Complexity Reduction. Managing the complexity of global product development to enable component reuse

Abstract: Problem
Complexity drives cost as it makes standardization and control difficult. The problem studied here is to identify which parts of these costs that are justified by creating competitive advantage and value to customer. What parts of the ConsEl new product development process add value, and how is this added value utilized? How can the non-value adding complexity of the new product development process at ConsEl be reduced? Why does the complexity need to be reduced? Is it based on customer need or is it some other stakeholder that would gain from it? This leads us to the main problem of this thesis: In what ways does the new product development processes of ConsEl need to be modified in order to reduce complexity while maintaining customer value?

Purpose
a)To gather current issues and suggestions for improvements of the new product development process from the respondents and determine how the value added by the new product development process can be increased by comparing the current situation at ConsEl with relevant literature by performing a gap analysis.
b) To identify drivers of complexity2 in the ConsEl new product development process.
c) To give suggestions on how the ConsEl new product development process can be modified in order to facilitate complexity reduction.

Methodology
The thesis is based on a qualitative single case study of the new product development process at ConsEl. Data was mainly gathered using personal interviews, internal ConsEl data and studies of relevant literature. Literature studies resulted in a comprehensive theoretical framework for understanding the complexity of new product development. Two different rounds of personal interviews where performed. This data was then analyzed using gap analysis. The gaps where then analyzed to identify non-value adding complexity and draft suggestions for improvements.

Theoretical framework
About new product development is said that many companies have had too much of a “tech push” orientation for their new product development and need to realign their development towards a “market pull” orientation. Many companies need to improve their capabilities for developing and launching new products, not just extensions and incremental updates, but new innovative products that deliver sustainable competitive advantage to the company. New product development is studied from three different perspectives, namely from a Lean Product Development System perspective, from a Process perspective and from a Project perspective. Important to realize is that these three perspectives on new product development represent different levels of abstraction for which new product development can be approached. A lean perspective deals with the balance between process, humans and technology. The process and project perspectives are, as the names suggest, mainly focused on processes and projects respectively. If the process is a road leading from market demand to customer satisfaction then a project is a car driving on that road. Since the thesis is written from the perspective of the Procurement department, the area of Purchasing involvement in New Product Development is studied. It is today widely accepted that involving suppliers in product development can lead to shorter lead time, lower costs and enhance quality. Modularization and Value Analysis are tools that in combination are believed to have the role of a catalyst in reducing non-value adding complexity. Modularization is a way to manage variety. Important to realize is the difference between internal and external variety and that it, using modularization is possible to have external variety even though the internal variety is standardized. The area of Knowledge Management is intended to facilitate the sustainable repetitiveness of New Product Development at ConsEl. Many argue that an organizations ability to learn and adapt is in fact the only sustainable source of competitive advantage in today’s economic environment.

Conclusions
The analysis indicates that there are three main drivers of complexity that drive complexity rather than customer value. These are product silos, functional silos and a general distrust of standardization.
Based on these three drivers of complexity the author identified seven key management areas for complexity reduction. These are Aligning planning horizons, Global coordination, Cross-functional communication and knowledge, Project implementation, Procurement as a facilitator in new product development, Enable modularization and Long term strategic technology development.