Components Sharing in the Management of Product Variety: A Study of Automotive Braking Systems

Management Science, Vol. 45, No. 5, 2003

Batten Institute Research Paper No. 2003 R 3

Posted: 9 Sep 2009

See all articles by Kamalini Ramdas

Kamalini Ramdas

London Business School - Department of Management Science and Operations

Marshall Fisher

University of Pennsylvania - Operations & Information Management Department

Karl T. Ulrich

The Wharton School

Date Written: 2003

Abstract

Product variety in many industries has increased steadily throughout this century. Component sharing-using the same version of a component across multiple products-is increasingly viewed by companies as a way to offer high variety in the marketplace while retaining low variety in their operations. Yet, despite the popularity of component sharing in industry, little is known about how to design an effective component-sharing strategy or about the factors that influence the success of such a strategy. In this paper we critically examine component sharing using automotive front brakes as an example. We consider three basic questions: (1) What are the key drivers and trade-offs of component-sharing decisions? (2) How much variation exists in actual component-sharing practice? and (3) How can this variation be explained? To answer these questions, we develop an analytic model of component sharing and show through empirical testing that this model explains much of the variation in sharing practice for automotive braking systems. We find that the optimal number of brake rotors is a function of the range of vehicle weights, sales volume, fixed component design and tooling costs, variable costs, and the variation in production volume across the models of the product line. We conclude with a discussion of the general managerial implications of our findings.

Suggested Citation

Ramdas, Kamalini and Fisher, Marshall and Ulrich, Karl T., Components Sharing in the Management of Product Variety: A Study of Automotive Braking Systems (2003). Management Science, Vol. 45, No. 5, 2003 , Batten Institute Research Paper No. 2003 R 3, Available at SSRN: https://ssrn.com/abstract=1442893

Kamalini Ramdas (Contact Author)

London Business School - Department of Management Science and Operations ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Marshall Fisher

University of Pennsylvania - Operations & Information Management Department ( email )

Philadelphia, PA 19104
United States

Karl T. Ulrich

The Wharton School ( email )

Philadelphia, PA 19104
United States

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