Challenges
Risks
Because this model is mostly suitable for very innovative product development, this model is not without risks. It is crucial that there are good agreements about who is responsible for the innovation risks. These risks are even bigger, because investments in this module are relatively high, both in the product development and in the relation between the partners.
In this model it is also very risky and expensive to switch suppliers if collaboration isn’t smooth. Because of these risks, partner selection and a Total Cost of Ownership analysis are extremely important.
Intellectual property
With Build to Requirements the ownership of the technical product documentation (like drawings and software) and the paid design documentation will belong to the OEM. There are exceptions a.o. for standardized modules (mechanical, electrical and software) that originate from the portfolio of the supplier and for the ‘source code’.
Partners have to form well documented agreements on possible patent worthy ideas. The OEM wants to protect the use of these patents from competitors to using them. The usage by other OEM partners of the supplier can be regulated by licencing the patent.
The right tools
Stating the obvious: the succesfull implementation of the model starts with forming the right requirements. They form the base of the agreements between the partners.
The partner selection tool and the Total Cost of Ownership tool can be applied by selecting and developing a Build to Requirements partnership. In addition is it imporant, when using this model, to use alliance management tools in order to structural implementation of the partnership.
