Business Chemistry

8External Integration: Why, When, and How to Integrate Suppliers and Customers

Carsten Gelhard¹ and Irina Tiemann²

¹ University of Twente, Chair of Product‐Market Relations

² University of Oldenburg, Chair of Innovation Management and Sustainability

Your most unhappy customers are your greatest source of learning.

Bill Gates, Co‐founder of Microsoft

This particular chapter discusses the principles, benefits, and challenges of integrating two of the most important stakeholders into a firm’s value creation process: a firm’s customers and its suppliers. You will learn why companies integrate external partners and why customers and suppliers are important knowledge resources for chemical companies (Section 8.1). In Section 8.2 you will be provided with more detailed information on customer integration, including a discussion of different degrees of collaborative activities with customers, their corresponding up‐ and down‐sides, and existing typologies of customer co‐creation. At the end of the chapter, we present a framework that is intended to particularly support you in designing and assessing collaborative activities with customers. In Section 8.3 we similarly provide fundamental insights on supplier integration. We discuss the emergence and importance of supplier‐induced innovations, existing typologies of supplier integration, as well as thoroughly discussing the characteristics that determine suppliers’ willingness to become involved in collaborative activities. The present chapter ...