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CIMData: Get rid of excess complexity via product lifecycle management - PLM

Gain time for innovation through complexity management, which can lead to improved product strategy and portfolio decisions.

Overview

CIMdata favorably reviews the Accenture solution to manage product complexity. Accenture’s framework consists of tools and processes in support of existing and, more importantly, planned products.

Clients typically see reductions in portfolio complexity ranging from 20 percent to 40 percent, according to Accenture. The benefits include reduction of operating expenses by 10 percent to 20 percent while accelerating time to market.

Managing design complexity can deliver reductions ranging from 6 percent to 10 percent in product cost, which derive from parts rationalization, improving design modularity, and through value analysis and value engineering. Commercial savings come from the application of strategic sourcing, supply-chain rationalization and demand management.

In addition to the cost savings, complexity management improves predictability of product-launch dates, reduces program overruns and product developments costs, and enhances quality through streamlined processes.

In addition, it enables more rational product strategy and portfolio decisions, thereby providing time for greater focus on product innovation.

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Background

Not all complexity is bad, but care must be taken so additional detail is linked to higher value. Some complexity, for example, is needed to meet diverse customer needs and differentiate products.

In many cases, however, features are added without understanding costs across the value chain and throughout the product lifecycle. Costs related to complexity can be found in the following areas:

Product portfolio. Development and support costs can increase due to additional options. Varying configurations can slow speed to market and add complexity to marketing, design, production, service, inventory and more.

Product design. Depending on product architecture, design complexity can increase with the creation of new features or product variants. Additional variants to support low-volume demand can increase internal and customer documentation, bills-of-materials cost, validation testing, packaging, and complicate customer service.

Process. Complexity impacts all business processes, including design, manufacturing, assembly and service. It also can impact planning, procurement, quality and on-time delivery.

Key Findings

CIMdata recommends implementation of an end-to-end strategy to manage complexity. This approach can enable companies to maximize product value to end customers while delivering quantifiable improvements and profitability for their businesses.

Key takeaways from the CIMdata analysis:

  • Portfolio, product and process complexity issues are easy to identify yet difficult to quantify

  • Managing complexity enables resources to be allocated to higher-value activities, such as developing profitable product differentiation and methods of highly efficient production

  • After eliminating sources of non-value-added complexity, governance and supporting processes are needed to prevent complexity from returning

Accenture’s end-to-end solution focuses on managing product portfolio, design, and process complexity to reduce costs, drive efficiency and improve profitability.

“Not all complexity is bad, but care must be taken so additional detail is linked to higher value. Some complexity, for example, is needed to meet diverse customer needs and differentiate products.”

Analysis

Managing complexity is relatively straightforward once the driver of complexity is identified and the impact quantified. However, the ongoing challenge is much more complicated than eliminating low-volume or low-margin products. Developers typically are concerned with making things work rather than optimizing processes.

Companies need to identify a baseline of a portfolio, design or process. When a product or process is new or at the conceptual stage, however, there is a limited baseline for comparison.

Analytic tools can help select complexity-reduction candidates and quantify potential benefits. Lean Six Sigma tools c an also be used to identify and address product and process issues.

Analytic tools are needed to map costs with complexity, and to ensure alignment across business functions such as marketing, product management, engineering and supply chain.

Recommendations

Companies can make progress by working at two levels:

  1. Quantifying costs. Analytic tools accelerate the cleansing and structuring of technical and commercial product data. Next, an analysis is conducted to understand product-lifecycle costs and improvement potential. Looking across the portfolio, targets for reduction are identified via cross-functional and strategic analyses. Tools help to address direct product costs via standardization, design and process reengineering, and supply chain management.

  2. Implementing strategies. Complexity-reduction strategies affect processes such as planning, marketing, design, manufacturing, distribution and product support. The key strategies Accenture implements are platform-based product development, modularization, component commonality and design for assembly.

Governance is essential to prevent unneeded complexity from creeping back into organizations. Decisions can be made by cross-functional teams, using data from portfolio, design and process indicators. The information drives decisions so complexity stays within boundaries and adds value. 


Author

Adapted from CIMdata’s three-page document, “Using PLM to Simplify Business Complexity” (author not listed).