Local arrangements

The mega trend individualization drives productmanufacturers towards offering more and more variants of theirproducts. As seen in mass customization scenarios, productconfiguration based on a modular strategy is an enabler for thistrend. The key idea of variant management is to optimize the number of product variants that can be offered to a specific market segment, i.e. outer variety, while reducing the complexity of product development and manufacturing. Production costs are typically kept low by producing a small amount of modules that are generic and common for multiple products within the modular strategy, i.e. inner variety. Classic variant management is driven by the idea of reducing costs between the fields of product design / engineering and manufacturing / logistics. Hence, we see this as efficiency. We apply the same method of optimizing the interplay between outer variety and inner variety to the sales-level; i.e. between the fields of logistics processing and sales / marketing. The product variants that are offered to a specific market segment should be aligned with the market needs. Hence, we see this as effectiveness. We show how the two views on variant management complement one another and how they relate to business economics, namely the economies of scale and the economies of scope. We suggest using a combination of both efficiency and effectiveness to assess the capability of change of product manufacturers that are based on modular systems. Market-oriented variant management involves a number of business processes. A management-ready presentation of the potential that changing these processes has, can significantly influence a company’s willingness to invest in such a change.