Innovation-Based Competition and the Dynamics of Design in Upstream Suppliers

Although the evolution of the design process in car manufacturers and their first-tier suppliers has been studied extensively, the situation is different for upstream industries, usually chemical and steel firms. This article focuses on such upstream suppliers situation based on an interactive research with a major european steel-maker group, Usinor. In its first part, it demonstrate that innovation-based competition is a significant issue for companies situated upstream from end-product manufacturers. The accelerating pace of the (re)design of end products downstream is increasing opportunities for the substitution of raw materials. The importance of this issue is obscured, however, by considerable inertia in the spread of innovations through the sector. Then the article characterises the specificities of implementing an innovative design strategy due to the activity and position of the firm in the industrial chain. The conclusions will make it clear that design models developed for car-manufacturers and first tear suppliers are in many ways unsuitable for this different context. We finally propose 5 principles to evaluate and define a innovation management system in upstream suppliers.

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