Early Supplier Involvement (ESI) - Definition & Meaning
What is 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
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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