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4.3 Case background – Sanav/San Jose
SAN JOSE NAVIGATION, INC. is a GPS hardware and turnkey solution manufacturer specializing in mobile and marine GPS receivers/antennas. Sanav started its operations in 1990 first in the telecommunications technology. Later in 1995, in cooperation with prominent GPS companies in USA & Japan, they started the technical interflow & research on GPS technologies as well so to differentiate into other industries. Today, Sanav`s expertise is in the field of GPS‐based vehicle tracking & marine navigation technologies, GPS receivers and variety of antennas, where they deliver products to their overseas customers who market those on their markets under different brand names.
Sanav, is a company that started as an OEM and then recently achieved to become an ODM and therefore we can expect they would have quite a loose relationship with their suppliers.
They have the recent experience of moving up in the value chain, and they will work hard to keep their hard won position – to block out their supplier to overtake their position.
San Jose is an OEM/ODM manufacturer. As such, they cooperate with the customer, who sells the product to the market, but does not design or manufacture. These tasks are on ODMs responsibility, who needs to have a good understanding of their customer`s needs and create products that would fit in.
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4.3.1Architecture
4.3.1.1 Differentiation
The GPS receivers Sanav employs in their products are rather very simple and uncomplicated products. At its easiest, they can consist of only three major components – the active antenna, the radio chip (RF/IF front end) and digital signal processor. Typical antennas for GPS include two components – the microstrip patches and quadrifilar helix. In some cases, the
manufacturer might choose to upgrade the passive antenna to active one – by adding low‐noise preamplifier to boost the weak signals (this might be helpful in the Sanav Defender line – which is sold in USA for home prison usage etc. but in other cases might just increase the costs and become unattractive). The RF/IF and digital processor consist of more sub‐parts, but since most of these are purchased as system‐in‐the‐box from the supplier and not individually, it won`t increase the differentiation complexity.
Source: Lanley, R., 2000
Figure 9: GPS components conceptualization
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4.3.1.3 Product newness
In general, the innovativeness of the GPS receivers is low. The very definition of the GPS suggests, that the main reason of using such a device is to locate one`s position in the terrain.
The major newness dimension in this case is the least innovative case from the matrix provided by Booz, Allen & Hamilton – the new application for existing products. As such, the GPS
receivers are employed in tracking boats and shipments, fighting crime (prisoners would wear an special bracelet with GPS receiver so they can`t run away etc.), military usage and rescue – e.g. having the active GPS receivers so that help can be send faster and to an accurate position or security alarms.
The first GPS receivers were build and introduced in 1970s and the way they work now and then did not change that much. The major differences are in size and accuracy – the first GPS receiver commercially available required around 30cm of rack space only in order to operate it.
Thus, the main innovation efforts were in miniaturization and increasing the accuracy, and even though there were technological breakthroughs in the process sphere, the components and their behavior within the system did not change that significantly so that we could say that product newness momentum is high – the contrary is the case actually.
4.3.2 Buyer‐supplier relationship and NPD
4.3.2.1 Segmentation of suppliers and vendor management
They don’t have any specified pool of suppliers, whose they would consider for their
cooperation. Instead, anytime they need any new component, the engineer who is in charge of the project would reach out and find suitable candidates to provide with such a part So for every time, they would do a business analysis of the supplier but also his component – generally based on four most important factors: price, speed, manufacture capability and quality.
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The selection and evaluation is basically finding an equilibrium inside this mix ‐ as Mr. Chen mentioned:
“We would invite many (of supplier) and then evaluate. It is not necessarily the best who will win‐ since we must consider cost vs. quality.”
4.3.2.2 Supplier roles
These findings indicate that Sanav employs the arm‐length relationship towards their suppliers and the cooperation history with the existing suppliers means very little towards the future cooperation. This finding is only reinforced by the fact, that the major decision maker on what supplier will pass is in hands of the procurement instead of the engineering – they would usually bargain with them on specs and price – so the decisions are mostly cost driven.
The volatility of the technology is also no issue when looking for new suppliers – as he mentioned that “if there is no existing component, you cannot manufacture. So engineers, when designing new product need to consider this – that is trade off during product design. If there are no physical prototypes of the components –than we also cannot do”.
