Minimize variant drivers and reduce product costs

The dynamics of customer requirements, rapid technological developments and customizing are leading to a continuous increase in product complexity in many companies.

The consequences are often unprofitable products and services as well as high process costs for all areas involved in order processing. Added to this are time-consuming coordination in the development of new products – or high costs in the strategic management of the Product portfolio. Therefore, profitability is at best foregone and entrepreneurial growth is prevented. At worst, the company's ability to keep up with the market - and thus its future viability - is at stake.

Together with our clients, we solve the central question for companies: How can product complexity be handled professionally and successfully? Our recommendations are:

  1. Manage the diversity of variants economically and successfully via intelligent product architectures and standardization.
  2. Streamline the Product portfolio systematically.
  3. Implement a governance model to manage the growth in variants.

Our aim is to manage variant diversity in a holistic and interdisciplinary manner.


1. Making product complexity manageable with intelligent product architectures and standardization

The desire for customized solutions is driving up the number of variants. The resulting diversity is unavoidable due to current market and customer requirements. However, it also offers opportunities for sustainable economic success. It is important here, that product diversity does not have an internal impact on the value chain. The right product design measures must be taken to achieve this.

The product architecture defines the functional structure of a product and thus forms the pivotal point between customer requirements and technical realization. Digitalization (e.g. IIoT) is also increasing the importance of product architecture for the value chain, as many functional elements are migrating from hardware to software and a large number of new functionalities are being created. However, these also enable improved service and interchangeability.

Development of the product architecture

Intelligent product architectures such as modular structures, modular systems and platform concepts make two things possible: to create individually configurable end products and to exploit the economies of scale. Product architectures represent a significant lever for the efficient realization of customer-specific solutions. A clear assessment of the required number of variants and the interactions between different elements of the product architecture are essential to define sensible modular elements, interfaces and, above all, standards.

ROI-EFESO approach: identify variant drivers, evaluate complexity effects and reduce product costs

In addition to the points mentioned above, a holistic approach to product architecture design also includes the identification of variant drivers. ROI-EFESO offers you a pragmatic approach for the economic assessment of product architectures and complexity-related costs. This is based on a small number of central cost drivers and enables a sufficiently precise assessment of the complexity effects in your company.

Our project experience shows that intelligent product architectures can cut manufacturing and material costs by up to -60% through economies of scale. In addition, development costs can be drastically reduced. And with focused and accelerated order processing, a shorter time-to-market (TTM) is achievable. All in all, this can significantly increase product profitability and customer satisfaction.

Aligning platform design with economic benefits

The interaction of software and hardware platforms in smart products poses an additional challenge, as different life cycles and overlaps across several product groups have to be efficiently coordinated. The development processes must therefore synchronize the interaction of platform and derivative development at fixed points throughout the entire product life cycle ("release management").

Therefore, platform responsibility has to be anchored in the organizational structure. Our project experience confirms that the lifecycle management of platforms determines whether the advantages of platform development can be used economically.


2. Free up resources in the product portfolio by streamlining variants

Growth requires resources throughout your company's entire value chain – the source of this is a profitable product range. This raises the most important question: How many "dead horses" are hidden in your Product portfolio? And: How many of these are you deliberately not doing without today?

Streamlining variants frees up resources in the company along the business processes such as order processing, procurement, or product development. Our approach can be summarized in the following three steps:

3. Managing variant growth with a governance model

We strive for sustainable solutions in our projects. To avoid having to repeat variant management efforts at intervals of several years, we recommend intelligently anchoring the discipline of "variant management" in the company.

How should variant growth be managed within the enterprise? Who is responsible for this? These are not easy questions for global manufacturing companies when distributed competencies around variant management often have to be intelligently bundled. Together with you, we develop case-specific solutions that we accompany through to full implementation.

Mastering variant drivers

The governance model in variant management is not just about defining decision trees and procedures at the right times in order processing. Another result should be the ability to perform fast, reliable, data-based variant controlling tasks. To realize the maximum potential in complexity management, we recommend - depending on the existing system landscape - the use of proven data analytics methods to accelerate the analysis and optimization processes.

In order to master complexity and variant drivers, it is also important to establish a conscious and systematic approach to variant management in your company's organization. This must be understood by management, sales, product development and controlling. In our experience, mindset and transformation measures are necessary to shape the change in a structured way and to send the right signals within the company.

The management consultancy ROI-EFESO supports you in identifying the potential in your product portfolio and in exploiting it.


Dr. Jan-Christoph Haag

Dr. Jan-Christoph Haag
Infanteriestraße 11
D-80797 München
Tel.: +49 89 1215 90-0

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Frau an einer computergesteuerten Medikamentenausgabe
Case Study

In a pharmaceutical company that has established itself at the forefront of the industry with an extensive portfolio of hospital and medicinal products. Over the years, topics such as structures and process standards have fallen out of focus. With the support of ROI-EFESO, the company reacted quickly and created a concrete action plan for its worldwide product lifecycle management (PLM) in just nine months.

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