How does development lead time affect performance over the ramp-up lifecycle? : evidence from the consumer electronics industry

Abstract

In the fast-paced world of consumer electronics, short development lead times and efficient product\nramp-ups are invaluable. The sooner and faster a firm can ramp-up production of a new product, the\nfaster it can start to earn revenues, profit from early market opportunities, establish technology\nstandards and release scarce development resources to support new product development projects.\nYet, many companies fail to meet their time-to-market and time-to-volume targets and the complex\ninterrelationships between product characteristics, development lead time and ramp-up performance\nare largely unexplored. In response to these limitations our study focuses on three research questions:\n(1) To what extent is ramp-up performance determined by development lead time and product\ncomplexity? (2) How do these relationships change in the course of the ramp-up lifecycle? and (3)\nHow can the results be explained? Our results contribute to the field of operations management in\nthree ways. First, we offer a more comprehensive and enriched analysis of the drivers for\ndevelopment lead time and ramp-up performance in the cell phone industry. Second, we demonstrate\nthat late schedule slips – although disastrous for customer relations in which due dates are crucial –\nprovide the opportunity to build up (semi-finished) product buffers which in turn increase the initial\nramp-up performance. Third, we show that it is important to take these effects into account in a jointly\nand lifecycle-dependent manner. Thus, our insights support management efforts to anticipate the\nconsequences of product design decisions, predict development schedule risk levels, and make\ninformed decisions about production volume commitments.

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