Improving cost effectiveness in an existing product line using component product platforms

Ronald S. Farrell, Timothy W. Simpson

Research output: Contribution to journalArticle

26 Scopus citations

Abstract

Previously, we introduced a new method for improving commonality in a highly customised, low volume product line using component product platforms. The method provides a bottom-up platform approach to redesign family members originally developed one-at-a-time to meet specific customer requirements. In this paper, we extend the method with an activity-based costing (ABC) model to specifically capture the manufacturing costs in the product line, including the cost associated with implementing a platform strategy. The valve yoke example is revisited in this paper, the customised ABC model is defined, two design strategy alternatives are addressed, and the new method is used to determine which alternative is better at resolving the trade-off between commonality, total cost, and product performance. The proposed method shows promise for creating a product platform portfolio from a set of candidate component platforms that is most cost-effective within an existing product line. The proposed method allows for arbitrary leveraging as it does not rely solely on the traditional vertical, horizontal, or beachhead strategies advocated for the market segmentation grid, and this is especially beneficial when applied to an existing product line that was developed one-at-a-time time such that artefact designs are inconsistent from one to another.

Original languageEnglish (US)
Pages (from-to)3299-3317
Number of pages19
JournalInternational Journal of Production Research
Volume48
Issue number11
DOIs
StatePublished - Jan 1 2010

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All Science Journal Classification (ASJC) codes

  • Strategy and Management
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

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