ADVANCED DESIGN SUPPLY RELATIONSHIPS: AN EVALUATION MODEL OF CODESIGN EFFORT PERFORMANCE IN SMALL AND MEDIUM ENTERPRISES Giuseppe Bellandi, Riccardo Dulmin, Antonella Martini and Luca Menini

Abstract Within the framework of Lean Supply systems, small and medium-sized enterprises acting as suppliers of innovative product-projects play a determining role in enabling their Customers to achieve that sought-for competitive edge by fostering their ability to adapt to product, market and technological changes. Optimising the supply chain can only be achieved through a reciprocal understanding of the specificity of the relationship, that is to say, the assigned roles and the required performance parameters. From the Customer's perspective, all this translates more and more often into the need for multidimensional, multicriteria selection and assessment systems, based on traditional as well as innovative parameters applied through context-specific evaluation procedures. Subsuppliers, for their part, must be aware of such systems and take appropriate action. The present paper presents a systematic scheme of reference for operational performance types and potential characteristics required of sub-suppliers and, above all, of the way in which they are judged (measurement aggregation procedure) in terms of factors such as competitive priorities and product lifecycle. By way of illustration, we describe an innovative methodology currently under development and implementation at a major manufacturing firm in the field of rail and urban transportation. 1. Introduction In the ambit of the Job Shop and Project manufacturing, the contribution of the product/project suppliers has precise consequences on all stages of Engineering, especially when dealing with firms that are organised according to projects and operate through individual production aimed at fulfilling extremely personalised orders by Customers, often regarding unique products produced in small scale. In the typical "package" or "all-inclusive"1 deal, a supplier, as co-designer, is in fact involved in every aspect of product development: • • • •

the concept design, both in defining the product, its functional criteria (operating specifications), as well as the constraints and modalities of design development; the detailed engineering (the true stage of project design which includes the drafting up of executive plans for plant operations); the activities of executive design and requisitioning; the stages of engineering and prototyping of the components/assemblies/equipment that it has designed or in those stages carried out directly by the firm taking on the role of "systems manager".

A supplier integrated into the product development team understands first and best the needs and problems of the Customer (who, in turn, can avoid problems of understanding the operational capacity and potentialities of the other), contributing thus to satisfying the development schedules that guarantees proper execution of the stages of requisitioning, inquiry, manufacture and testing (O'Neal, 1993). The ability of the designer-manufacturer to offer innovative skills and advanced technology, as well as their efforts to propose effective solutions for materials and

techniques selection, parts standardisation and adopting easily engineered solutions are all factors having a great influence on the quality and cost of the product (Lamming, 1990, Clark and Fujimoto, 1991). In the stages of product concept design the information which most interests the Customer's Project Engineer (or Manager) are those regarding the technological potentials (often numerous and innovative) that can be incorporated into the product, how to reduce Time to Market and how to keep project-production decentralisation of complex functional subsets from causing the firm (faced with significant technological change in the externalised sector) from loosing its custody of the technology by becoming dependent on external sources. The Customer, pursuing needed innovation through the technological-innovational leadership of the supplier, designates to them the role of gatekeeper (Von Hippel, 1988). Given the critical nature of the assigned tasks in such a relationship of long-term partnership, it is not only the delivered output that counts, but the profile, potentialities, availability and timeliness of the information exchange. A further important service rendered by suppliers, clearly affecting the competitiveness of a product, is its advice on adopting new (innovativeness) or already designed and manufactured (economy) components. A co-designer involved in the stages of detailed engineering collaborates in translating functional specifications to technical ones, and facilitating the product's industrial feasibility through adequate and timely prototyping, advantageous to the Customer in order to redesign interfacing solutions, reschedule production times, organise quality testing and define reliability parameters. Shared responsibility over the entire product lifecycle and, ultimately, customer satisfaction requires suitable data for analysis of failure mode and effects and collaboration in the phases of value analysis and engineering. A number of factors affect the overall design times and production costs, including the ability of the outside designers to refrain from modifying the agreed-upon specifications, starting with performance and operating requirements, and to suggest suitable use of standard components and solutions compatible with existing production operations. Nowadays, the small and mid-sized enterprises working as suppliers of "speciality items" (apart from in the operating stages, they also have responsibilities in defining production methods) or as "co-designer" (design, methods definition and implementation) are evaluated and chosen on the basis of a wide range of qualitative and quantitative performance parameters of both an objective and subjective nature. These concern, apart from the delivered output, the supplier's contribution to development in the stages of design and the quality of the final product, with the relative weight of such assessments being in relation to the strategic importance of the supply and the specificity of the job order. Optimising the relationship is also achieved through the congruity between effort and expected results, and therefore an understanding of the complexity and specificity of the methodology of vendor rating adopted by buyers. 2. Assessment method and performance parameters Let us now have a brief look at the methods used and the performance features considered by Customers in assessing and selecting a sub-supplier, and therefore, the factors which these latter firms can act upon in order to institute, maintain and foster partnership relationships. 2.1. Methods The generally adopted methods, in order of increasing complexity (this being the current trend), can be grouped into three basic categories (Lipparini, 1991): •

