Cost-Orientated Product Variant Evaluation Using Similarity Analysis

Engineer-to-order-companies in the field of mechanical engineering are particularly facing the challenge of providing customized products at competitive prices while the market is increasingly fragmented into small niches. Striving to fulfill this demand, companies underestimate the negative financial effect of a higher product variety. Therefore, complexity costs for new product variants with small volumes are often only roughly estimated. This leaves a severe risk for crosssubsidization of exotic variants and a loss in the company's competitive market position. Previous research does not provide a holistic approach that considers the integration of complexity costs related to a new variant and the existing variants in the offer process. This paper introduces a methodology facing these challenges. Adjustments of product configurations during the configuration process are analyzed and taken into account in order to increase the transparency during this work-flow. Complexity costs of new customer specific product variants can be determined at an early stage of the offer process. By using similarity analysis, they are clustered and distributed to the causative department. Customers can thus be managed through the offer process and the pricing of the product can be optimized as the complexity costs are considered as well.