Published Date 11/22/18 8:00 AM
Many companies that make successful products were founded a few decades ago and, given their small size initially, they tended to create vertical products for individual applications or even custom products for specific customers. The limitation of this approach is that product types or configurations need to be limited in order to allow economies of scale in production and distribution; finding the right balance between the two aspects is not easy.
Moreover, the more innovative a company is, the more its products will see continuous evolutions, both small, incremental ones, such as the addition of a new feature, accessory or configuration, and complete redesigns for the addition of new features, cost reductions, new regulations and so on, thus giving life to new products.
All this comes together in the challenge of managing mature products, which bring volumes, sales and margins, and which require continuous small evolutions, together with the birth of new products, which are innovative, often breaking from the past, with low initial volumes, sales and margins, yet that will grow and represent the company’s future. A major challenge, added to which is the need to combine the flexibility and diversification required by customers, with planning and production efficiency.
How to combine innovation and sustainability? The answer can be product platforms: these comprise both people and products.
People, in platforms, deal with the life cycle of products, from when they are conceived, designed, launched on the market, grow and multiply in various configurations (solutions for customers), until their decline and eventual replacement by their successors.
Products are designed according to the application, and thus consist of “core” parts plus additional and/or optional parts to configure the product according to the needs of customers. In this way, production volumes are guaranteed for the right investments in the “core” parts, with the product being completed by additional parts to adapt it to the needs of customers and applications. This modular approach facilitates production sustainability, as just a few “core” and non-core parts are assembled in the last stage of production to create many different configurations starting from a limited number of objects. It simplifies the technical upgrade of products if, for example, needing to replace components no longer available for one of the “core” parts, so as to automatically upgrade many final products and their evolutions. A product platform architecture favours rapid cycles of innovation and optimisation, as required by customers who are increasingly polarised by the consumer market, which has for some time now taken the lead in renewing products very frequently with continuous updates.
A platform’s products and people are cross-functional with respect to the traditional company structure: product development deals with all of the products in the company’s different platforms, production manufactures them all and sales sells them, regardless of the platform they belong to. This is why product platforms and their teams are often considered cross-functional, or cross-process, compared to the traditional product development, production and sales and marketing processes. In fact, the people engaged in platforms feel more like small entrepreneurs within the company, as they manage the product from its conception to phase-out. This is a lean concept, in which the flow of value and products is clearly identified and measured, flows and is pulled by customers.
Another benefit is that people in platforms know their products very well, what they do, what they can do exploiting all the possible configurations, and what they would be able to do with some small, quick changes: this is a very powerful tool for grasping all customer opportunities and maximising prior investments.
A cross-sectional view of platforms also facilitates “platform accounting”, examining the costs and investments of product platforms and consequently their profitability (lean accounting).
It allows product-related costs to be measured throughout the life cycle, monitoring quality by product, delivery time, service level, and so on, in other words, measuring and managing product QCD indicators: indeed, these indicators are not based on traditional company functions such as product development or production, but rather are cross-functional and reflect the value that is delivered to the customer.
Is it that easy?
No, it’s not that easy! It’s takes time to implement, but it is a structured, clear and measurable way of managing flexibility and short cycles, exploiting investments and having motivated people... and the results will not be long in coming!
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