The importance of project management in small- and medium-sized enterprises (SMEs) for the development of new products through E-collaboration docx

ISSN 1993-8233 ©2011 Academic JournalsFull Length Research Paper The importance of project management in small- and medium-sized enterprises SMEs for the development of new products th

ISSN 1993-8233 ©2011 Academic Journals

Full Length Research Paper

The importance of project management in small- and medium-sized enterprises (SMEs) for the development

of new products through E-collaboration

Marjan Mohammadjafari1*, Shamsuddin Ahmed1, Siti Zawiah Md Dawal1 and Hadi

Zayandehroodi2

1

Department of Engineering, Design and Manufacturing University of Malaya, Lembah Pantai, 50603 Kuala Lumpur,

Malaysia

2

Department of Electrical Engineering, Kerman Branch, Islamic Azad University, Kerman, Iran

Accepted 29 November, 2010

The research in this paper seeks ways for manufacturing companies to accomplish projects in real time with less cost This paper describes a new model using critical success factors of implementing projects in small- and medium-sized enterprises (SMEs) The factors in the conceptual model were identified in past studies and are validated from interviews with 20 project managers in the electronics industry in Iran Several prior researches have suggested critical success factors for reducing time and cost in the development of a new product These factors are related to design, product, planning and procurement However, none of these studies has proposed a model that specifies practices that should be undertaken to facilitate the progression to reduce time and cost in developing new products

in SMEs Following this, a development of a new model will likely prove important to help SMEs to understand what is required in order to be an effective global organization in terms of reducing time and cost through electronic collaboration (E-collaboration) and project management The concept and value of E-collaboration and project management, and its strengths and weakness on SMEs, is also explained

Key words: E-collaboration, project management, small- and medium-sized enterprises (SMEs), new product,

reduces time, reduce cost

INTRODUCTION

The manufacturing industry plays a vital role in the

economy of many countries (Mahaney and Lederer,

2009) A large number of small- and medium-sized

enterprises (SMEs) make up the manufacturing industries

of these countries, but they have some limitations for

entrance into and sustainability in the market, especially

on a global scale (Mohammadjafari et al., 2011) SMEs

are often suppliers to big companies and are producers

of final products for ultimate customers In the case of

their final products, SMEs cannot compete with larger

companies without paying due attention to customer

marjan_mohamadjafari@yahoo.com Tel: 0060173141328.

needs In the current customized market environment, SMEs are able to increase product varieties, but the time for developing a new product is often more than initially thought

However, new product introduction must be very timely and cost competitive One of the paths to time and cost reduction in new product development is to create a collaborative environment between the various departments of one factory Four departments, namely design, production, planning and procurement, have a key role in SMEs (Bashir, 2008; Kusar et al., 2004; Roberts, 2006; Xie et al., 2002; Zhou et al., 2008) Collaboration can be established in different ways using different tools, one of which is E-collaboration (Bafoutsou and Mentzas, 2002) The use of E-collaboration technologies has become essential for supporting

Figure 1 Project management process

product development projects (Qureshi et al., 2005)

Alternatively, in many manufacturing industries,

project-oriented management has become a way to develop a

better work environment (Mohammadjafari et al., 2010a)

The research on which this paper is based seeks to

understand how companies based in the electronics

industry in Iran have approached the implementation of

their projects in real time with less cost By investigation

into and interview with some of these companies, it

emerges that a major problem faced in new product

development by such companies is a lack of coordination

between different parts of the company If the related

sections engage in electronic collaboration, led by the

project manager, the information for production of a new

product will be integrated, and the project will be finished

in real time Furthermore, the cost for production will

likely decrease The focus of this paper, then, is to

propose a conceptual model with which to improve new

product development in SMEs through E-collaboration

and project management

E-collaboration

E-collaboration is an active cooperation among different

individuals to accomplish a joint task using electronic

technologies (Cai and Kock, 2009) “E-collaboration and

collaborative tools bring geographically dispersed teams

together for virtual meetings across great distances”

