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Resumen de Exploration & exploitation: reconciling product innovation and supply chain performance in consumer packaged goods manufacturing

Leonardo Laranjeira Gomes

  • Product innovation often introduces complexity within supply chains, hurting operational efficiency –yet companies must be innovative to survive. That is the central issue of this thesis. We analyze the innovation vs. efficiency trade-off from the supply chain perspective using multiple research methods and the lenses of the exploration & exploitation literature, aiming at developing a framework for dealing with product portfolio exploration & exploitation issues in consumer packaged goods (CPG) manufacturing operations.

    We conducted a thorough, systematic review of the relevant literature related exploration & exploitation and identified that operations management, being the discipline that deals with getting things done, may be the next frontier of this multidisciplinary research stream. We then empirically analyzed the impact of new product introductions on supply chain performance, using qualitative and quantitative methods: we identified the nuances of how this impact flows and also tested and measured the impact using cross-sectional-longitudinal operational data. We finally conducted an action research project in order to analyze how to build exploration-and-exploitation-enabling supply chain strategies.

    We found evidence that new product introductions imply an impact on supply chain performance; yet it mostly goes through the increased variability of production assortment and is associated with category-based long-term impacts. We claim that, for small businesses and single business units aiming to be both innovative and efficient, supply chain strategies should incorporate certain conflicting goals; however, certain actions can be taken to mitigate the negative impact of concurrent goals interfering into one another.

    This study contributes to the exploration & exploitation literature by: (1) analyzing and summarizing the evolution of the literature stream, being among the first to do it from the operations management perspective; (2) evaluating how new product introductions impact supply chain performance in a CPG manufacturing firm, providing a set of testable hypotheses; (3) testing and measuring the short-term and long-term impact of new product introductions on the supply chain performance in CPG manufacturing operations using robust panel data econometrics; (4) testing the moderation effects of product-level degree of innovativeness on the relationship between new product introductions and supply chain performance; (5) adding a different level of analysis –i.e. product category– to dealing with new product introductions; (6) employing the Conceptual System Assessment and Reformulation (CSAR) as a research method for the first time; and (7) unveiling a set of supply chain trade-offs that can be faced by CPG manufacturing companies willing to be both innovative and efficient, also challenging the notion that a good supply chain strategy must be free of conflicting goals.

    This research is also carries managerial implications, as it: (1) provides a summary of the relevant literature on exploration & exploitation, which can be a helpful source for practitioners willing to overcome this dilemma; (2) improves the understanding about the how new product introductions impact supply chain performance; (3) quantifies the impact of new product introductions on supply chain performance, which can be a helpful decision-making tool when balancing exploration & exploitation; (4) improves managerial intuition for the conditional supply chain implications of product-level degree of innovativeness when introducing new products; and (5) provides guidance for building supply chain strategies to balance exploration & exploitation in CPG manufacturing firms.


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