Mastering product complexity (PDF, 3316 KB) - Roland Berger

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4 A. KEY FINDINGS Our study shows how different industries are coping with customer appetite for differentiation 1 Complexity has increased dramatically: The variety of products has more than doubled in the past 15 years, while product lifecycles have shortened significantly (by about 25%) 2 This raises challenges for manufacturers: Product variety drives costs throughout the entire value chain. Inventory management, more volatile demand and differentiation in customer requirements are key issues 3 Cross-industry comparison reveals different performance levels: In the discrete industries, automotive leads the field in product complexity management, while FMCG is the most advanced of the process industries 4 Four major optimization approaches have been confirmed across industry segments: Supply chain segmentation, supply chain integration, production flexibility and product structure optimization all rank as highly relevant. Although implementation still lags behind overall, automotive and FMCG are the most advanced industries in this respect. Other industries should adopt the best practices developed there 5 Huge savings potential: Examples in the automotive and consumer goods industries show that good complexity management reduces production and sourcing costs by roughly 2.5-3.5%. Machinery companies worldwide could save approx. EUR 39-54 bn, chemical companies EUR 29-49 bn and the pharmaceutical industry EUR 6-9 bn
5 A. KEY FINDINGS Product variety has more than doubled in the past 15 years – Product lifecycles have shortened by about 25% Increase of product variety across all industries 1) 1 250% 200% 220% 185% 250% 215% No. of sales products No. of raw materials and components > Complexity has increased dramatically. Product variety more than doubled between 1997 and 2012, while the number of raw materials and components increased only to a lesser extent 150% 100% 50% 76% 70% Duration of product lifecycle > The smaller rate of increase in raw materials and components is due to the standardization and modularization efforts of leading industries such as automotive and FMCG 0 1997 2002 2007 2012 2015 1) Automotive, chemicals, machinery, FMCG, pharmaceuticals
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Mastering product complexity (PDF, 3316 KB) - Roland Berger

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