Bundling Across Product Lines
"Have we gone completely crazy?" According to the German business publication Manager Magazin, this was the reaction of one of Germany’s premium automotive OEM CEOs when confronted with the company’s huge array of different wing mirrors and V-belt pulleys, not to mention its 27 different cooling units. However, this OEM is not alone here, for developers apparently find it easier to design a new component from scratch than look for existing ones to incorporate into a new product.
The deep-seated human ambition to create something new and individual evidently plays a major role in this context.
And yet the rational approach of using the same components across various product lines makes sense. The benefits offered by scale effects, with resulting lower prices for parts, simplified logistics, and more efficient repairs, are obvious. The only question is how to actually implement bundling across product lines.
The simplest case is, of course, when the same components are already in use across several product lines, but are being bought at different prices. Here, potential savings can easily be realized. As a rule, however, components only resemble one another in function, but differ in terms of performance, size, connections, and so on. Consequently, it is only possible to achieve isolated, minor successes for the current product generation, and even this will require concentrated, interdisciplinary effort.
True bundling across product lines calls for a long-term visionary concept in which the strategies for modules, platforms, and part-sharing are clearly defined. Once this concept is in place, all product development projects need to be undertaken in accordance with the new guidelines.