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August 05, 2016
Product variety or cost efficiency? Why not both?
By: Doug Thomas

In many industries, customers demand both a wide selection of products and fast and reliable delivery. At the same time, product life cycles have shortened and organizations are at a greater risk than ever of producing and storing products that never get sold, or are at least not sold in the original market or at the original price the organization intended.

How can an organization profitably deliver the product variety and speed that customers want while maintaining manufacturing cost efficiency and minimizing the risk of producing unsold inventory? The answer is product modularity.

With product modularity, a wide range of final products can be created from a relatively small set of modular components. The use of standardized modular components allows a firm to differentiate end products to meet customer needs while simultaneously enabling scale advantages in procurement and inventory management.

With product modularity, a wide range of final products can be created from a relatively small set of modular components. The use of standardized modular components allows a firm to differentiate end products to meet customer needs while simultaneously enabling scale advantages in procurement and inventory management.

However, adopting a modular approach is full of challenges. To effectively manage in a modular environment, at a minimum, you need to:

  • Recognize how modules can be combined to create many final product variants to effectively segment markets and meet customer needs.

  • Balance customer preferences with product design decisions to offer enough variety to meet market needs without making the product selection process too complicated for the customer.

  • Be able to forecast and plan at both the finished product and component levels to make assembly capacity and module inventory decisions that take full advantage of product modularity.

  • Recognize the key cross-functional coordination challenges marketing, product design, and supply chain teams face in a modular environment and know how to address these challenges.

Would your organization benefit from offering more variety to your customers at lower cost? If so, product modularity may be right for you. The Accenture Academy course Using Modularity to Enhance Customer Value and Profitability will help you manage in a modular environment to deliver the benefits of greater product variety and lower cost to your organization.

About Accenture Academy

Accenture Academy offers proven, cost-effective learning solutions for a more versatile workforce and a more agile organization. We provide a flexible learning approach that helps your people be more versatile and your entire organization be more agile in the marketplace. Curriculum includes Supply Chain Management, Finance, Procurement, Analytics, Leadership & Management and Specialty Skills.

LEARN MORE ABOUT ACCENTURE ACADEMY 

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