14/10/2024. How to optimise your value drivers in low-volume and high-mix markets
Have you ever wondered how some companies thrive even when producing complex products in low volumes?
The secret lies in modularisation—using standardised building blocks to create customised solutions efficiently. By embracing this approach, businesses can tackle the challenges of low-volume/high-mix markets, improving productivity and reducing costs.
Companies in low-volume/high-mix markets do not have the luxury of optimising their value disciplines – product leadership, customer intimacy, and operational excellence. They need all their focus and efforts to deliver on time without busting their budgets.
The paradoxical secret to success is standardising to offer fit-for-purpose products.
The Power of Modularization
Modularisation is akin to creating Lego bricks for your products. With a collection of standard assemblies, you can combine them in various ways to develop different products. This flexibility allows for innovation and efficiency in design and production.
This strategy offers significant benefits:
- Productivity: Using standardised building blocks simplifies design and production, unlocking the cost-reducing power of the learning effect.
- Flexibility: Easily adapt to high product complexity and variety without starting from scratch each time.
- Efficiency: Reduce planning costs and improve manufacturing productivity by reusing information.
- Cost Reduction: Lower maintenance and repair costs through common parts.
- Reuse of Information: Streamline design processes by reusing existing modules, boosting efficiency and reducing the workload of your design department.
Modularisation helps companies deliver customised products swiftly and efficiently in settings with low production volumes.
Understanding the Three Value Disciplines
In the business world, companies often focus on one of three strategies to stand out and deliver value to their customers:
- Product Leadership: This means offering the most innovative and high-quality products. Companies that excel here constantly push boundaries with new features and cutting-edge technology.
- Customer Intimacy: This approach builds strong customer relationships by providing personalised solutions and exceptional service. Businesses prioritise understanding and meeting the unique needs of each customer.
- Operational Excellence: Companies aiming for operational excellence focus on running their operations efficiently. They strive to provide reliable products
Choosing just one of these disciplines can be tricky in markets where products are complex and made in low volumes. But with modularisation, businesses can combine the best of all three. Using standardised building blocks, they can innovate, personalise, and operate efficiently—all simultaneously.
Modules vs Value Drivers
1. Product Leadership
Being a leader means offering the most innovative and advanced products. With modularisation:
- Invest in Key Modules: Focus research and development on modules that deliver unique value and protect your intellectual property.
- Drive Innovation: Continuously enhance features and performance in critical modules.
- Stand Out: Offer cutting-edge solutions even in complex, low-volume products.
Example: A robotics company develops a unique control system module. This controls engineering solution set them apart in the market, showcasing their expertise in mechatronic systems optimisation.
2. Customer Intimacy
Building strong customer relationships means providing precisely what they want. Modularisation helps by:
- Offering Variety: Customers can choose options like colours, interfaces, or layouts.
- Personalisation: Customise products to meet specific needs without complicating production.
- Enhancing Experience: Make customers feel their product is uniquely theirs.
Example: A custom vehicle manufacturer uses mechanical and electrical integration to let customers select interior layouts and features. Each choice is a module, making it easy to provide personalised options. The automotive industry is a prime example of how customers can configure new cars.
3. Operational Excellence
Running efficient operations is crucial, especially for product parts that do not make a big difference in the customer’s value perception. Modularisation contributes by:
- Streamlining Production: Standardised building blocks simplify manufacturing processes.
- Reducing Costs: Lower production maintenance and repair costs through standardisation.
- Improving Quality: Consistent modules lead to reliable products.
Example: The hull is a critical part of a ship; it keeps the vessel afloat and is the platform for its mission. The ship owners will not give feedback they are happy with the craft because it has a hull. Therefore, the design must focus on efficient operations, such as low resistance and high stability, and optimise the construction to reduce costs.
Balancing Modules for Success
The key is to balance these disciplines through modularisation:
- Product Leadership Modules: Invest heavily in innovation and protect your unique technologies.
- Customer Intimacy Modules: Offer variety that enhances customer satisfaction.
- Operational Excellence Modules: Standardise and reduce variety to streamline operations.
Companies can handle high product complexity and variety by selecting the right approach for each module without sacrificing
Key Takeaways
- Modularization Simplifies Complexity: Handle high product complexity and variety efficiently.
- Optimise Each Module: Choose product leadership, customer intimacy, or operational excellence for each part.
- Improve Productivity: Reduce planning costs and improve manufacturing productivity by reusing information.
- Reduce Costs: Lower maintenance and repair costs with standardised building blocks.
- Enhance Customer Satisfaction: Offer personalisation where it matters most, delighting your customers.
Take the Next Step Towards Efficiency
Ready to transform your products and boost your success in low-volume/high-mix markets? Modularisation will be your game-changer.
Curious about how it all works? Watch our video to learn more about defining modules and selecting the right strategies. 🎬
By embracing modularisation, your company can excel in product leadership, customer intimacy, and operational excellence—even in complex, low-volume markets. Let’s start building success together! 🚀
Don’t miss out on the opportunity to increase sales with modular design and improve your operations. You can schedule a call in our calendars here.