CATEGORY METHODS: low cost and easily implemented, though little used nowadays; the buyer judges performance regarding a set of predefined attributes on a subjective scale grouped into categories such as good, satisfactory, and so forth.

•

•

INDICATOR METHODS: the supplier must in this case control the ratio of selling price to quality of the good or service furnished; the judgements make use of non-conformity cost analysis (inspection and checks of the supplier, reworking/tooling and repairs, production stoppages due to under stocking, etc), expressed as a percentage index out of the total purchase value (see Bowersox, et.al., 1980). PONDERING METHODS: the various aspects of supply are weighed critically and the measures pondered and aggregated in a final summary judgement; the supplier needs to ascertain whether there is a logic to the differential assignment of weights, and what elements determine the value assigned to any given attribute.

The fundamental aspects to keep in mind are the assessment parameters and the factors determining the various degree of importance attributed to each of them. In dealing with a complex subsupplier system, we shall neglect the aspects of operating efficiency and economy of the relationship, as there is a vast amount of literature on the subject (Weber et. al., 1991). In fact, given the current competitive context, the logic of assessing solely static efficiency of delivered output has been overcome, and attention has instead been focused on the potentials for integration and partnership and finally, through ever-increasing performance (Helper, 1991), on being technologically up-to-date and responsive to change. If the supplying firm is required to act as codesign2, it must seek to integrate its own know how with the operative capabilities of the Customer, utilising its skills, technology and innovative abilities in order to provide efficient solutions for achieving economic, qualitative and scheduling goals, all of which are the fruit of collaborative analysis, rather than contractual obligations. 2.2. Measurement parameters Given that the most wide-spread assessment techniques in use, especially in large firms, call for both an indirect performance evaluation and a direct one on technical-management potentialities, we will refer to such a scheme in the following (see Figure 1 -- omitted). The direct judgement distinguishes the type of supply and fixes the number of indirect assessment parameters, while indirect assessments serve the purpose of measuring the effective performance of the supplier, rating it, and then coming to decisions based on the results, including the possibility of conducting a new round of direct assessment. The process calls for definition of an initial vendor list and the assignment of projects according to the results of the direct evaluation. For those suppliers certified adequate, when working, an indirect performance assessment is carried out and an overall rating reached, which may confirm the results of direct assessment, lead to a revision thereof, or lead to the search for new alternatives. It is noteworthy that some authors (Merli, 1997) maintain that suppliers' need to perform an initial self-diagnosis, guided by checklists furnished by the potential Customer, and to examine them together critically. This allows for a reduction in times and costs, limits the direct checks to the critical or dubious areas, and involves the supplier more fully in improving its operations. Potentialities -- Direct assessments In general, direct assessments are carried out by a team of inter-firm composition (Design, Purchases, Production) which exams factors such as: • •

PROFESSIONAL QUALIFICATIONS and the presence of a QUALITY SYSTEM. TECHNOLOGICAL LEVEL. The technological resources must be adequate to guarantee the supplier, and therefore the Customer, the ability to differentiate offerings and stave off technical obsolescence. To this end, it may be useful to classify the various technologies as emerging, key and basic (O'Neal, op. cit.), and verify whether selective investment, systematic controls and targeted abandonment have been performed, respectively for each, as required.

