Test model minimises risks in development of new production variant


As a company, you should always respond to the needs of the market and the evolution of technology, by launching new product variants, for example. But it is not always easy to properly assess the costs and potential returns on your investments when embarking on such a venture. While, as a company, you obviously always want to minimise the risks.

Solution: New model to estimate the impact on the product family

We therefore developed a new model that helps to get a good idea at an early design stage of the impact of developing a new variant at the level of the whole product family, especially in terms of material (procurement) and inventory costs. This innovation was done in collaboration with high-tech company Barco, known for its display technology, where we were able to validate our model on their data.

You can use the analysis to make key decisions about production. It provides key insights around which products will be profitable at a reasonable price and which product offerings need to be adjusted to remain cost-competitive. The model facilitates the development of new variants, in terms of both hardware and software. As a company, you run less risk and increase the reliability and quality of new products. You can also use the same tests (codebase) for different end products and reuse existing peripherals. This efficiency also reduces the ecological footprint of product families.

Specifically, the model generates visualisations of inventory and procurement costs (per year and per unit) and the impact on working capital for finished products and components. In addition to the visualisations, all data are transferred to an Excel file to make further analysis easy.

Result: Good overview on costs of new product variant

During the validation at Barco, we used the model to test the possible development of a new product variant that has 350 out of 400 parts in common with the other product in the same family. We had the purchase cost per part and price reductions per purchase quantity. To determine the safety stock, we also knew the lead times per part. Data on development costs were missing in this case.

The model gave those responsible at Barco a good overview of the impact on their inventory and procurement costs (per year and per unit) and the impact on working capital for finished products and parts. This would enable them to renegotiate expensive parts faster and change the way they order parts for better working capital (free cash flow). They could also better track how to maximise inventory costs, specifically considering the cost of storage space, labour and insurance.

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Kristof Vrancken, Communication Officer

Kristof Vrancken is Digital Communication Officer at Flanders Make since 2019. As Digital Marketeer with experience in both B2B and B2C environments he writes with a fresh view on technological innovation, about what literally and figuratively moves within our research centre.