Component Commonality and Its Cost Implications - Increasing the Commonality of the Right Components
Publication: Research - peer-review › Paper without publisher/journal
Component commonality (Labro 2004, Zhou & Gruppström 2004) can be defined as the use of the same version
of a component across multiple products. It is usually seen as a means to manage costs without sacrificing
product variety. However, when managing costs with component commonality, the managers should be able to
identify rather rapidly which group of components would enable the most significant cost reductions.
Unfortunately, the existing literature lacks profound discussion of how to identify the right components for
increased component commonality. The objective of the paper is to discuss how to identify those components
that would most benefit from increased component commonality. The paper is based on an action research
project with a company that manufactures hydraulic power units.
Hydraulic power units are usually customized products and, hence, engineered to order. Customized hydraulic
systems mean that the steel constructions of such product also need to be customized. These steel constructions
are needed in the assembly first; yet, at the same time, they cannot be designed until all the components of the
power unit have been defined. Thus, the mechanical engineering of these steel constructions was identified as the
most important bottleneck for the delivery process causing many indirect costs, especially with respect to
project-management-related activities. Interestingly, by eliminating the need for mechanical engineering, the
context starts to approach assembly-to-order context, also resulting in significant cost reductions. Thus, in order
to achieve best results in engineering-to-order contexts, component commonality should mainly be focused on
non-expensive but customized bottle-neck items.
|Number of pages||17|
|Conference||Sixteenth International Working Seminar on Production Economics|
|Period||01-03-10 → 05-03-10|
- Component Commonality, Cost Management