•

INNOVATIVE CAPACITY. Beyond performing analyses of outlays for R&D relative to proceeds, the number of staff devoted to R&D and investment trends (see Keller, 1986), a factor to be considered is the suppliers capacity to be a "first mover" in introducing and/or adopting new technological solutions. Such an assessment should then be integrated with the firm's technological position), based on the categories of Clear Leader (recognised in the sector as determining the direction of technological advances), Strong (able to exert technological influence and independently take new approaches), Favourable (capable of keeping up with the competition in general and/or take the lead in niche technologies), Tenable (unable to develop original solutions; must imitate in order to stay competitive), Weak (exhibits technological inferiority with respect to competitors)3. The number of patents held and technical publications are also considered variously to be indirect indices of technological position.

Performance -- Indirect judgment As mentioned above, the supplier-codesigner intervene in certain areas of its operations in order to improve its chances. In this regard, grouped according to the stage of the new product development (NPD) effort of interest, such firms should undertake suitable efforts to: • • • •

• • • •

•

• •

• •

STAGE OF CONCEPT DESIGN contribute to carry over; contribute to increasing the Customer's know how regarding product solutions (components), as well as materials and technological innovation; propose clear definitions of the design variables and constraints (dimensional properties and quality in use of the product, as well as its main subsets, such as reliability, types of check to be carried out, relevant laws and regulations regarding safety and environmental impact); IMPLEMENTATION STAGE OF DESIGN (including engineering) initiate exchange of information on the need to modify assigned project quotas, including those introduced during prototyping, as well as regarding interfacing effects; respect the supply sequence, project-prototype, and be punctual in their realisation; insure a good technical-qualitative level of products (adherence to specifications, ease of engineering and production, availability on the market of solutions and high formal-qualitative level of outcome (completeness, clarity, identifiable key choices/calculations, auxiliary information and quality control); collaborate in defining reliability parameters (reliability and maintainability) and in identifying and evaluating the incidence of environmental and operational variables, as well as failure types and their effects (contributing to robustness of design FMECA analysis); contribute to standardisation and the definition of company-wide project standards; maintain elasticity -- meaning the ability to furnish projects that can be adapted to resolving the often unforeseeable changes in specifications and the problems of variable interface specifications -- as well as flexibility, that is, the ability to industrialise or engineer new products, verifying, not only the degree of reconfigurability, but the convertibility as well (converting a product's characteristics through minor modifications). Such processes can best be performed through the use of so-called "enablers", such as CAD, CAE e CAPP4; collaborate in project checks with the "systems manager" of the Customer, if any, in order to satisfy final user controls. know how to carry out, manage and document any modifications and variants on issued documentation (executive), as requested by the Customer5.

2.3. Context and attribution of criticality The assessment priorities adopted by buyers vary according to the current context and their own dynamics (Ho, 1988). Advanced sub-suppliers had best understand how the importance of the various elements of their contribution varies according to the development conditions of the supplies market, the state of technology, Customers' strategies and the stage of the products' life cycle. In practice, a proper evaluative approach would be to assign to each parameter a weight that remains constant for all suppliers subjected to evaluation in any given moment and for any given type of acquisition (fixed-judgement class internal homogeneity). The following example serves to illustrate and regards the buyer's position in the portfolio matrix and the life-cycle stage of the product supplied (see Figure 2 -- omitted). •

•

•

•

From the supplier's point of view, if the company manufacturers a particular non-critical component (with low strategic-profitability impact at low supply risk for the buyer) the emphasis is to be placed on the advantages of standardising materials and components, optimising production volume and keeping operating costs down. For particular bottlenecks (low strategic impact and value, though high risk in terms of supply) the economic aspect takes on secondary importance with respect to the ability to ensure logistic flow compatible with delivery times and flexibility in production volume. If the supply is of the leverage type (high economic and strategic value with low risks deriving from its purchase), the capacities to improve are those stemming from price competitiveness and service timeframes. Operating facility efficiency and integration with the customer's planning system are the benefits to be offered. Lastly, in the case of strategic supplies (high strategic importance and value together with high risk), the supplier can exploit the Customer's willingness to establish effective long-term collaboration, to accept contingency economic conditions, even if they are less than optimal. The supplier should concentrate on its capacity for dimensional and technological development.

