinese vehicle manufacturing industry. This research is linked to the hypothesis that supply chain systems in heavy industries differ from supply chain management in light industries based on the risks involved in marketing processes.

Relationship to theories

The article provides an in-depth analysis of the situation in the Chinese vehicle manufacturing industry. It reveals some information regarding the current situation in the industry. In this case, the industry is likely to face financial problems associated with supply chain risks (Christopher & Lee 2004). The vehicle manufacturing industry in China is a relatively new and young sector. It seeks to compete with regional giants in the industry such as Toyota, Mazda, Nissan, and Hyundai, among others. Japanese companies such as Toyota and Nissan are multinational corporations with a presence in all parts of the world. For the Chinese SPV industry to compete with these giants, it is necessary to consider factors that are likely to cause problems in the marketing system. The article by Yong Li is a good example of modern research studies that should be adopted to run the SPV business in China. Most customers are likely to get confused after a sudden change in product design, especially in terms of motor vehicles. In fact, the change may subject the company to an increased rate of competition from the Japanese companies because customers are likely to shy away from new product designs.

On the other hand, most Chinese carmakers are likely to face problems in their marketing if a section of customers requests for change in product design with success. For instance, managers and other executives in these companies have developed a fear of changing product design because they are aware that it is likely to reduce sales, which risks their profitability (Lee & Billington 2002).

Therefore, it is clear that the risks to supply chain development and maintenance are likely to increase with the increase in the rate of changing product design in the Chinese vehicle industry. Nevertheless, this might also apply to other products and industries in China and other parts of the world. Also, this article shows that change in product design should be approached with adequate care to avoid such risks. The article is important in developing additional studies in determining the industries that are most affected by the negative impacts of change in product design. However, the researcher used a case study to develop the information presented, which means that generalizing the results may cause bias. Some industries such as design, hospitality, food, and others are likely to obtain positive impacts when they change their product designs. Additional research studies are needed to determine the variables that make an industry face positive or negative impacts when changes in product design are implemented.

The Second Article Analysis

In yet another study, Omera Khan (2008) had attempted to address the same question from a slightly different perspective but using a case study as the study methodology. This study aimed at addressing the issue of the impact of product design on supply chain risks in the UK. Using semi-structured interviews, the researcher found that sudden change in product design is a risk factor that may cause an industry or an organization its profitability. On the other hand, the researcher argues that in some instances, a change in product design may not have an impact on the supply chain if it is implemented based on the prevailing market conditions and the forces of supply and demand.

Conclusion

It is worth noting that the two articles have addressed the same question but have used different approaches. Nevertheless, the information provided in the two articles provides some evidence that supply chain managers should ensure that change in product design is implemented according to the prevailing conditions to avoid the risks involved in the supply chain.

References

Christopher, M & Lee, H, 2004, “Mitigating supply chain risk through improved confidence,” International Journal of Physical Distribution & Logistics Management vol. 34, no. 5 pp. 388-396.

Khan, O, Christopher, M & Burnes, B, 2008 “The impact of product design on supply chain risk: a case study,” International Journal of Physical Distribution & Logistics Management vol. 38, no. 5, pp. 412-432.

Lee, HL & Billington, C, 2002, “Managing supply chain inventory: pitfalls and opportunities,” Sloan management review vol. 33, no. 3.

Lin, Y & Zhou, L, 2011, “The impacts of product design changes on supply chain risk: a case study”, International Journal of Physical Distribution & Logistics Management, Vol. 41 no. 2, pp. 162 – 186

Zsidisin, GA, 2003, “Managerial perceptions of supply risk,” Journal of Supply Chain Management vol. 39, no. 1, pp. 14-26.