Don't give customers options they don't want
BigWheels, a top car company, had a vast product offering, yet the company did not know which combinations customers truly wanted. The result was a noncompetitive cost structure, poor manufacturing performance and excessive inventory. Bain implemented customer-driven complexity reduction by focusing on the most profitable combinations and markets. The result: $75 million in first-year savings.
BigWheels, a top-five car company, lacked customer focus. The company offered 15 million possible product combinations, yet did not know which combinations customers truly wanted.
As a result, BigWheels had a noncompetitive cost structure, poor manufacturing operating performance and excessive stocks at the manufactuere and at dealers.
To reverse BigWheels' poor performance, the company asked Bain to re-engineer major elements in its European value chain. The specific focus of the project was customer-driven complexity reduction.
To identify a massive reduction in buildable combinations, the team sought data to clarify which product specifications were in high demand and which were in low demand.
Upon quantifying that a minority of markets and products drove the great majority of sales, Bain recommended that BigWheels focus on the most profitable combinations and markets.
BigWheels approved and implemented a model year line-up with dramatically reduced complexity and substantial savings.
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