Tag: choice combinations
Connect With Us
Key Concepts To understanding Product Variety
1. Product
A product is something offered for sale to customers. This is deliberately vague, because we want to encompass services as well as tangible products. Most of our discussion and examples involve manufactured products, but our framework also applies to services with many variants like insurance policies and cell phone calling plans.
2. Instance
An instance of a product is a specific unit of the product: the car that Joe buys, which has a specific VIN (Vehicle Identification Number).
3. Configurable Product
A configurable product is a product where the instances are not all identical. No. 2 pencils are not configurable. Computers, cars, tractors, refrigerators and cell phones are configurable.
Comments Off
Optimization is the big win – but getting started is key
When I started studying complexity and realized the huge adverse impact it was having on companies, I was determined to “find it and get rid of it.” There are many places where that formula will lead to big improvements in everything – profits, service, quality and more. More and more companies are discovering how to do this. In some cases it is pretty simple. Just having the courage of their convictions that it will make things better is all that stands in the way of eliminating complexity.
Well, I found that is not completely true – at least not all the time. There are some situations where what seems to be a simple complexity elimination process turns out to be quite a bit more… complex! The real issue is not just complexity reduction. It is “optimization” of complexity. Get rid of the wasteful part and structure processes to use the right level of complexity.
Comments Off
Why product complexity matters
I was telling some friends at a brunch about what I do, and how variety drives cost in manufacturing. “But all the manufacturing has moved to China,” commented one person. I’ve heard this comment over and over.
A picture is worth a thousand words — and here’s one that fits the bill.
- Commoditization of labor in manufacturing
- Higher output per worker
- The percentage of cost in goods is much higher
Comments Off