On the other hand, taking into consideration the product life cycle of the component or system to be supplied, we can state that: •

• • •

if the company collaborates in the study stages of product development, the aforementioned aspects of codesign effort relative to the concept design stage take precedence. The form and degree of information exchange, and the disposition towards innovation of the product are also quite important.; if the product is in the stage of being introduced, the supplier can stress the high level of quality, flexibility in adding project modifications and openness to strengthening the relationship; in the development stage, the supplier must guarantee elasticity, ensure high quality and be able to keep upto-date regarding future advances in the sector; in the maturity stage, the customer's interests lie in increasing efficiency, and collaboration will concern stocking costs reduction (in the whole supply chain), establishing routine procedures and simplifying existing processes and logistic flow.

3. An example of an innovative assessment model With the aim of illustrating the concepts discussed, we shall provide a brief description of a vendor selection model under development and implementation at a major Italian manufacturer of rail and urban transportation equipment. The assessment logic, of which the model provides a representation, can be summarised as follows (see Figure 5 (omitted) at the end of the document): a set of indicators is taken into account that characterises the various distinct aspects of a supply relationship (both classical, i.e., time, quality and costs, as well as, advanced, i.e., Codesign Effort, Innovative capacity, etc). From these indicators we wish to obtain, through suitable selection, an assessment paradigm that represents a dedicated tool for evaluating the supplier, differentiated according to the characteristics of the customer-supplier relationship considered. To this end, we must firstly define the relationship in question and therefore the type of activities the supplier is called upon to perform, considering both the 'tangible' aspects of supply (output characteristics), as well as the 'intangible' ones (linked, for example, to the manner in which the association is conducted, the degree of active participation in developing new products, etc). The information obtained in the framework of such a stage lead, through weighted selection, to a ranking of the variables-indicators, which thus go to make up the Assessment Paradigm with Weighted Parameters relative to the supplier in question. It should be noted that the model's logic stems from the assumption of correlations among the supplier's features, evinced through the preliminary analysis, and the supply problems originating in the type of relationship established. In order to provide a more accurate description of the model, it seems best to consider the subdivision into different areas, as presented in figure 5. The logical fulcrum is represented by Area 3, referring to the Weighting Filter. By virtue of the preliminary considerations regarding the supply type, which stem from Area 1, the Filter, in fact, enables the selection and weighting of the indicators associated to Area 2 (reference platform). Area 1 Three Zones, indicated in the diagram as 1.A, 1.B and 1.C can be distinguished in Area 1. •

Zone 1.A refers to the determination of the correspondence between the general work-orders objectives, evincible from the General Program, and the objectives associated to each of the single supplies deriving from it, which can be defined through intermediate documents of feasibility analysis or from short-term operative scheduling plans. In this way, the definition of the supply explanation variables is performed consistent with the characteristics of the Customer which the supply itself concerns.

Next to Zone 1.A we find: •

Zone 1.B, referring to the studies of Kraljic, later taken up by Olsen and Ellram (Kraljic, 1983, Olsen and Ellram, 1997); this considers a supply classification based, not on variables relative solely to the intrinsic characteristics of the supply item, but which characterises it in terms of components linked to:

-- The Management Complexity of the supply relationship, -- The associated Strategic value.

