In any manufacturing company that builds configurable products, there is a lot of discussion around what product complexity is. What’s interesting is that when times are good and there are lots of sales, the discussion is usually around how to simplify or streamline with the goal to sell more product even faster, that complexity is keeping sales from going even higher. In bad times, the discussion typically moves to how complexity is causing undue stress on the supply chain, creating problems with parts forecasting, quality and finished goods inventory.
Rarely do these discussions end with participants really agreeing about exactly what complexity is or how to reduce it. Solutions are attempted with internal projects like SKU reduction and part number reduction initiatives driven by Six Sigma teams that mean well and do good work, but usually are chasing the tail of the complexity dog, rather than leashing it for good and guiding it to higher profits, lower forecasting errors, even shorter sales cycles.
The interesting thing is that product complexity manifests itself in any manufacturing company in all the ways everyone talks about it. Depending on what side you stand on, your view of the complexity elephant is very different! But what is also just as interesting is that these descriptions of complexity are all just symptoms of complexity, not the cause. The cause is unconstrained variety in how customers/dealers can order your product.
Offering choices to customers is critical to having a competitive offering in the marketplace, but allowing customers to order any combination — without guiding them to optimal configurations — leads to variety-induced parts and inventory problems as well as quality and sales cycle slowdowns. Options aren’t bad; it’s the combinations of options that cause problems.
The easiest way to solve complexity problems throughout the company is to help customers order configurations that are good for both them and you. It takes longer to order special parts, build and test the quality for a configuration you have never built before. If you only had known that a configuration was just like another you built last week, but with a different option for the mirrors, you would have realized it wasn’t so unique after all, that this new SKU was just like five other SKUs except for one single choice.
In most cases, a new SKU differs on a choice that the customer didn’t care about anyway. Usually it’s because the configurator they ordered from or the price sheet check boxes FORCED the user to choose every feature on your product, even choices they didn’t care about and sometimes didn’t understand.
Each customer comes to your product offering with a short list of must-haves or anchor features — the choices that are very important to them. If you satisfy them on these features, you have a sale. Moving the customer on the other choices that are less important to them is critical in shaping demand toward optimal configurations. The problem is the fact that each customer coming to your product line differs on what they think is important, so no one solution solves all problems. The key is to be able to push customers along THEIR low-importance features. Satisfying the customer on those features that matter to them and then guiding them on those that are less important makes it possible to streamline variety and stop complexity where it enters: at the door.
Next: How do you move customers along non-anchor features?
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