Variant management is about keeping a product’s variant diversity as “lean” as possible throughout its entire life cycle. This applies to product development, procurement, production, sales, and disposal. The focus is on preventing, reducing, and optimizing the variety of variants (see also Ecodesign Directive). The guiding principle is this: Anyone who wants to offer a product for every customer request runs the risk of soon having a highly varied product portfolio. This leads to high complexity in business processes and, inevitably, to higher costs*.
The relevance of variant management increases the more complexity is associated with the product variants. For example, a T-shirt available in three colors and four sizes offers a variety of variants but virtually no complexity. In contrast, a car—which is typically available in countless variants—poses a challenge in managing the resulting technical complexity and variety of variants.
Internal and Customer-Perceived Variant Diversity
A product’s variance can be viewed from two perspectives. On the one hand, there is internal variance—that is, variance within the manufacturing processes—and, on the other hand, customer-perceived variance. The latter is evident, for example, when a customer configures a new car online with an automaker. The numerous configuration options do not necessarily reflect the internal variance. For example, a specific connectivity feature may be installed in all variants, but it is only unlocked—that is, activated—when the customer selects a specific connectivity package. The customer therefore does not realize that they may be choosing a variant that, from a production perspective, does not actually exist. The situation is exactly the opposite when one of three variants of the wiring harness is installed for the customer’s configuration. In this case, there is an internal variant that affects procurement and production but is not visible to the customer.
- Example 1: No internal variant, but relevant to the customer: The customer configures their new car without heated seats. However, their car is still delivered with heated seats. These are, however, deactivated. If the customer had chosen a different configuration—such as the winter package—the heated seats might have been included and enabled. Furthermore, it is likely possible to enable the heated seats at a later date.
- Example 2: Internal variation, not perceptible to the customer: A customer configures a car. The car with a turbocharger uses wiring harness A, the car with a supercharger uses wiring harness B, and car three with a naturally aspirated engine uses wiring harness C. The customer generally doesn’t know that the car with the supercharger has a different wiring harness than cars one and three—he’s only interested in the technology, not the technical implementation.
Combine harvesters: more customized and complex
- Example 3:While variant management and the associated product management are highly standardized in the automotive industry, complexity and its management are even more relevant and customized in other sectors. A prime example of this is mechanical engineering. Customized designs, high unit costs, low production volumes, and specialized applications all combine to create the need for comprehensive variant management. For example, a combine harvester is a very large machine, costs more than a single-family home, and offers around 10,000 possible variations, all of which must be presented to the customer and implemented in production. And this process must be repeated over and over again for every single end product.
Variant Diversity and Sales
When a sales representative configures a car together with a customer during a sales conversation, it’s not just about presenting the variety of variants, the individual options, or the possible combinations. It is equally important to take into account country-specific configurations—which, for example, mandate certain safety-related equipment variants—as well as other individual, functional variants, in order to price them and ultimately summarize them in a quote document. With products as varied and customer-specific as cars, the process of preparing a quote would take an enormous amount of time. To streamline the production, sales, replenishment through software—and thus integrate them optimally—vendors rely on so-called Configure-Price-Quote (CPQ) systems. They automatically exchange information with CRM systems and can even communicate directly with an ERP system, thereby forwarding the configuration mentioned above directly to production, for example.
Variant Management and Procurement Logistics
In the age of digitalization and increasingly interconnected system landscapes, the sheer variety of product variants also creates pressure for customization—rising customer expectations and demands, shorter product life cycles, and a wide range of legal regulations automatically influence procurement logistics. With regard to avoidance and reduction (the lean philosophy—see also Lean Production and Lean Management) and managing the associated complexity, the logistics and procurement sector thus plays a crucial role.
For example, the workload increases due to decreasing batch sizes, and the cost prices for a standard configuration rise because of declining order quantities. With a simultaneous increase in individual inventory items, inventory planning becomes more time-consuming, and even during the product development phase, the effort required increases due to additional processes related to supplier search and selection (various components). Incoming goods inspections also increase. This is also because 1,000 identical parts are no longer being delivered; instead, countless different parts are distributed across countless delivery slips—and the inspections consequently take more time. Suboptimal variant management in this area can already be anticipated when procurement costs rise and logistics metrics—such as inventory levels and range—deteriorate. Incoming inspections can also pose a significant time management challenge: initial sample inspections may increase disproportionately, or the occupancy and utilization of storage locations may rise sharply.
Summary
Variant management focuses on eliminating unnecessary product variants and preventing them in the future, while ensuring that the necessary variants are effectively managed. The goal is to produce as many end products as possible—which can be manufactured modularly—using as few different individual parts and assemblies as possible.
If you’re interested in the topic of variant management, be sure to also read the articles Collaborative Planning, Forecasting, and Replenishment / CPFR as well as Product Lifecycle Management / PLM.
* Tonja Schmid – Variant Management – Solutions for Managing Variant Diversity in the Individual Phases of the Product Lifecycle