Consideration of these variables determines the position of the supplier within a classical portfolio matrix, including the classes of non-critical, strategic, leverage and critical, that contribute to its multidimensional characterisation; •

Zone 1.C, also refers to the so-called "relational" variables, linked to:

-- participation of the supplier in New Product Development, -- complementarity between the suppliers know-how and that of the Customer; -- integration level, in terms of degree of participation in the activities of the Customer. Area 2 As previously mentioned, this Area refers to a series of assessment macro-groups, each of which is linked to a distinct aspect of the supply relationship: the classical parameters (intuitively, delivery time, quality and cost), are supplemented by variables whose consideration is dedicated to the defining and general analysis of the so-defined "advanced" relationship (including the Codesign Effort, Innovative Capacity, etc). according to the Model's evaluative goals. The synoptic function of Area 3 has already been discussed above: the assessments arising from Area 1, considered relative to the indicators of Area 2, allow the output of the Model to be obtained and represented in Area 4 as the Assessment Paradigm with Weighted Parameters. The Model's management goals The model can be applied in two distinct contexts: • •

evaluation of a group of suppliers of the same product types (therefore, competitors) evaluation of a supplier with no competitors relative to the goods in question.

In the first case, a partial or total ranking is effected of the subjects competing for supply of the same products, thus allowing the Customer firm to choose from among the possible suppliers according to criteria based on the type of article to be furnished and the characteristics of the relationship desired. If the assessment regards as yet unestablished supply relationships (preliminary evaluation for the choice of most suitable partner), in order to establish the necessary requisites of the partner to opt for, the expectations of the Customer regarding the potential business relationship will be taken into consideration in such a way as to enable defining a reference Assessment Paradigm. In the second case (sole supplier of the type of goods to be furnished), as a determination of the "best" or "most suitable" no longer makes any sense, the Model envisages a distinct aim for such an assessment. By virtue of the preliminary classification of the supply type in question, regarding the intrinsic features of the item to be supplied and the type of relationship to be established (Strategic value, Complexity, etc.), the supply can be defined by allocating it within one of the reference classes envisaged by the modelling (for instance, a possible subdivision taken from the classes of the Olsen-Ellram matrix: critical, strategic, etc.). This allows the firm to make comparisons of the supplier under exam with other partners currently supplying goods of other types, though belonging to the same class, such as for example those mentioned above. Thus, given the same relationship features (in terms of complexity of the good to be supplied and the characteristics of the ongoing relationship), it now makes sense to evaluate the success of an ongoing relation and the adequacy of performance, when compared to that of other suppliers operating under the same reference conditions.

4. Implementation and use of the model As mentioned above, a firm's decisions are guided by several aims. Thus, there is a trade off among the various evaluating criteria which does not generally emerge from the mono-objective models (Wind and Robinson, 1968), hence, the need to resort to the use of multiobjective mathematical programming techniques (Khoury and Martel, 1990). From an operative point of view, these allow the different criteria to be assessed in their natural units of measure, thus avoiding the need to resort to a common denominator. As for the decisional perspective, they provide the user with a set of non-dominated solutions, compared to the single solution of "excellent" yielded by optimising approaches. The model's implementation has been set forth in terms of a multicriteria decision problem6, within which a set S of possible alternatives, i.e., suppliers (s1,...,sn), is evaluated over k criteria c1,...ck relative to the k explanatory variables (attributes). (I) Max {c1(s), c2(s),...,cj(s),..., ck(s) | s G S} Figure 3 (omitted) shows the logical structure of the Multi Criteria Decision Aid (MCDA) method used, and depicts the model presented. Regarding the assignment of weights to the various attribute-criteria, the robustness of the adopted method is attested to statistically, in that the weights are generated at random (N iterations, leading to N solutions of the problem), using a computer simulation program that generates random weights preserving a rank order of importance from well defined pi priorities. The priorities on which the above-mentioned rank order are performed have been derived by means of the AHP methodology (1980). The decision-maker must assign judgements of relative importance starting with the specific reference scenario, such as, for example, the competitive priorities, position within the Olsen-Ellram Matrix, or the stage of the product life-cycle. The choice of the aggregation procedure, consistent with the Decision Making Situation (DMS) is made by means of the outranking algorithms, PROMETHEE I and II (Brans et al. 1984, Brans and Vincke, 1985, Brans and Mareschal, 1994). Table I show some input data: measures, a code for max/min problem and type of preference function for each variable. Table 1. PROMETHEE input data Variables Min/max S1 ... Sn Type of criteria Parameters Cj (.) A simulation yields data such as those presented in Table II, which are then processed for ranking position analysis. Table II. Results from a rank order weight simulation Mode Min Max 25th percentile 75th percentile mean Std dev. Si .....

