Product Platform and Product Family Design

Platform Planning is increasingly being adopted by companies seeking to provide customization while maximizing economies of operation. Platform Planning is defined as the proactive definition of an integrated set of capabilities and associated architectural rules that form the basis for a group of products. When implemented effectively, Platform Planning can provide distinct benefits in cost and market leverage to provide a competitive edge in the marketplace.

Firms in many industries increasingly are considering platform-based approaches to reduce complexity and better leverage investments in new product development, manufacturing and marketing. However, a clear gap in literature still exists when it comes to discussing the problems and risks related to implementing and managing product families and their underlying platforms. Using a multiple-case approach, we compare three technology-driven companies in their definition of platform-based product families, investigate their reasons for changing to platform-driven development, and analyze how they implemented platform thinking in their development process and which risks they encountered in the process of creating and managing platform-based product families. The field study shows, that the companies involved in the study use a homogeneous concept of platform-based product families, and that they have similar reasons to turn to platform thinking and encounter comparable risks. However, the companies analyzed use mainly product architecture as a basis for their platforms (and ignore many of the platform types advocated in literature), while on the other hand they show divergent applications of the platform concept regarding the combinations of product families and market applications. Through this exploratory study, some important “gaps” in the literature became evident, and in the discussion, these “gaps” are discussed and directions for future platform research are proposed.

A platform must support several product variants at any point in time and it must survive several life cycles into the future. The technology composing the platform itself is usually the embodiment of the core value-added capability of the developing company, yet what makes a good platform? This question often arises, for instance, when comparing two alternative platform concepts or deciding whether to update or replace a platform. The decision is more complex than a standard concept comparison exercise, involving forecasts of several applications and alternative technologies. Multiplicity and uncertainty characterize platform concept evaluation.

As firms begin to adopt product family and product platform principles in the beginning stages of the product development process, an essential component is to have a cohesive market segmentation strategy for the product family. Managing innovation throughout the product family can be achieved by leveraging three elements within the organization: (1) the market applications for the technology, (2) the company’s product platforms, (3) and the common technical and organization building blocks that form the basis of the product platform (Meyer and Lehnerd, 1997). Implementing this strategy can allow the organization to attack different market segments and gain market share while benefiting from the cost advantage of using product families and sharing key common technological modules. This chapter builds upon the product platform planning methods described in Chapter 2 and explores the history of the market segmentation of product platforms. We describe the principles and tools behind market segmentation and include several examples showing how companies have used this process.

Due to the development of modern technologies and global manufacturing, it becomes harder and harder for companies to distinguish themselves from their competitors. To keep the competitive advantage, the companies intend to provide a variety of products by differentiating their product lines with the belief that product variety may stimulate sales and thus conduce to revenue (Ho and Tang, 1998). A large product variety does improve sales by providing the customers more choices. However, companies with expanding products face with the challenges of controlling costs. The costs exponentially increase with the variety growth. Further, high variety will result in the proliferation of products and processes and in turn inefficiencies in manufacturing (Child, et al., 1991). Mass customization aims at satisfying individual customer needs with the efficiency of mass production (Pine, 1993a). Customization emphasizes the uniqueness of, and the differences among, products (Jiao and Tseng, 2000). To optimize the product variety, a company must assess the level of variety at which customers will still find the company’s offerings attractive and the level of complexity that will keep the costs low (Jiao, et al., 1998). Developing product families has been recognized as a natural technique to facilitate increasing complexity and cost-effective product development (Meyer, et al., 1997).

Manufacturing companies need to satisfy a wide range of customer needs while maintaining manufacturing costs as low as possible, and many are faced with the challenge of providing as much variety as possible for the marketplace with as little variety as possible between products as discussed in Chapter 1. The challenge, then, when designing a family of products is in resolving the tradeoff between product commonality and distinctiveness: if commonality is too high, products lack distinctiveness, and their individual performance is not optimized; on the other hand, if commonality is too low, manufacturing costs can increase substantially (Simpson, et al., 2001). Commonality has many advantages beyond improving economies of scale: decreased lead-time and risk during product development (Collier, 1980); decreased inventory, handling costs and processing time; reduced product line complexity, set-up and retooling time, and increased productivity (Collier, 1979; Collier, 1981). However, too much commonality within a product family can hinder innovation and creativity and even compromise product performance (Krishnan and Gupta, 2001). Commonality is best obtained by minimizing the non-value added variations across the products within a family without limiting the choices of the customers in each market segment, i.e., make each product within a family distinct in ways customers notice and identical in ways that customers cannot see.

