Many manufacturing companies are currently experiencing a period of high demand, creating a bottleneck in production capacity. For many, products are already sold out for the next two years! In addition to the shortage of labor and materials, organizations are experiencing many challenges, and in this context, several solutions are available to them. Have you ever thought about simplifying your product line to make your production more efficient? You’d be surprised how many customers are willing to lower their requirements in terms of options (color, model, etc.) in order to receive their product faster! Let’s take a look at how this solution has allowed our customers to significantly optimize their operations.
Effects of Options and Customization on Manufacturing Operations
Our customer had seven different rear bumper configurations for their vehicles. When our experts went to meet with their team, no one could explain why they were offering so much for one part! Offering additional options creates complexity (more parts to order, a wide variety of products) and adds to operations since there are many ways to assemble a vehicle. It also requires additional efforts in terms of logistics and coordination. In a context of labor shortages, supply chain issues, operational turbulence, and high consumer product demands, reducing the product line is a very interesting opportunity for manufacturers as it simplifies the overall process.
The question is: Does offering so many options add value in the end?
Improvement and Standardization
At this stage, it is essential to introspect and validate the need for as many options as possible for a product. Our team looked at our client’s case, taking the time to understand the different functionalities of each of the seven bumpers, versus the needs of their customers, by performing a simplification and standardization exercise.
Our finding: we regrouped and allowed our client to go from seven to three rear bumper options. We also redesigned the way these different bumpers were assembled so that the change in options did not impact the assembly procedures.
Generally, sales and marketing teams are reluctant to reduce and/or eliminate certain options on product offerings. It is therefore important to perform a value analysis, a rational method of optimizing a product that can be performed by an expert who will evaluate the perceived value of the options to the customer versus the cost to the company, as well as the challenges they generate to operations. It is sometimes much more advantageous to eliminate some of the rarer, or even uncommon, options in order to keep a single customer.
In this case, our team not only reduced the range from seven to three rear bumpers but found a way to attach all bumpers in a standard way, allowing our customer to offer a choice of three bumpers, knowing that they are interchangeable. In addition to the operational savings, keeping three models in stock instead of seven allows them to hold a larger quantity of each model, as well as requiring only one installation training instead of five.
What we found: Reducing our customer’s bumper line has resulted in significant operational efficiencies without affecting the value provided to their customers.
As you have seen, reducing the range of products and options is an interesting opportunity to consider in order to optimize the various rare configurations and options. This strategic solution can simplify and accelerate your operations, your product development, your logistics, your employee training, and if done right, it will improve the value perceived by your customers.
MERKUR is a firm of experts in manufacturing performance and innovation and has been doing so for over 25 years. From strategy to execution, its sole objective is to make Quebec’s manufacturing companies more efficient by offering innovative solutions in product development, operational excellence, manufacturing engineering, automation and smart factory. Merkur is proud to contribute to innovation and productivity in Quebec!
KHROME PRODUIT TRANSPORT is a manufacturing integrator located in Drummondville specialized in the design and manufacturing of train car interiors and exteriors. Its strength comes from its great engineering capacity and its manufacturing agility. Among its customer portfolio, there are major manufacturers such as Alstom, Bombardier Transportation and Kawasaki Rail Car.
SYNKRO is a software developed by Merkur and designed specifically for high-performance manufacturers. It collects, classifies, and distributes the right data to the right people at the right time. SYNKRO gives you a real vision of your operations. SYNKRO is the software solution that finally connects your floor and your offices!