Delayed Product Differentiation Research Articles

Managing Broader Product Lines through Delayed Differentiation Using Vanilla Boxes

In an attempt to reduce cost while maintaining good customer service, some of the leading manufacturers in the computer industry are delaying product differentiation (by exploiting component commonality) while managing broader product lines. In an environment where demands are stochastic, it seems a good strategy to store inventory in the form of semi-finished products (vanilla boxes) that can serve more than one final product. However, finding the optimal configurations and inventory levels of the vanilla boxes could be a challenging task. In this paper, we model the above problem as a two-stage integer program with recourse. By utilizing structural decomposition of the problem and (sub)gradient derivative methods, we provide an effective solution procedure. A special case, a variant, and several extensions are also discussed. In our computational section, we utilize our model to study several new research issues. We provide insights on the effect of demand variance, correlation, and capacity limitations on the optimal configuration and inventory levels of vanilla boxes and the performance of a vanilla assembly process. In addition, we compare the performance of the vanilla assembly process to make-to-stock and assemble-to-order processes and provide managerial insights on the conditions under which one might be better than the others. Finally, we discuss the characteristics of an IBM product line (which motivated this work) and the effectiveness of a heuristic tailored for that application.

Delayed product differentiation: a design and manufacturing perspective

Delayed product differentiation (DPD) is a design concept for improving customer satisfaction and manufacturing performance. In this paper, a methodology for implementing the delayed product differentiation strategy in manufacturing is presented. Three design rules are suggested. The impact of delayed product differentiation strategy on the performance of a manufacturing system is quantified and incorporated in the product design. The problem of selecting designs to minimize the total differentiation and manufacturing cost is formulated and solved. The methodology presented in the paper is illustrated with examples.

Modelling the Costs and Benefits of Delayed Product Differentiation

Expanding product variety and high customer service provision are both major challenges for manufacturers to compete in the global market. In addition to many ongoing programs, such as lead-time reduction, redesigning products and processes so as to delay the point of product differentiation is becoming an emerging means to address these challenges. Such a strategy calls for redesigning products and processes so that the stages of the production process in which a common process is used are prolonged. This product/process redesign will defer the point of differentiation (i.e., defer the stage after which the products assume their unique identities). In this paper, we develop a simple model that captures the costs and benefits associated with this redesign strategy. We apply this simple model to analyze some special cases that are motivated by real examples. These special cases enable us to formalize three different product/process redesign approaches (standardization, modular design, and process restructuring) for delaying product differentiation that some companies are beginning to pursue. Finally, we analyze some special theoretical cases that enable us to characterize the optimal point of product differentiation and derive managerial insights.