August 24, 2009 – 10:43 am
I want to apply the discussion of entropy to the features of a configurable product. But first we have to introduce the important concept of a “take rate”. In different industries this is called an “attach rate”, or a “penetration rate”. The idea is very simple: the take rate of an option is the fraction [...]
August 21, 2009 – 3:39 pm
A product is a collection of features, and each feature has mutually exclusive options. If a feature has only two options, then the choice is like a coin toss. The information contained in that choice is measured by entropy.
Entropy is a concept from classical thermodynamics that deals with the amount of disorder in a [...]
Recently I wrote about quality rankings for automotive manufacturers and the perception of these rankings in the market. While the marketing teams at these companies must shoulder the burden to convince consumers about their products’ quality, there is a very real connection between product quality and configuration management.
In many industries where products have grown over [...]
By Mike Merrill
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Posted in Uncategorized
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Also tagged build to order, business intelligence, customers, demand driven, Intelligence, manufacturer, manufacturing, marketing, one-off, order fulfillment, profit, proliferation, quality
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This morning I was talking to the VP of business process improvement for a company that sells industrial machinery. Their products are highly configurable. She told me that every year they have 50% new configurations they have never seen before. The number of choices on their products has grown over time. ”A salesperson can’t know everything about the product,” [...]
By Radhika Subramanian
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Posted in Uncategorized
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Also tagged algorithm, complexity, configurable, cross sell, customer fulfillment, customers, demand driven, demand shaping, industrial, machinery, margin, order, order fulfillment, predictive analytics, product, product variety, sales funnel, salesperson, suggestive selling, upsell
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One of the most important components in choice complexity is the product configuration itself, the mixture of product options that give a product its unique signature. Obviously the typical product orderable options are needed to analyze the complexity of a product, but other more abstract options can offer surprising insights into product and customer behaviors.
A [...]
By Mike Merrill
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Posted in Uncategorized
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Also tagged algorithm, analytics, attribute, attribution, choice combinations, complexity, customer fulfillment, customers, demand driven, demand shaping, long tail, margin, options, product, product extension, product mix, quality, sales mix, trends
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Possible combinations
This is a question with several answers. The easiest answer is the least useful. The number of possible build combinations, or unique configurations, is easily computed by multiplying the number of options for each feature. For example, if your product has feature A with 3 options, feature B with 2 options and feature C [...]
By Roy Marsten
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Posted in Uncategorized
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Also tagged algorithm, analytics, BTO, build combinations, build to order, choice combinations, customer fulfillment, customers, demand driven, demand shaping, features, manufacturing, options, product management, product mix, proliferation, sales data, sales history, SKU
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1. Product
A product is something offered for sale to customers. This is deliberately vague, because we want to encompass services as well as tangible products. Most of our discussion and examples involve manufactured products, but our framework also applies to services with many variants like insurance policies and cell phone calling plans.
2. Instance
An instance of [...]
By Roy Marsten
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Posted in Uncategorized
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Also tagged choice combinations, complexity, configurable, customer fulfillment, demand driven, feature, long tail, option, product, product mix, product substitution, SKU
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Emcien defines product complexity as simply the ability to predict what the next order coming into the company will be.
Think about it: If you only made product configuration A, you have 100% confidence in knowing that the next order in the door will be configuration A (assuming you get an order in the door at [...]
By Russ Caldwell
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Posted in Uncategorized
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Also tagged analytics, complexity, customer fulfillment, demand driven, demand sensing, demand visibility, forecasting, long tail, product mix, product substitution, profit, proliferation, SKU
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