Mastering Differentiated Products: Enable efficiency and flexibility in The Age of the Customer
Turn on the full power of configuration to hit the mark with your markets and customers every time and stand apart from your competitors with the right fit, price, and delivery. What if you could do that without the historical disruptions, margin drag and complexities of ‘customization’? It’s not only achievable, but in this era of ultra-competitive manufacturing, especially within technical and specialized products and services manufacturers, it is now essential. Commoditization is a market-share/margin killer in these industries. It leaves technically superior industry leaders vulnerable to be ‘knocked-off’ by copycat competitors for the more standard (commoditized) market and customer segments. It may leave you open to be ‘cherry-picked’ to handle only the most difficult customer needs while competitors gain the market share and margin of the easier to predict and pre-standardized needs. The ability to stand apart with core product technical superiority and meet specific customer and market demands for specialized ‘perfect fit’ solutions slams the door on less agile and inefficient competitors.
We will explain why Configuration Matters in your ability to master differentiated products and meet your customer’s demands.
Configuration In the Consumer World
Configurable products are all around us. It is interesting how some people in the business world struggle with the definition of a configurable product, and yet nearly everyone regularly buys configurable products in everyday life. Common configurable products in the consumer world include automobiles, new houses, motorcycles, computers, and even food products like pizza.
The so called “lot size of one” movement has gained a lot of popularity in recent years, and the central theme is that operational efficiencies must improve to the point that a consumer can buy a customized product as easily as a commoditized one. In general, consumers are demanding more choices, not fewer. Many products that have traditionally been commoditized are becoming available in customized forms. Examples include shoes, golf clubs, and headphones. Here is an example of a configurator eLogic created for a well-known BOSE headphone product.
The configuration process itself has become much more self-service than in the past. For example, automobiles have always been configurable, but until this century the process of finding an available car or configuring a car involved searching through inventory printouts or price books and then you still needed help from a dealer to get the car you wanted. That has all changed and the consumers have never been more empowered to shop for and get exactly the cars that they want. Look at Ford’s “Build & Price” site for their customers.
Configuration In the Business World
In the business world, configurable products are even more pervasive than in the consumer world. In general, the more complex the application requirement, the more configurable the product must be. In cases of complex requirements with relatively low volume, the more engineered (to order) the product must be. We will discuss examples of each later in this chapter.
There is a simple test to determine if a given product is configurable or not. If the product has a UPC (Universal Product Code) or SKU (Stock Keeping Unit), then it is not likely to be a configurable material because such numbers don’t provide a way to distinguish between two different configurations of the same product. On the other hand, if a product has an intelligent part number like a VIN (Vehicle Identification Number), then it is almost certainly a configurable product.
To Configure or Not to Configure, That is the Question
Business leaders often ask whether their products should be configurable or not, and there is often an inclination to avoid configuration because of the perceived complexity that it entails. In fact, avoiding configuration for truly configurable products only moves the complexities elsewhere like product selection and master data maintenance. The true measure is what makes sense to the...