Product portfolio complexity

Dr. Christoph Kilger
Posted by Dr. Christoph Kilger on May 25, 2020 9:04:11 PM
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The product portfolio and complexity have the biggest impact on supply chain performance. A supply chain's purpose is to provide physical goods. The number of physical goods and their structure (number of raw materials, components, variants) determine directly the quality of forecast, the amount of safety stocks and the delivery performance.

The number of product variants offered today is significantly higher than years ago. Typical examples concerning growing numbers of product variants come from the automotive industry. Let’s take BMW. 40 years ago, BMW had five different models in its line-up: The 3 series, the 5 series, the 6 series, the 7 series and the very exclusive M1 sportscar. 10 years later the line-up increased to 7 models. Around the 2000’s it was at 10. Another 10 years later BMW had almost tripled its line-up and today we can even choose between 23 different models which all can be customized to your personal taste to make it one-of-a-kind.

The first step in improving supply chain performance through optimization of product portfolio and architecture is to create end-to-end transparency. We have to connect market demand to supply of components and raw materials, and need to rationalize product portfolio and architecture. Through modularization and standardization we are able to create a large product variability on the market from a limited number of components, reducing operational costs and required working capital.

We have created AIO Insights to create end-to-end transparency of your supply chain and the corresponding impact of your product portfolio and architecture on supply chain performance. With AIO Intelligence we can help you optimize your product portfolio and architecture. AIO Impact is a closed-loop decision making and execution platform to ensure the measures to optimize your product portfolio and architecture are being implemented.

aioneers: We are building high performance supply chains.

Topics: product portfolio, complexity, supply chain, performance gap