.....

.....

.....

.....

.....

.....

In the left-sided chart of figure 4 (omitted), the grey box encompasses the middle 50% of the ranking distribution, while the minimum and maximum ranks are the endpoints of the grey lines; the absence of a grey box indicates that the first and third quartiles are identical.

The data in table II and related graphical rendering in figure 4 are very useful to our decision making process, as they generate the best/worst performance obtained from the iterations and, most importantly, the ranking distribution. For example, in order to identify a subset of alternatives that consistently ranks above other options over a wide range of possible weights, this analysis, together with that of "stochastic dominance" (figure 4, chart on the bottom)7, can avoid the need to conduct a formal assessment of the weights. The details of implementing the method can be found in Bellandi et. al., 1999. 6. Conclusions For firms that develop innovative made-to-order products and seek compatibility amongst efficiency objectives, quality and time to market, a source of competitive success resides in harmonising the vendor selection and rating system with adopted strategic policies. A supplier that operates within a partnership and participates in new product development must be aware of the contractual power in its reach by virtue of its potential contribution to the Customer's ability to efficiently adapt to changing products, markets and technologies. Awareness of one's role and the effectively expected or proposable levels of performance finds correspondence, on the buyer's side, in ever more flexible systems of vendor rating, in which the weight of assessment parameters varies in order to emphasise the real consequence of individual performance factors and the overall operations of the supplier. The present work has attempted to underscore how the services to be supplied are myriad, and, especially for the co-designer, of both a qualitative and quantitative nature, some direct, others indirect. The fact that a supplier can gain a clear idea of how, in what regard and on the basis of what criteria it is to be judged can contribute greatly to improving the relationship. The closing description of the multidimensional, multicriteria model currently under development at a major Italian firm has served to illustrate the approach in application. References Bellandi G., Costantino N., Dulmin, R., Menini L., (1999), "Quality on buyer/supplier relationships: proposals for an evaluation methodology", Proceedings of the 8th International IPSERA Conference, Belfast and Dublin, 28-31 March. Bowersox D.J., Bixby C.M., Lambert D.M., Taylor D.A., (1980), "Management in Marketing Channels", McGrawHill, New York. Brans, J.P., Mareschal, B., Ph., Vincke (1984), "PROMETHEE: A new family of outranking methods in MCDM", in IFORS '84, North Holland, Amsterdam, pp. 447-490. Brans J.P., Mareschal, B., (1994), "The PROMCALC & GAIA decision support system for multicriteria decision aid", Decision Support Systems, 12, pp. 297-310. Brans J.P., Vincke, P.H., (1985), "A preference ranking organisation method", Management Science, Vol. 31, No 6, June. Clark K., Fujimoto, T., (1991), Product Development Performance, Boston: Harvard Business School. De Maio A., Maggiore E. (a cura di), (1992), Organizzare per innovare. Rapporti evoluti clienti -- fornitori, Etas, Milano.