(Bafoutsou and Mentzas, 2002) “The field of

collaborative computing encompasses the use of

computers to support coordination and cooperation of two

or more people who attempt to perform a task or solve a

problem together” (Borenstein, 1992) In this study, the

authors consider E-collaboration between different

departments of one factory

Project management

Initially, a project emerges because there is something

important and complex to be solved The project

organization then develops due to a need for a purposeful organizational effort and a high level coordination in order to execute a number of activities (Sِderlund, 2004) Project management is a methodology for managing a project (Ramaprasad and Prakash, 2003) “Project management, including the tools, techniques, and knowledge-based practices applied to manage the creation of products and services, is becoming an increasingly accepted and applied discipline across industry sectors” (Jugdev et al., 2007) Project management is “the manner of implementation, of expertise, paraphernalia, knowledge and modus operandi

to an extensive range of activities for the fulfillment of prerequisite of the specific project” (Qureshi et al., 2009) Project management has become a distinctive way to manage business activities nowadays (Filippov and Mooi, 2010) Project management is becoming a key strategy for managing organizational change in contemporary organizations, with corporations, government, academia and other organizations recognizing the value of common project approaches and of educated employees for the execution of projects (Rooij, 2009) Most of all, project managers are in the front-line when it comes to assuring customer satisfaction (Kirsilä et al., 2007) By these definitions, and due to the importance of the role of project management in the success of projects, the authors consider related department collaboration on product development by the project manager through e-collaboration

Project management process

All projects have a beginning and an ending, and project management has corresponding initiating and closing processes The middle, or work of the project, is managed by planning, executing, and monitoring and controlling processes (Guide, 2004) Effective project management involves repeated performance of these processes, as illustrated in Figure 1 For this research, the project manager leads the projects through the steps presented in the Figure

Table 1 Project management institute project management area

Project management area Description

Integration management Unifying the activities and resources of the project to complete

Scope management Ensuring that the project includes all the work required, but only the work required to meet the project

requirements

Time management Ensuring timely completion

Cost management Ensuring that the project can be completed within the project budget

Quality management Ensuring that the project product will satisfy the project requirements

Procurement management Managing the purchasing and acquisition of outside goods and services required to complete the

project

Risk management Identifying and managing project risks

Communications

management Ensuring timely and appropriate project communication

Human resource

management Organizing and managing the project team

Adapted from Project Management Institute, A Guide to the Project Management Body of Knowledge (PMBOK Guide), 3rd ed., Project M anagement Institute, Inc., 2004 Copyright and all rights reserved

Project management area

Projects are typically part of an organization The

relationship between the project and organization varies,

and that relationship affects the scope of project

management responsibilities Although the nature of

project management responsibility varies by organization

and by project within an organization, project

management encompasses many areas The Project

Management Institute in the United States in 2004

(Project Management Institute, 2004), listed project

management areas, summarized in Table 1, which

provides a sense of the breadth of the project

management task The Project Management Book of

provides comprehensive description of activities

associated with each area, the interaction of the areas

with the key project management processes described

earlier, available management tools and techniques for

each area, and input and outputs of each area (Jacobson

et al., 2006)

In this research, the authors attend to two areas of

project management from nine existing areas, because of

the operation of the conceptual model One is integration

management and the other is communications

management

Small and medium enterprises in developing

E-collaboration

Small and medium enterprises (SMEs) play an important

role in promoting economic development (Ale Ebrahim et

al., 2009a) In most countries, SMEs dominate the

industrial and commercial infrastructure (Deros et al.,

2006) SMEs play a very important role in national

economies, providing job opportunities, act as supplier of

goods and services to large organizations, and any lack

of product quality could adversely affect the competitive ability of the larger organizations (Deros et al., 2006)

“Small firms are indeed the engines of global economic growth” (Acs et al., 1997) SMEs have an important role

in flows of foreign direct investment (Kuo and Li, 2003) SMEs also serve as the key engine behind equalizing income disparity among workers SMEs are increasingly internationalizing their business activities (Beck et al., 2005)

According to Ale Ebrahim, there are many accepted definitions of SMEs The classifications vary from industry

to industry and from country to a country, different countries accept dissimilar criteria such as employment, sales or investment for defining small and medium enterprises In the absence of a definitive classification,

an agreement has developed around the European Commission (EC) criteria for SME classification This definition adopts a quantitative approach emphasizing

“tangible” criteria, employee numbers (up to 250 employees), turnover (less than 50 million EUR) and balance sheet statistics (less than 43 million EUR) (Ale Ebrahim et al., 2009b)

Our attention in this study is focused on SMEs in Iran While the term SME has varied definitions from different organizations, the most acceptable one is similar to the

EC definition, except for financial criteria According to these definitions and the importance of SMEs in manufacturing industries in this research, the author chose these types of companies

Strengths and weakness characteristics of SMEs in developing E-collaboration

For a better understanding of SME activity, summary information of SME characteristics is listed in Tables 2

Table 2 Strength characteristics of SMEs

Easily adaptive to new market conditions, flexible to change, developing

customized solutions for partners and customers, dynamic in activities

(Ale Ebrahim et al., 2009b; Aragón-Sánchez and Sánchez-Marín, 2005; Davis and Sun, 2006; Mezgár et al., 2000)

