ABSTRACT
Market globalization and rising customer needs lead to a steadily increasing pressure of cost efficiency and innovation (MacDuffie, Sethuraman & Fisher 1996). Companies are constantly seeking ways to reduce production cost, while still offering attractive products (MacDuffie, Sethuraman & Fisher 1996). The product family paradigm introduces product proliferation while taking advantage of mass production efficiency (Pine & Davis 1999). Many companies are investing in product family development practices in order to provide sufficient variety to the market while maintaining the economies of scale and scope within their manufacturing capabilities (Robertson & Ulrich 1998). The underlying focus of conventional product family optimization is to exploit the commonality between individual products, so that a company can fulfill diverse customer needs at a low cost. However, too much commonality (i.e. not enough diversity) within a product family can cause major problems, including a lack of product distinctiveness and a compromise in product performance.The most obvious implication of too much commonality is the potential risk of product performance degradation due to the use of common components across different products. These common components are most likely non-optimal for any product individually (Fixson 2007). Furthermore, common components might be over-designed for low end products, this leads to higher cost and more waste. On the other side, the increasing distinctiveness between
products of product family relates to rising production cost. Hence, the flipside of offering product variety, while keeping costs under control, is the obligation to maintain product variety while reducing costs. Consequently, there is an inherent tradeoff between commonality and diversity within any product family (Simpson, Seepersad & Mistree 2001). Robertson & Ulrich (1998) discuss in detail the tradeoff that exists between the cost savings potential due to commonality and the revenue decreasing potential due to loss of distinctiveness. Not surprisingly, the design engineering community has presented work on the ensuing tradeoff between product performance and production cost. Studies of the cost effects of commonality in manufacturing often focuses on increasing scale economies (Garud & Kumaraswamy 1995). Typically, the goal is to distribute fixed costs (e.g., dedicated tooling) over larger product volumes, and thus reduce unit costs. Thus, manufacturing diverse components with conventional processes becomes increasingly costintensive. Hence, for product family design there is the fundamental assumption that common components are less cost-intensive than diverse components.