Helper S, (1991), "How Much has Really Changed Between U.S. Automakers and their Suppliers?", Sloan Management Review, n.4. Ho C., Carter P.L., (1988), "Using Vendor Capacity Planning in Supplier Evaluation", Journal of Purchasing and Material Management, n.1. Kamath R.R., Liker J.K., (1994), "A second look to Japanese product development", Harvard Business Review, November-December. Keller R.T., (1986), "Predictors of the performance of Projiect Groups in R&D organisations", Academy of Management Journal, 29(3):715-726. Khoury N.T., Martel J-M, (1990), " The relationship between risk-return characteristics of mutual funds and their size", Finance 11, 2, pp.67-82. Kraijic P., (1983), "Purchasing must become supply management", Harward Business Review, NovemberDecember. Lamming R., (1990), "Strategic Options For Automotive Suppliers in The Global Market", International Journal of Technoogy Management, 5(6):649-684. Lipparini A., (1991), "Il vendor rating I Parte", Logistica Management, Ottobre, pp.60-61. Merli G., Loni M., (1997), Comakership, ISEDI, Torino, p. 183. O'Neal C., (1993), "Concurrent Engineering with early supplier involvement: a cross functional challenge", International Journal of Purchasing and Materials Management 29(2):39. Olsen R.F., Ellram. L.M., (1997), "A portfolio Approach to Supplier Relationships", Industrial Marketing Management, 26, 101-113. Saaty, T.L. (1980), The Analytic Hierarchy Process, Mc-Grow Hill, New York. Volpato G., (1988), "Strategie di innovazione nella componentistica auto", L'impresa, n.3. Von Hippel E., (1988), The Sources of Innovation, New York: Oxford University Press. Weber C.A., Current J.R., Benton W.C., (1991), "Vendor selection criteria and methods", European Journal of Operational Research, 50, 2-18. Wind, Y., Robinson, P.J. (1968), "The determinants of vendor selection: The evaluation function approach", Journal of Purchasing and Materials Management, fall, pp.29-41. About the Authors Giuseppe Bellandi, Professor of Business Economics and Organization, Faculty of Engineering, University of Pisa, Dept. of Electrical Systems and Automation, Via Diotisalvi 2, 56126 Pisa. Riccardo Dulmin, PhD student in Managerial Engineering, Dept. of Economy and Technology, University of San

Marino, Strada della Bandirola 44, Montegiardino, 47031, Republic of San Marino. E-mail: [email protected] Antonella Martini, PhD student in Managerial Engineering, Faculty of Engineering, University of Pisa, Department of Electrical Systems and Automation, Via Diotisalvi 2, 56126 Pisa. E-mail: [email protected] Luca Menini, PhD student in Managerial Engineering, Faculty of Engineering, University of Pisa, Dept. of Electrical Systems and Automation, Via Diotisalvi 2, 56126 Pisa. E-mail: [email protected] Contact person: Prof. Giuseppe Bellandi University of Pisa Faculty of Engineering, Dept. of Electrical Systems and Automation Via Diotisalvi 2 56126 Pisa (Italy). Tel: +39-50-565330 Fax: +39-50-565333 E-mail: [email protected] 1

This refers to contracts that call for comprehensive supply directly to the Customer of a operational plant/system/assembly in accordance with the performance and/or product specifications stipulated in the contract and within the allotted time. in the case analysed, the contracts in question are of the "package" or "all inclusive" sort, including operational assistance for a pre-set period of time, during which tests of performance specifications and reliability are also performed.

2

A broad definition of codesign, set forth by Merli, (Merli, op. cit, p.186), is the capacity to "develop a product autonomously and with full responsibility on the basis of operating blueprints, and conform to the Customer's stated objectives in terms of quality, schedules and costs, with the aim of satisfying the final user". The degree of responsibility is however quite variable and varies according to the different stages of design concerned: process design, prototyping, component design, component planning and component conception. The four classical roles of the supplier (Partner, Mature, Child and Contractual) are discussed in (Kamath e Liker, 1994). 3

See also De Maio and Maggiore, 1992

4

The availability of compatible Hw/Sw may represent the deciding factor in a Customer's choice or certification of a supplier (see Volpato, 1988). 5

In this context, "modification" refers to changes in a project/design based on an executive technical specification, made necessary, for example, for reasons of facilitating industrialisation, production economy or problems of interfacing with other project components. "Variant" instead refers to a modification of requires performance in the course of operations. 6

MCAP is the acronym for Multicriterion Aggregation Procedure, the heart of the Multicriterion Decision Aided method.

7

An alternative A "stochastically dominates" an alternative B, if this is never above or to the left of A in the right graph in figure 2 (omitted). The ranking stochastic dominance is a sufficient, though not necessary condition in order for a supplier to be considered superior. The chart on the right uses, rather than a cumulative probability distribution, a cumulative ranking distribution.