Optimization has been used for many years during product design to help determine the values of design variables, x, that minimize (or maximize) one or more objectives, f(x), while satisfying a set of constraints, {g(x), h(x)}, and the design variable lower and upper bounds, x ¹ and x ^u, respectively. The typical notation for formulating the optimization problem is as follows:

Product variants with similar architecture but different functional requirements may have common parts or elements. We define a product family to be a set of such products, and refer to the set of common elements as the product platform. Product platforms enable efficient derivation of product variants by keeping development costs and time-cycles low. In many cases, however, the individual product requirements are conflicting when designing a product family. The designer must balance the tradeoff between maximizing commonality and minimizing individual product performance deviations. The design challenge is to select the product platform that will generate family designs with minimum deviation from individual optima.

The design optimization paradigm provides us with a rational synthesis means for the engineering design of products, machines, etc. The essential outcome from computational design optimization is that it can generate the best solution under mathematical representation and procedures, if an original design problem is appropriately translated into a formal style. The outcome is more effective if the original design problem is complicated, since human expertise cannot precisely manipulate such content. This situation is obvious when design concerns shift from component-level to system-level optimality (e.g., Papalambros and Wilde, 2000).

Most products are neither designed nor manufactured as one piece. They are decomposed into parts that are developed individually before they are assembled to form the final product. Typically, this partitioning-based development process matches the hierarchical structure of the product-offering organization. Design tasks are assigned to divisions, departments, and teams according to expertise. An example from the automotive industry is depicted in Figure 11-1. Obviously, this decomposition is not complete and serves only as an illustration of the decomposition paradigm.

Typically, it is assumed that a product family will be derived from a single platform once a firm has decided on platforming as an appropriate strategy. The totality of all variants represented in a single-platform family defines the lower and upper performance and value bounds which have to be supported by the platform. This difference between upper and lower bounds of a platform is commonly referred to as platform extent (Seepersad, et al., 2000). However, the average number of variants built from a single platform has been steadily increasing in a number of industries (automotive, electronics, aircraft) since the early 1990’s. Figure 12-1 shows that the number of models per platform in the automotive industry has been increasing since 2002. This trend had started in the mid 1990’s and is likely to continue in the future. The consequence is that each platform has to accommodate a larger number of variants, whereby the extent of the platform is constantly being challenged with each new variant that is assigned to it. There is general agreement that mass customization has led to an increasing fragmentation of the automotive market with the number of individual models for sale in the U.S. rising each year from 33 in 1947, to 198 in 1990 to an estimated 277 in 2009 (Simmons, 2005).

In recent years many markets have exhibited increasing demand heterogeneity; they are fragmenting into more and smaller market niches. This development threatens the large-scale assumption of many mass production processes. As a result, firms face the dilemma of how to provide a wide variety of goods for prices that can compete with mass produced products. To respond to these challenges, many firms have begun searching for ways to combine the efficiency of mass production with the variety of customer-oriented product offerings. A major focus of these efforts has been the fundamental structure of the product: the product architecture. Examples for this development are Sony’s personal music players (Walkman) that use common drives across different models (Sanderson and Uzumeri, 1995), different power tools that use similar motors (Meyer and Lehnerd, 1997), PDAs (personal digital assistant) that can be turned into an MP3 player, a camera, or a telephone with different attachments (Biersdorfer, 2001), and automobiles with common components across models (Carney, 2004).

As companies are being challenged to produce a wider variety of products to satisfy customers that have different needs while maintaining competitive prices, platform-based product family development has become a cost-effective method for reducing production costs (Roberson and Ulrich, 1998). In general, production costs are generated by production activities ranging from purchasing raw materials to distributing finished products, and those activities consume direct and indirect resources (Horngren, et al., 2000). These costs are identified and collected through management accounting systems that companies have developed for accounting purposes and used to estimate the production costs of existing products. However, many management accounting systems are incapable of providing the necessary information to support platform-based product development because many companies have developed their own accounting systems to help them remain profitable and eliminate unnecessary costs in production. In many cases, the primary objective of management accounting systems is to support management to control overall equipment efficiency (OEE) and keep it as high as possible.

