Product Complexity Impact on Quality and Delivery Performance

Existing literature on product portfolio complexity is mainly focused on cost related aspects. It is widely acknowledged that an increase in a company’s product portfolio will lead to an increase in complexity related costs such as order management, procurement and inventory. The objective of this article is to examine which other factors that might be affected when a company is expanding its product portfolio, if initiatives are not taken to accommodate this increase. Empirical work carried out in a large international engineering company having a market leader position confirms that cost is increased, but it is not the only factor affected. We can document that there is a tendency towards increasing lead times as well as a drop in on time delivery and quality for newly introduced product variants. This means that the company experiences a reduced ability to deliver on time while also receiving more quality related complaints for the product variants, seldom engineered and produced.