Component Commonality and Its Cost Implications - Increasing the Commonality of the Right Components

Jouni Lyly-Yrjänäinen, Petri Suomala, Poul Israelsen

    Research output: Contribution to conference without publisher/journalPaper without publisher/journalResearchpeer-review

    Abstract

    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.

    Original languageEnglish
    Publication date2010
    Number of pages17
    Publication statusPublished - 2010
    EventSixteenth International Working Seminar on Production Economics - Innsbruck, Austria
    Duration: 1 Mar 20105 Mar 2010
    Conference number: 16

    Conference

    ConferenceSixteenth International Working Seminar on Production Economics
    Number16
    Country/TerritoryAustria
    CityInnsbruck
    Period01/03/201005/03/2010

    Keywords

    • Component Commonality
    • Cost Management

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