While most companies have methods in place for introducing new products, formalized procedures for phasing out products rarely exist. This usually leads to ever-expanding product programs that become increasingly complex and expensive to manage.
Frequently observed consequences of product programs with high levels of complexity:
- Disproportionate increase in item numbers
- Long list of products with low sales volume
- Lack of cost transparency throughout the value chain
- No means for evaluating true profitability of individual products
- Low EBIT margin despite high turnover
The CPC approach to complexity management offers companies the tools and insight to take informed and deliberate action to minimize complexity costs by optimising existing product programs. It provides companies with the insight needed to proactively minimize complexity throughout the value chain in the design of future product programs.
CPC applies a set of powerful tools to reduce complexity based on quantification of complexity costs:
- Product program complexity analysis: ABC product and customer categorization
- Complexity cost factor and driver identification
- Complexity cost quantification and allocation
- Complexity cost reduction at key suppliers
Typical effects from CPC complexity management projects:
- Transparency of profitability of individual products in the product program
- Identification and quantification of main complexity cost factors and drivers
- Sustainable complexity reduction – increased EBIT margin
- A transparent economic basis for informed rationalization of the product program
Contact CPC to learn more about how your business can benefit from reducing complexity.