Whoever masters complexity wins
A manufacturer of specialized machinery and systems streamlines its product portfolio and increases performance and margins
A globally active plant engineering company is under pressure: international competitors are relying on aggressive pricing, while the complexity of its portfolio is rapidly increasing and putting margins under strain. With an integrated solution approach tailored to the company’s specific needs, the project team led by EFESO makes the drivers of complexity transparent. In addition, it identifies the associated costs and proposes concrete levers for profitable growth, such as variant reduction or redesign. The results are a competitive portfolio, leaner order processing, and sustainably strengthened performance.
Challenge
A leading manufacturer of specialized machinery shifts its focus to the systems business. However, the growing Product portfolio increases internal complexity and puts pressure on margins. It is time for a structured new approach.
MoreEFESO approach
With a tailored approach that brings together the technical and economic perspectives, the project team systematically penetrates the portfolio and product architecture. Financial simulations immediately show the impact of the potential measures.
MoreLessons learned
Trying to capture all data from a complex Product portfolio first can unnecessarily slow down a project. The pragmatic approach quickly delivered robust results without compromising quality.
MoreEFESO success model
Within just three months, the manufacturer streamlined its portfolio and achieved significant margin improvements. In addition, it now systematically manages complexity in other areas as well.
MoreVariant diversity becomes a burden
The system manufacturer, with a focus on the food and pharmaceutical industries, was facing increasing competitive pressure. The company produces specialized machines, which it sells both as individual machines and as complete system solutions. These special machines and systems are used when companies in the process and food industries need to separate or process substances. They are highly customer-specific product solutions, with volumes of around 250–300 machines per year and product family. Key product characteristics include an exceptionally long service life spanning decades, as well as a high level of technical complexity across mechanics, software, and system integration.
More and more providers were entering this market, offering standardized machines at increasingly lower prices. However, the manufacturer chose not to enter into a price war and instead placed its strategic focus on the systems business. Rather than selling individual machines, the company increasingly sold larger system solutions that covered complete process chains end to end.
However, the special-purpose systems business was highly planning-intensive, and the growing portfolio became increasingly difficult to manage. Each customer-specific configuration required hundreds of hours for engineering, planning, and production. As complexity increased, the organizational effort continued to grow as well, putting margins under pressure despite a strong order situation. Previous cost reduction programs had already addressed the technical side, but they had consistently failed.
To solve the problem, management needed a partner that could not only understand the portfolio from a technical perspective but also optimize it economically. The stated objective was to increase the profit margin by at least 10 percent. EFESO was selected due to its methodological expertise in complexity management and its ability to directly combine portfolio streamlining with economic performance. The consultants covered several areas of expertise with their industry know-how, including product complexity, Design-to-Cost, and cost-value engineering.
The target: increasing the profit margin by at least 10 percent.
Systematically penetrating complexity
The project started with a lean, specially assembled team. On the EFESO side, an experienced Senior Consultant with relevant expertise took over project management, supported selectively by additional colleagues. On the client side, the team included a developer with deep product knowledge who had already supported generational changes of machines, a representative from product management, and experts from production planning. The Head of the Business Unit and the Head of Development acted as sponsors, contributing knowledge and advice. The jointly developed solution approach comprised three central components:
Tailored methodology
The methodological basis for resolving complexity and repositioning the product platform was tailored to the company’s specific requirements. Measures that could have slowed down the project were deliberately left out. The methodology combined a coordinated repertoire of targeted levers, ranging from variant tree analyses and a design structure matrix to morphological boxes and creative workshops with subject matter experts.
Parallel analysis of technology and market
The analysis process followed two parallel, closely interlinked tracks. On the market side, the team analyzed which variants were actually in demand and which did not add value. On the technical and conceptual side, the team examined the product architecture, the structure of the systems, and which modules were key drivers of complexity. Based on this, the team developed scenarios and options for configuring systems differently, simplifying interfaces, and consolidating variants.
Direct financial simulation
EFESO contributed not only its technical analysis expertise, but in particular also the know-how required to simulate variant reduction together with its organizational and financial effects. The actual internal effort, which had previously not been reflected in any order costing, could now be quantified in concrete terms. For example, it became clear that a special-purpose machine as a customized variant can require around 850 hours of effort from planning through to delivery. This newly gained transparency was a decisive breakthrough for portfolio streamlining and further product development.
A simulation quantifies the actual financial effort in concrete terms for the first time.
Technical depth and a pragmatic approach
In this technically and methodologically demanding project, the following lessons learned proved particularly transferable to comparable initiatives:
Ensure a high level of technical expertise on both sides.
To consolidate a plant engineering portfolio, a company needs a team with aligned, specialized know-how. This includes, in particular, consultants with experience from comparable projects and developers with in-depth technology expertise. Only then is it possible to develop robust scenarios and narrow down the variant space in a meaningful way. Team composition is therefore a critical success factor.
Clarify the data basis early and pragmatically.
Evolved product portfolios are complex from a data perspective. Trying to capture all variants completely at the outset can block projects for months without justifying the additional insights gained. It is more effective to clarify early on, together with the client, which data structures are truly needed and otherwise work with pragmatic assumptions. This enables sound results to be achieved quickly while keeping the project on track.
Evaluate effort and complexity holistically.
Indirect efforts resulting from variant diversity, such as engineering hours or coordination effort, can easily be underestimated. However, true economic viability only becomes apparent when project stakeholders assess product costs and effort across the entire system.
Portfolio streamlined, margins and organization strengthened
The project delivered the desired results immediately. Within twelve weeks, the team reduced active component variants by 35 percent while also achieving the targeted margin increase. However, the immediate and long-term positive effects achieved by the company went even further.
- Organization sustainably relieved: The company significantly reduced the operational effort per order, particularly through leaner processes in engineering and planning. As a result, the organization can now refocus on the systems with the strongest demand and the greatest market potential.
- Scaling without excessive complexity: Thanks to fewer new planning efforts and a lower share of special solutions, the streamlined portfolio now grows much more slowly in terms of complexity. The company can increase the standard share of machine components and produce more systems efficiently overall.
- Targeted development of the offering: The newly gained transparency regarding effort drivers and cost markups opened up new opportunities for management to steer the portfolio and differentiate the offering more effectively in global competition. In this way, the company successfully repositioned itself through system expertise and configuration depth.
The methodology developed and successfully applied in this project can be transferred to additional product families. The internal team now has the tools to systematically manage complexity in other areas going forward.
Active component variants decrease by 35%, while margins increase by 10%.