Calculating Complexity Maximizing The Value Of Customization

Product Customizations: How to Ace Them

The world is going virtual, and everything from consumer trends to their expectations is changing every second. With the increasing comfort and empowerment that the Internet and the Internet of Things bring to the table, consumers are pickier about what they want. In one of the recent consumer reviews from Deloitte, it’s suggested that more than 50% of consumers desire and work around personalized products exclusively. Moreover, since the limit of personalization gets pushed further every day, the possibilities of product customization have shot up exponentially, making them long for more. This makes it imperative for businesses to adapt over and calculate/analyze their product complexity.

This article highlights what product customizations are costing your company and how you can make better product-related decisions.

What is Complexity Truly Costing Your Company?

Product complexity does not just mean the portfolio. It also includes the internal complexity that is affected. Simply put, it’s an amalgamation of the product portfolio and the components/resources they need. Different organizations have different ways of calculating these two metrics based on experience, business approaches, and priorities.

• Bottom-Up Complexity Cost Calculator
• One such approach used by multiple companies is the bottom-up calculator, which works based on industry benchmarks, a rule-based algorithm, and other efficiency improvements. It entirely relies on the availability of data, which is addressed through multiple analytics.
• Multifunctional Complexity Cost Calculator
• Another innovative way to calculate product complexity is through the multifunctional complexity cost calculator. The approach here includes the top-priority cost dimensions for a product and compares them with industry benchmarks to develop its implications. This typically works in five steps, leading to 25 individual analyses. 
  

How to Make Better Product-related Decisions?

A major challenge that organizations endure while increasing the complexity of choices for product customizations is the increasing cost of operations and its resources. These costs can exceed the whole of supply chain operations, making it difficult to do business. Hence, it is crucial to think about long-term cost effects rather than only the short-term results.

Adding customizations cannot be avoided entirely. There can always be a way to cover these costs without moving too much from the set processes. When the overall profits/losses are calculated, the increased customization costs may be masked within lower order quantities and more extensive inventories, higher return rates, quality issues, and warranty claims.  

The way out for the same is to track the root cause of these costs individually for each product. This may sound like a gruesome task to manage, but it is directly related to how well you plan your next steps of product customization.

In all, focusing on product complexity is the way forward for organizations. Customizing products account for at least 16% more impact, as suggested by Gartner. Organizations need to prioritize the high-value opportunities and work accordingly to make better product-related decisions. In case you want to read more such articles, visit the Cogent Infotech website.