...It may seem difficult to quantify the benefits of less complexity, but consider the following: suppose you ran an automobile factory where people could order any mix of options they wanted. If you had 30 product features (e.g., radio, climate control, airbags, upholstery, wheels, engine size, transmission, etc.) and each feature had just two levels of options (standard and deluxe), then the number of different possible unique automobiles you could produce would be:
230 = 1,073,741,824 possible cars!
Try some different values of features and options with the combination calculator below to see how quickly product offerings can become highly complex:
Contrast this operation with a simpler way of providing variety...
...The Europe and Asia-Pacific DCs had two issues to grapple with: long lead times and a requirement for extremely high service levels. Each printer designed for a local market overseas had to be completed at the factory in the USA and then took a month to arrive. If demand exceeded supply at the DC, there were costly delays in getting the proper localized versions of the printer to the right place. In the meantime there was often a surplus of printers designed for other countries in the very same DC. Furthermore, torrid growth in the inkjet printer market meant that factors like price and availability were becoming most important to consumers as quality and reliability distinctions between manufacturers narrowed.
HP had to find a way to reduce costs (to keep prices down relative to competitors) and still maintain a wide variety of localized products to meet availability requirements...
...an additional benefit of postponement, commonality, or universality can occur at a product's "end of life", when a product rollover or product roll takes place and a new product replaces the existing one, or simply during a new product launch. A global manufacturer may sell similar products in different continents (e.g., the USA and Europe). Given that demand is always uncertain and forecast error is always present, the typical "ideal" product roll diagram pictured below almost never happens as desired:
Show Rollover:
Instead, the more likely scenarios are either an excess or a stockout of the old product when the new product is released. Click the links in the preceding sentence or use the selection menu under the figure to compare these scenarios...
