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The reduction of product and process complexity based on the quantification of product complexity costs

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  • Lars Hvam
  • Christian Lindschou Hansen
  • Cipriano Forza
  • Niels Henrik Mortensen
  • Anders Haug

Abstract

Complexity management is an increasing challenge for industrial companies. To address this issue, this paper develops a procedure to reduce the complexity of products and processes. This procedure includes five steps: (1) definition of the scope of the products and processes to be included in the analysis, (2) grouping of products into A,B, and C categories, (3) identification and quantification of the most important complexity cost factors, (4) identification of initiatives for the possible reduction of complexity costs and the quantification of possible cost savings, and (5) evaluation and prioritisation of initiatives. To test the usefulness of the suggested procedure, it was applied at a globally leading manufacturer of mechanical consumer products. The case study demonstrated the usefulness of the proposed procedure in (1) supporting the allocation of complexity costs in relation to individual product variants, (2) achieving a better understanding of the cost structure of product assortment and business processes, and (3) providing a basis for generating and evaluating initiatives aimed at reducing the complexity of products and processes. The case study also showed that the use of the procedure can produce considerable financial benefits.

Suggested Citation

  • Lars Hvam & Christian Lindschou Hansen & Cipriano Forza & Niels Henrik Mortensen & Anders Haug, 2020. "The reduction of product and process complexity based on the quantification of product complexity costs," International Journal of Production Research, Taylor & Francis Journals, vol. 58(2), pages 350-366, January.
    • Handle: RePEc:taf:tprsxx:v:58:y:2020:i:2:p:350-366
    DOI: 10.1080/00207543.2019.1587188
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    Cited by:

    1. Zhang, Hengyuan & Yang, Yi & Xia, Chengcheng, 2023. "Flow and Ebb: Factors affecting SMEs to exit from the DRP market during pandemic," Journal of Business Research, Elsevier, vol. 154(C).
    2. Anna Lucia Missaglia & Alberto Bubbio & Dario Gulino, 2024. "From cost control to cost management: How is the current state of the Italian context?," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2024(1), pages 203-226.
    3. Parast, Mahour M., 2022. "Toward a contingency perspective of organizational and supply chain resilience," International Journal of Production Economics, Elsevier, vol. 250(C).

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