Complexity Management - A multiple case study analysis on control and reduction of complexity costs

Complexity tends to be arguably the biggest challenge of manufacturing companies. The motivation of further studying complexity is a combination between the existing literature and the practical experiences from the industry. Based on the latest trend companies are trying to supply a growing mix of products, with features more custom-made to cover individual needs, both regarding characteristics of products and support services. This necessity leads to a considerable increase of the complexity in the company, which affects the product portfolio, production and supply chain, market segments, IT systems, and business processes. In order to identify and eliminate complexity, several approaches are used, both by researchers and practitioners. The purpose of this thesis is to contribute to the existing knowledge of complexity management theory. This research focuses on the relationship between product and process complexity. The possible factors for describing this correlation are identified and defined as complexity cost factors (CCFs). By identifying the CCFs this research intends to analyze the most relevant processes where the complexity and cost are directly related to the complexity of products. In this way, it will be possible to quantify the exact cost impact on those processes for each product variant. Furthermore, initiatives regarding complexity reduction are investigated. Standardization in product design, increased reusability of components, postponement of the customer order decoupling point (CODP) and utilization of configuration systems are further examined in terms of their complexity reduction effects. The research is supplemented with empirical evidence from several manufacturing companies. Finally, the evaluation of the obtained results indicates a strong managerial and theoretical potential for the control and reduction of complexity in manufacturing industries and pinpoints areas for further investigation.