Product strategy at the platform level simplifies the product development process and encourages a long-term view, because there are fewer platforms than products and major platform decisions are only made every few years. A move towards implementation of a platform strategy, which is significantly different from design and development of each product separately, can be a challenging undertaking. While the move is difficult, potential benefits from product family approach include decrease in development cost and time over a range of products. Consequently, key questions and issues that need to be addressed to justify a company’s decision to allocate resources for refocusing their product strategy at the platform level are:

The current market has become customer driven and heterogeneous, and these shifts in the market have caused companies the additional problem of providing greater variety with existing challenges of providing greater quality, competitive pricing, and greater speed to market. Many companies are moving towards a platform approach to address the challenges posed by the market, which requires aggregation of the existing varieties to design and develop common platforms. Product platform aggregation is a bottom-up approach that focuses on development of a common platform for an existing family (see Chapter 1). In a given product family, each product will have a basic/core function in combination with a unique set of functions to appeal to the targeted market segments (Kota, et al., 2000; Kota and Sethuraman, 1998). Consequently, one of the important questions that need to be addressed is “What is common among the different products of the family?” A key factor to answer this questionis measuring commonality of components across the product family to identify common components that have the potential to be included in the platform for the family.

Offering product variety affordably is the crux of mass customization. Unfortunately, this is the foremost difficulty that enterprises face in making the transition to this paradigm. Anderson (1997) addresses the problem of offering affordable variety through the identification of the cost of variety. The cost of variety is the sum of all the costs of attempting to offer customers variety with inflexible products that are produced in inflexible factories and sold through inflexible channels. This cost includes the cost of customizing or configuring products, the cost of excessive variety, the cost of excessive procedures, and the cost of excessive processes and operations, among others. The key to mass customization, therefore, is the development of products and production processes that minimize the cost components.

Many companies have developed product families based on common platforms with varying degrees of success. Many studies of these platforms are based on product dissection. It can be challenging to gain complete information from the companies about the product development for a number of reasons including intellectual property protection. Also, many new products are developed by teams, making it difficult to get the complete picture from any individual. The case study in this chapter comes from a small company of only two primary people, so it was possible to gain insight about the complete process. Of particular interest is that the company started their design with full intent of using platform strategies for developing their product family. The following is a description of their top-down approach to platform-based product development.

Every company has the business objectives of maximizing customer choice as well as its profitability. Typically, companies address maximum customer choice through a large spectrum of variants in their products and complete flexibility in creating engineered solutions to satisfy varying customer needs. For example, a camera manufacturer may wish to offer various choices such as fixed focus, auto-focus, variable zoom, different zoom ranges, SLR, APS, and digital cameras, and in different combinations, to satisfy customers with different demands (including the price that they wish to pay). The business goal, therefore, is to design a family of products or systems that satisfy many customers but at a minimum cost. These goals, customer choices and profit margin, are not as contradictory as they seem.

A Product Design Generator is a web-based tool, developed for a specific product platform, for automatically creating all of the design artifacts and supporting information necessary for the design of a particular product. The PDG is modeled as a transformation function where a set of customer requirements is transformed into finished designs that will meet those requirements. Several methods have been presented for configuring and defining a product platform and are not reviewed here. Once the concept and embodiment have been selected, scaling, reconfiguration, artifact creation, and testing must occur to complete the design. Variants of the product platform are achieved by modifying the customer requirements. The development of the transformation function must account for the envelope of variation desired to encompass the range of product family members. The development of the PDG demonstrates how this is accomplished

Cetetherm is a company developing and manufacturing different types of heat exchanging systems (HES). It has two different product lines, one for small HES and one for large HES. The case example being described in this chapter is about the implementation of a product platform for the large HES, systems that are used by professional users in buildings connected to district heating system. The other product line consists of smaller HES that are mainly used in family houses. The market for large HES is exceptionally heterogeneous, meaning that there are many difficulties involved for individual firms trying to increase their market shares. In the large HES business, there are different rules and regulations in each country, and there are even often several different regions with specific technical demands on products within each country. That is why it is nearly impossible for an individual manufacturer to cover all these policies with a narrow set of standard products and thereby becoming a superior player.