(I) Overview of Product Management
Boutique sellers often have fixed manufacturers to cooperate with, or the sellers themselves are production sellers. In order to spread the risk, many sellers often choose to list many products, which makes the products highly complex. However, whether it is a general-purpose seller or a boutique seller, the original intention of doing a good job of product management is to meet the market and reduce costs, which also means reducing the complexity of the product.
Product complexity includes three levels: product line (long), product model (overflowing) and parts (too many non-standard parts). Enterprises hope that one of their many products will become a hit, but they ignore the harm caused by product overload: the larger the batch, the lower the unit cost; the more varieties, the higher the unit cost. The main reason for this problem is insufficient product development capabilities and extensive product management.
Complexity will drive up costs. Complex products require complex organizations and complex processes to support them. To reduce costs, we must start from reducing the complexity of products, organizations and processes, and the three must be reduced together to be truly effective.
(II) Commonly used product management methods
(1) Streamlining products or product lines. The essence of streamlining products or product lines is to streamline consumers. The customized needs of a small number of consumers have led to unique designs or product modules, which has increased the complexity of the product. These consumers and products or product lines need to be “cut off”. Product complexity can be reduced through standardized, universal, and modular designs.
(2) Streamlining related personnel and facilities. Reducing product complexity is not enough. If the relevant personnel are still there and the facilities are still operating normally, the cost will not be improved. Therefore, it is necessary to streamline the relevant personnel and facilities through organizational adjustments, clear responsibilities, performance appraisals, and teamwork.
(3) Streamlining processes. For production-oriented sellers, just-in-time (JIT) can be introduced, consumer-oriented, and the production cycle of products can be reduced; delay strategies can be adopted to shorten the lead time of products.
Through analysis, streamlining products and adopting standardized designs can reduce organizational complexity and process complexity, save costs, shorten lead time, and improve the company’s operating profit margin and capital turnover rate.
To improve operating profit margins and capital turnover, companies must reduce complexity, which requires a “three-pronged approach” of products, organizations, and processes, and cross-functional collaboration, specifically in: R&D and marketing collaboration to promote product standardization; R&D and supply chain collaboration to promote product design optimization; supply chain and marketing collaboration to more accurately assess the costs brought about by demand and complexity, and promote the matching of marketing with demand