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

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