When complexity becomes a question of survival/secured production despite disrupted supply chain – Variant management

March 9, 2021 | News Germany

Disrupted supply chains keep compromising the production flows of German industry. Currently, for example, automobile manufacturers are suffering from massive resupply problems with regard to chips. Such external shocks suddenly increase complexity. In order to remain able to act and thus to survive in these situations, companies should take timely measures to ensure that the complexity drivers variety, networking, and change remain in a healthy balance with one another.

“Companies cannot prevent external shocks such as the Corona pandemic. But they can plan in advance for possible changes to framework conditions and adapt themselves to extreme situations,” says Dino Munk, Senior Partner at the consulting company Staufen. This Lean development specialist has identified three drivers of complexity: variety, networking, and change. These are the dimensions that a company has to keep track of in order to manage complexity as well as possible.

“Change usually comes from the outside and is thus only within the company’s control to a very limited extent. But networking and variety can be designed internally,” says Staufen partner Munk. “In times of crisis – such as the current semi-conductor shortage – many manufacturers recognize that they not only can actively control variant management, they must do this. This means that the line that keeps the three complexity drivers in balance may not be too fine.” To reduce complexity, the number of component variants used or the dependencies within the production chain can be reduced.

The Staufen expert advises “sensible variant planning” in order to be prepared for future crises. “The goal is to prevent a shutdown of the lines. In the long term, this can only be handled with extensive warehouse storage and associated distribution centers. However, this path is too expensive and doesn’t add any value. And so only a sensible range of variants remains so that the customer doesn’t feel too restricted.”

Companies should aim to standardize components even if the individual costs increase minimally in the process. Manufacturers are faced with the challenge of finding a profitable balance between customer requirements and efficient product design. “Small, isolated solutions will not solve this problem,” says Munk. “An interdisciplinary understanding with integrated variant and complexity management is required here. An ideal state can only be achieved with a holistic concept that covers the entire value-creation process and other company processes.”

The product portfolio should always be optimized according to market requirements. “Customers don’t purchase part numbers, but rather properties that fulfill their requirements precisely,” argues complexity expert Munk. If products do not fulfill these expectations, lower prices can’t help.”

Staufen consultants explain how the product portfolio and production can be arranged accordingly in the new white paper “Variant and complexity management – getting and managing the big picture.” There is also a video that offers an introduction to this topic.

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