4.3.2.3 Reasons to involve suppliers
Sometimes it happens, that there are some changes in the components necessary – but usually these are of minor importance – what is the most common issue is although they have an supplier of suitable component, the component performance is lower than they expect – and they would need them to improve this.
In this kind of situations, they would simply provide the supplier with clear targets on what they imagine and ask them to meet these. If they can`t, than Sanav will have to try to find another supplier. The cooperation and co‐development is very rare.
This shows us, that the rationale of their selection process is rather straightforward – they design and manufacture based on existing components, and in this way the innovativeness of
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4.3.3 Timing
Mr. Chen says, that once they learn they need the suppliers to adapt some changes on the components they try to involve them as early as possible.
From the very nature of the way they develop new products – this is later than the other two companies studied, and the information exchange is also much lower and limited.
Sanav will advice suppliers on the specs after the project concept stage and that is also when they would expect to receive some more serious prototypes to be submitted. They won`t tell them any of the system knowledge, and if – than only very little and therefore they will need to evaluate what they received. If the prototype submitted by the suppliers does not fit ‐ it is now, after the initial testing when they expect the most changes in the component design will occur. For this they create and provide the supplier with a working document ‐ where they specify what changes need to be done – and they expect that the supplier would meet these requirements at once. It is interesting to observe, that they would ask for an prototype from number of suppliers and then will choose the most suitable – this only posits the finding, that they do not cultivate any sort of deep relationship with their suppliers and rather source on the arms length basis.
4.3.4 Development responsibility and development scope
4.3.4.1 Top management involvement in the NPD
There is not much support from the top management from the Sanav`s side during the new product development – as they are merely preoccupied with business development and sales strategies. The top management`s role is in building good relationship with their customers and having good understanding on what are the trends they will need to adapt in the future – and than communicating this to the design. Therefore the major cooperation between Sanav and their suppliers is managed by the engineering teams themselves. As such, we can see the personal liaisons and functional exchange between the teams. The information exchange is
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often maintained by emails and visits of the sales engineers to Sanav to get better understanding on what is expected from them.
4.3.4.2 Degree of knowledge sharing
The development goals and the specs are usually fixed and they are not subject to any changes.
Sanav does not update its suppliers on any specific architectural details – as “the whole system is too complicated for them.” The supplies are not expected to raise any issues or ideas of how to improve the overall architectural performance. Sanav has its clear concept and since this is based on pre‐existing components, and only marginal improvement in area of performance optimization and connectivity are expected. Mr. Chen describes this as follows:
“If they have changes, these might interfere with the overall system. This is not good. So this is why need to give them very clear specs on what we want. If they don`t follow – than it might not work inside our product and if we don’t give them these specs, than they would argue with us.”
Such an approach does not provide the supplier with much initiative.
Once the need for supplier`s improvement is identified, the frequency of the communication would be rather frequent however – in urgent cases this can be almost daily visits or con call meetings.
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4.4. Case background – Thermal Management Company
Thermal Management Company (THC) is a manufacturer of PC Cases, power supply and cooling solutions. Its headquarters is situated in Taipei, Taiwan but has a number of manufacture facilities in China as well. The Taiwan company was founded in 1999, and at hte same time the company established its American HQ in California as well. They entered te Taiwan Stock Exchange via IPO in 2007.
The division studied in this paper was the cooling and fan producer. Thanks to their extensive R&D in the area as well as the clear desire to be the market leader, they were able to achieved quite a few success in this area ‐ where in 2000 they were the first company in the world to be able to provide with comprehensive cooling for the Intel Pentium processors and in 2004 they launched the world first liquid‐cooler for CPU`s.
Most of Thermal Management company`s production goes into the global technology channels.
Their main customers are the end customers, who have substantial knowledge and skill so that they can build their own PC systems that will respond to their particular needs and desires. In 2009 they created a portfolio of brands, where all are differently themed (e.g. sporty, luxurious, classic etc) so that the PC enthusiasts can modify their PCs not only based from the technical aspect, but can also change the appearance and design of their computers to their liking. So, in 2010 they were able to introduce the well received and most famous product – the Level 10 Chasis co‐developed with BMW Designworks – to give the user chance to create an computer like never seen before.
This is also one of the main aspects of their corporate culture – the DIY attitude, where they try to provide many innovative and variable products, on the highest standards.