Home Depot: Choosing Subcontractors

Home Depot Products

What motivated producers to create the products that Home Depot sells? Author Lexis Higgins explains that when it comes to creating new products to market, there is what he calls an "ideal climate" for "new product development" (NPD). The motivation must be there in order to follow these guidelines: a) "goal clarity" (well understood objectives for the product); b) "resources" (there must be adequate economic and other forms of support for the project); c) "encouragement" (emotional support for the launch must be a driver); d) "freedom" (the flexibility and ability to take the project in any direction); and e) "integrity" (management does what it says it will do) (Higgins, 2007).

The company involved in developing the product needs more than motivation and vision to make their product successful. To start with there should be "idea generation" (an informal session can come up with ideas; it doesn't have to be formal); "idea assessment" (demand for the product, does it make sense or it is just a novel idea with no utility); "concept testing" (self-explanatory); and before "final version development" there must be choosing the best idea and developing a prototype (Higgins, 42).

How did producers decide on the best combinations of resources to use? The description of decision-making in the two paragraphs above responds to that question. Also, Higgins points out that the best decisions on combinations of resources must be made utilizing "cross-functional teams." Using people with different educational backgrounds and employees coming from a variety of cultural and social backgrounds should be part of teams that make decisions on what products would work and which ones are not likely to take hold. Brian Tracy writes in Entrepreneur magazine that after a team mulls over questions like, is there a demand for this product, and would you buy it yourself, the nuts and bolts of how the product will be assembled from what resources is addressed. Jane. S. Lopus and Amy M. Willis write that firms face the problem of deciding "how to produce their product. This means deciding "which resources to use in this process"; and since resources cost money, firms have to be careful to choose resources that will make a profit (Lopus, et al., 2003). If costs "…are too high and/or revenue too low," the project will not succeed (Lopus, 75).

Who made / makes these resources available, and why? The managers and owners of companies "…have to decide what inputs to buy, and all the firms they buy from also have to decide where to source their own inputs" (Lipsey, et al., 2015). The whole economy is made up of "millions of individual decisions made by all the economically active population" (Lipsey, 13). The resources that go into the manufacture of an automobile are made from "thousands of individual components," and some of the components are manufactured by the car company but most are "…subcontracted" by other parts manufacturers, and in turn many of those parts manufacturers subcontract with smaller suppliers who make parts that are considered "niche" market materials (Lipsey, 13). Why are these resources done this way? An automobile manufacturer is zeroed in on the whole car, and while the parts are important to the integrity of the car, companies can't be bogged down making every little bolt and rubber windshield form; it makes much more sense to have other supplies make those parts.