Reduce supply chain complexity with product architecture

The supply chain management of a high-performance organisation is characterised by systematically managed and optimised product portfolios and especially product architectures that counteract the increasing complexity. Especially industrial sectors such as mechanical and plant engineering are struggling with increasing complexity in the product portfolio. The main drivers of this development are individual customer wishes, changes in the procurement market, an uncoordinated product portfolio and unclear guidelines for product specifications.

The increasing number and variety of products and especially components has a negative impact on day-to-day business. In addition to production, supply chain management (SCM) is particularly affected, as work processes become more complex and economies of scale fail to materialise. In the end, the customer feels the effects through increased prices or reduced availability.

High Performance SCM focuses on selected levers to avoid, reduce and control complexity in SCM. This has a positive impact on day-to-day business - among other things, through optimised purchase prices and increased process efficiency in operational SCM. Ultimately, the customer benefits from higher delivery quality as well as availability and low prices.

1. Separate strategic development from day-to-day business: Separating strategic considerations from day-to-day business is an essential lever for controlling complexity: Strategic product decisions are deliberately not made in day-to-day business in order to enable smooth, efficient processes in operational procurement and logistics.
   
   
2. Empower product management: The role of the product manager includes clear tasks, responsibilities and competencies to manage the product portfolio from a cross-functional perspective. Accordingly, strategic purchasing, among others, is involved in central portfolio decisions in order to take into account the impact on operational procurement.
   
   
3. Further develop product architecture based on strategy: Based on customer needs and strategic directions, the product architecture is further developed in defined processes in such a way that modularisation and standardisation ensure the highest possible reusability of product solutions.
   
   
4. Systematically design business processes: Clearly defined guidelines for product specifications, jointly agreed timing for design freeze as well as consistent responsibilities and clear interfaces with SCM are systematically anchored in the business processes. At the same time, managers ensure that the business processes are lived out in this way.
   
   
5. Approach make-or-buy decisions correctly: Make or buy decisions are made from a strategic and cross-functional perspective. Focused on the core competencies, strategically irrelevant stages of the value chain are to be identified and consistently outsourced in the event of quality or cost disadvantages.

hpo supports you in addressing the right complexity drivers and releasing the potential using four steps. First, we identify the individual challenges along the supply chain together. Then, we record the connections between SCM and complexity in a targeted manner in order to design the target picture for complexity mastery in a further step - based on the strategic directions and the relevant levers. The targeted involvement of employees ensures a successful roll-out and the sustainable anchoring of the solution in the final phase.