Early Supplier Involvement (ESI)

Posted in Operations and Supply Chain Terms, Total Reads: 1983

Definition: Early Supplier Involvement (ESI)

Vertical Coloration between supply chain partners, such that the manufacturer tries to involve the supplier in the product development process from a very early stage is referred to as the Early Supplier Involvement. These suppliers act as an important source of innovation for the product development process.

For example: fuel injection by Bosch, sun protecting and security glass by Saint Gobain

ESI brings forth significant advantages due to the involvement of suppliers in cross functional teams from the very initial stages of product development. It helps in improving and ensuring accountability and alignment throughout the product development, innovation and launch processes.

Additional significant benefits, of ESI include:

Short term benefits include

• Better production quality

• Lower production costs

• Shorter development cycle

• Lower development costs

Long term benefits include

• Joint research programs

• Aligned technology strategies

• Risk sharing

Although beneficial, ESI also poses some challenges in its implementation. Some of the significant ones are:

• Lack of cooperation

• Intellectual property conflicts

• Overestimation of the development skills of supplier

• Reward structure for suppliers


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