The cost of customising: assessing the performance of a modular product programme

Introducing modularity in product development as a mean for dealing with increasing levels of variance within product portfolios has been widely and successfully applied by many companies. It is however important to acknowledge that challenges related to product portfolio variance will not disappear after introducing modularity. A new type of variance on modular level is likely to develop over time. Empirical work carried out in a large international engineering company designing customer specific products confirms that increasing levels of variance within module portfolios can lead to reduced performance according to crucial key performance indicators. The findings illustrate the importance of recognising the potential trade-off when continually complying with unique customer requests. The paper contributes with a detailed insight into a company’s competitive performance trade-off on a modular level after introducing mass customisation. The paper also adds a dimension to existing survey-based findings on the potential trade-offs.