Excellent at multi-tasking (Ale Ebrahim et al., 2009b; Schätz, 2006)

Powerfully correlated and inter-related with respect to innovation (Bhagwat, 2006; Gray, 2006; Huang et al., 2001; Jutla et

al., 2002)

Capable to answer quickly to customer requests and market changes,

customers focused

(Abdul-Nour et al., 1999; Ale Ebrahim et al., 2009b; Kim et al., 2008)

Quick decision making process (Lawson et al., 2006; Schätz, 2006)

Able of going global rapidly (Ale Ebrahim et al., 2009b; Gassmann and Keupp, 2007)

Routine processes, flexible structures (Bhagwat, 2006; Gassmann and Keupp, 2007; Haga,

2005)

and 3

New product development

New product development (NPD) is a business process

for developing new products for a company, whether it is

an upgrade of an existing product or a new concept

(either for the company or for the customer) It includes

all activities from the development of an idea or a concept

for a product, to the realization of the product during the

production stage and its introduction into a market place

(Hohenegger et al., 2007)

SMEs need to develop their products for competing in

the market, and then they need to develop new products

In that case, the authors tend to focus on new product

development in SMEs

RELATED STUDIES

By investigation into prior research, the author finds one

of the problems in many industries is the long time

required to develop a new product From the literature

review, it is discovered that four departments are

influential in reducing time and cost in new product

development in manufacturing companies These

departments are those of design, procurement, planning

and production (Bashir, 2008; Carter, 1997; Clift and

Vandenbosch, 1996; Griffin, 1997; Roemer and Ahmadi, 2010; Selvaraj et al., 2009; Tan and Vonderembse, 2006; Xie et al., 2002) A summary of the prior studies is shown

in Table 4

METHODOLOGY Model verification methodology

The primary ideas on the development of a conceptual model were devised based on a brainstorming process with academics Following the primary expansion of the conceptual model, feedback was obtained from participants in the industry and academics The objectives of obtaining feedback on the model include:

(1) Identify how integration can be achieved among different parts

of a manufacturing company

(2) Reduce new product development time by using the conceptual model

(3) Reduce the cost of new product development by using this model

The validation of the conceptual model was conducted through one-to-one semi-structured interviews with 20 participants All participants were from the electronics industry and each held a project management position All had related knowledge and experience

The interviews were conducted via video conferencing The duration of the interviews lasted between 50 min to 1 h The participants were given an explanation regarding the purpose of the feedback, the purpose of the conceptual model, some background

of the research that lead to the development of the model, and key

Table 3 Weakness characteristics of SMEs

Lagging in the export, lack the resources necessary to enter foreign

Weak at converting research and development into effective innovation (Ale Ebrahim et al., 2009b; O'Regan et al., 2006)

Scarce resources and manpower (Abdul-Nour et al., 1999; Chou, 2008, Kim et al., 2008;

Westerlund and Rajala, 2008)

Strategy formulation on the basis of what available, lack a long run

Limited degree of information technology (IT) implementation (Chou, 2008; Egbu et al., 2005; Eikebrokk and Olsen,

2007; Sarosa and Zowghi, 2003)

Lack of industrial engineers or right kind of manpower to apply various

statistical and managerial methods or tools (Ahmed and Hassan, 2003; Ale Ebrahim et al., 2009b) SMEs shy away from formal projects and long-term initiatives and instead

only participate in small-scale, once-off initiatives (Burke and Gaughran, 2006)

