COMPONENT SHARING IN THE MANAGEMENT OF PRODUCT VARIETY
Product variety in many industries has increased steadily throughout
this century. Component sharing-- using the same version of a
component across multiple products-- is increasingly viewed by
companies as a way to offer high variety in the marketplace while
retaining low variety in their plants. Yet despite the popularity of
component sharing in industry, little is known about how to design an
effective component sharing strategy or about the factors that
influence the success of such a strategy. In this paper we critically
examine component sharing using automotive front brakes as an example.
We consider three basic questions: (1) What are the key drivers and
trade-offs of component sharing decisions? (2) How much variation
exists in actual component sharing practice? and (3) How can this
variation be explained? To answer these questions, we develop an
analytic model of component sharing and show through empirical testing
that this model explains much of the variation in sharing practice for
automotive braking systems. We find that the optimal number of brake
rotors is a function of the range of vehicle weights, sales volume,
fixed component design and tooling costs, variable costs, and the
variation in production volume across the models of the product line.
We conclude with a discussion of the general managerial implications
of our findings.