Today, European supplier companies participating in their customers' development of new products are reporting a range of problems, leading to cost increases as well as delays which sometimes may jeopardise entire projects. The vast majority of these companies are in the SME range. Even when a supplier company does not perform product development, it is normally more or less involved in the development process. In some development phases, the need for communication may be very great. This situation is encountered by many small and mediumsized supplier companies throughout the European Union. It is also, however, a certified fact that many problems regarding such co-operation are still unsolved. Often, availabe in-house skill among suppliers is not utilised by customers in their development processes, leading to costly manufacture and less competitive end-products. Other problems experienced are frequent changes of specifications and difficulties in keeping prototypes and preproduction series up to date with the continuous flow of engineering changes made by-customer companies. Companies whose in-house resources for product development actually have been used in co-operative development projects are resporting additional problems as diffuse product specifications in terms of total cost and required level of quality and that participation in the customers' meetings consumes time and leads to high travelling expenses. A major RTD goal of this project is to develop a new methodology for rapid and flexible product development in customer/supplier networks, with the participation of several supplier categories (horizontal as well as vertical cooperation) enabling a reduction of the development-related costs of SME-size suppliers of 50 % and of the overall time-to-market for new end-products of at least 25%. Another important goal is to find ways of at least halving the time from production start until the costs are brought down to the budgeted level.