ESI = early supplier involvement and CE = concurrent engineering, and they mean the same thing. Before companies go into production with new products, they have to design those products, it is called the new product development process (NPD). Companies expect suppliers to do a lot of the design work for the parts that will go into their new products. ESI and CE is bringing suppliers on board during the new product development process so suppliers and companies can work on design issues from the beginning and together. That way, when they go into production, there are fewer issues. ESI and CE gives companies a chance to do things better, faster, and cheaper. Companies are under competitive pressure to get through the new product development process in record time so that they can get their products into the market sooner than later. The ability to do this is called Time Based Competition (TBC). ESI and CE is driving TBC (along with technology and standardization). In the past, companies (OEMs) would do all the design work and just dump off blue prints to suppliers right before the product went into production. Now, the OEMs expect their suppliers to do the design work and integrate these suppliers in the NPD process from the beginning. Every decision and investment dollar has to translate into helping companies do it better, faster, and cheaper. If it does not, it is non-value added (get rid of it). ESI and CE requires a lot of work and investment, but data shows that it pays for itself very quickly. In other words, it is very value-added.
The data actually shows that companies which get products into the market first, not only sell more stuff and make more money, but their margins are also better. Why would their margins actually be better if they spent all that time and effort ($$$$) to be first to market?
Here is a lecture video that builds on our conversations:
Thank you. Sime
Sample Lectures & Should You Major in Supply Chain Management?
Dr. Sime (Sheema) Curkovic, Ph.D., Professor, Operations/Supply Chain
Western Michigan University, Haworth College of Business
“WMU Integrated Supply Management (ISM)…Nation’s best undergraduate SCM program (Gartner); 2nd in SCM technology (SoftwareAdvice); 2nd in top global SCM talent (SCM World)”