Improving Cost Effectiveness in an Existing Product Line Using Component Product Platforms

Abstract

Previously, we introduced a new method for improving commonality in a highly customized, 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 customized 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 tradeoff 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 develop one-at-a-time time such that artifact designs are inconsistent from one to another.