Early Phase Estimation of Variety Induced Complexity Cost Effects: A Study on Industrial Cases in Germany

Offering a broad external market variety at competitive prices is one of the main challenges in the global competition among mechanical engineering branches. Reducing variety and thus variety induced complexity cost has evolved to become one of the crucial global success factors. The aim of this study is to get insights on variety induced complexity cost effects and to elaborate on how these effects can be influenced by modular product development. Firstly, general causes and effects of variety are described portraying their trans-disciplinary nature. Next, the state of the art in reducing variety by modular product development is explained. Hypotheses on cost effects of variety induced complexity are introduced; and industrial cases from Germany are evaluated in order to support the hypotheses. During these empirical case studies, an integrated approach for developing modular product families by including various corporate disciplines is applied. This trans-disciplinary procedure aims to reduce variety over the whole product life by modularization. The results obtained and their potential effects on complexity cost are presented and discussed. Based on the analysis of these cases, an approach for Early Phase Estimation of Complexity Cost (EPECC) is developed. This approach helps assess trans-disciplinary complexity cost effects of different modular concept alternatives in early design phases. Furthermore, the effect of branch specific lot sizes on complexity cost is illustrated. Factors related to the successful use of these effects in branches and segments with high and low lot sizes are shared from industrial and consultancy practices. This contribution is authored by a team of academicians, consultants, and industrial executives.