Market efficiency

80:20
Because a Euro in sales is very rarely related to a "Cost Euro"!

The question which markets and which products generate sales and which products and markets are the prime cost drivers will lead to two different lists. And this is the starting point for each productivity program.

A well balanced product range and a smart product structure are the foundation for an efficient market development. Deproliferation is the name of the game to get you there. It helps you to attack complexity from the market perspective and to react to the insights of Pareto-Analysis. Form the manufacturing perspective a smart product structure helps to directly exploit scales economies in engineering and manufacturing. You may recognize a smart product structure by a high level of standardization or the extensive use of commodized sub assemblies.

Manufacturing Strategy is another crucial element of market efficiency. Manufacturing strategy defines where and at what level of vertical integration a product or part should be manufactured and how fast it could be introduced in which markets.

But if a product which is manufactured at the optimal cost position of the company still meets saturated demands only one way out is left to survive in this market. And this escape lane is called Innovation. Innovation in this case means to enter the market with new products or to apply new technologies to radically change the product features and the cost structure of the existing products.