concepts from the literature In the feedback process, the opinions

of the industrialists and academics were obtained based on their

knowledge and experience

Methodology for review of the related articles

The review is based on reliable publications It covers aspects like

scope of reduced time and cost by E-collaboration through project

management approaches The articles are collected from leadings

journals and books related to the topic published since 1992

There is a poor track record of reducing time and cost by

E-collaboration through project management Only a few studies have

been conducted on this subject In order to prove this allegation, the

distribution of published articles per year extracted from the Web of

Science database is demonstrated in Figures 2 and 3 However,

the tendency of publication has shown that E-collaboration, SMEs,

project management and new products are an interesting topic In

order to prove this assertion, the distribution of published articles

per year extracted from the Web of Science database is

demonstrated in Figures 4 to 7 Therefore, in order to determine the

formation of active management involvement in the field, we

consider a broader scale of literature The references used contain

approximately 55 articles out of 400 selected articles, which were

taken from 670 pre-investigated items, shown in Figure 8

Theoretical foundations and conceptual model

As indicated by the review of the literature, it is almost

universally accepted that the time needed for new

product development is a major concern for SMEs (Hung

et al., 2007; Langerak and Hultink, 2008; Roemer and

Ahmadi, 2010; To et al., 2009) However, an examination

of the interdisciplinary literatures identifies four

departments that affect the completion of projects in

terms of time and budget: design, planning, production and procurement The effects of these four departments have been studied separately under several theoretical perspectives in recent years (Mohammadjafari et al., 2011; Roberts, 2006; Roemer and Ahmadi, 2010; Selvaraj et al., 2009) However, none of these studies has proposed a model that specifies practices that should

be undertaken to facilitate the progression to reduce time and cost in developing new products in SMEs

To understand the importance of coordinating these sections with the project manager and validated the model, the author interviewed 20 project managers The majority of project managers interviewed stated that the lack of coordination between the related departments in production was the major problem in the inability to reduce time and cost Our interviews led us to the primary conclusion that the long time required for new product development results from a lack of coordination The companies interviewed were in the electronics industry The purpose of these interviews was to understand the companies’ process for collaboration among four departments into product and process development and to elicit insights into how they had overcome barriers along the way

Using the information from these interviews, we developed a conceptual model that is characterized by the major activities required for interdepartmental collaboration in new product development Our case studies suggest that companies that had achieved reduced time for new product development had more effective interdepartmental collaboration Four critical elements of this process are captured in the explanatory

Table 4 Numerous of influence factors for reduce time and cost based on literature review

Search

result

Tool P

√ √ (Carter, 1997)

2001)

Vonderembse, 2006)

2006)

2009)

2009)

2010)

Ahmadi, 2010)

Table 4 Continued

Performance effect Research methodology Source information

Reference

model (Figure 9) and supported by prior

researchers (Petersen et al., 2005; Roemer and

Ahmadi, 2010; Xia-Bao and Li-Xi, 2009; Zhou et

al., 2008) In this model, we consider four sets of

hypotheses:

H1: The communication between a designer in the

department of design and project manager is

essential before starting production

H2: Coordination between product manager and project manager is necessary for reducing time for new production development before the start of production

H3: The procurement manager must report to the project manager about preparing equipment before starting a project

H4: The project manager must be familiar with the product plans and then the control project

manager must report to the project manager before arriving at the project in the line of product

Conclusion

This paper looks at the development of a new model using critical success factors of reduce time and cost that were identified in past studies and

Figure 2 Number of publication in field

E-collaboration, project management and new product (source: Web of Science ® 2010)

Figure 3 Number of publication in field

e-collaboration, project management and SMEs (source: Web of Science ® 2010)

Figure 4 Trend of E-collaboration (source: Web of

Science ® 2010)

validated from a survey Increasingly, more studies

create awareness of the critical success factors that are

important in reducing time and cost in new product

development These factors are the departments of

design, planning, procurement and production Additionally, the author presented some definitions of the value of E-collaboration, project management, SMEs and new product development Future research can improve

Figure 5 Trend of project management (source: Web of

Science ® 2010)

Figure 6 Trend of SMEs (source: Web of Science ®

2010)

Figure 7 Trend of new product (source: Web of Science

® 2010)

Figure 8 Schematic diagram of the literature

Project Manager by E-Collaboration

Department

of Design

Department

of Production

Department

of Procurement

Department

of Planning

Production Line H1

H4

Reduce Time

of Product

Decrease Cost

of Product

H2

H3

Figure 9 Conceptual model for reducing time and cost

new product development in SMEs by this information

REFERENCES

Abdul-Nour G, Drolet J, Lambert S (1999) Mixed production,

flexibility and sme J Comput Ind Eng., 37(1-2): 429-432

Acs ZJ, Morck R, Shaver JM, Yeung B (1997) The

internationalization of small and medium-sized enterprises: A policy

perspective J Small Bus Econ., 9(1): 7-20

Ahmed S, Hassan M (2003) Survey and case investigations on application of quality management tools and techniques in smis J

Qual Reliab Manage., 20(6-7): 795-826

Ale Ebrahim N, Ahmed S, Taha Z (2009a) Modified stage-gate: A conceptual model of virtual product development process Afr J

Mark Manage., 1(9): 211-219

Ale EN, Ahmed S, Taha Z (2009b) Virtual r & d teams in small and medium enterprises: A literature review J Sci Res Essay,

4(13): 1575-1590

Aragón-Sánchez A, Sánchez-Marín G (2005) Strategic orientation