With the number of new product launches substantially increasing each year, product proliferation is a common challenge for many companies today. The thirst for incremental revenue and margin gains are often offset by cost inefficiency due to product proliferation, deteriorating the profitability of the enterprise as a result. Proliferation adds organizational complexity and complexity means cost. Aside from the impact on profits, the ensuing internal ‘gridlock’ can paralyze a company, impacting its nimbleness and adaptability to market changes.
Companies looking to reduce organizational complexity and identify winning products and customers turn to Complexity Management. Complexity Management is a powerful process enabling companies to turn around or eliminate low productivity products, customers, and activities. The focus is shifted to driving profitable “winners,” streamlining manufacturing, reducing supply chain complexity, and improving resource utilization.
Kalypso’s Complexity Management methodology will help you take stock of your existing portfolio and identify areas of unprofitable business. An effective Complexity Management initiative can drive up to five points of profit growth from significant efficiency and right sizing gains across the organization. Reduction in complexity aligns and focuses your organization for:
- Significant manufacturing and supply chain cost savings
- Improved cash flow and working capital utilization Improved resource utilization and effectiveness
- Increased R&D focus to more innovative “big idea” products
- Reduction of administrative expenses
- Delivered savings that can be reinvested to build strategic growth areas and accelerate profitable innovation
The Rationalization process focuses on delivering significant cost reductions by eliminating low profitability products and developing product platforms that optimize operational efficiencies. The savings from discontinuing low profitability products can be reinvested into driving innovation and profitable sales growth.