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Cost of Complexity Calculator
The Cost of Complexity calculator provides end-to-end visibility of costs across the value chain to keep complexity costs under check
Cost of Complexity calculator
The Cost of Complexity calculator provides end-to-end visibility of costs across the value chain to keep complexity costs under check
What it is
Companies today are faced with the challenge of managing high complexity caused by the proliferation of SKUs affecting profitability.
The Cost of Complexity Calculator provides a comprehensive view of costs across the value chain for adding and rationalizing product module variants via an easy-to-use interface.
It helps answer questions such as:
- What will be the profit and loss impact of adding or eliminating a module variant in the portfolio?
- What will be the combined impact of multiple module variant optimization initiatives?
- What is the most profitable new product development options among the various scenarios?
Check out a demo
Cost of Complexity Calculator calculates the end-to-end business impact of product development decisions.
How it works
Click thumbnails to expand
Click thumbnails to expand
Three modes of analysis are available depending on your needs
Advanced mode
Top-down mode
Quick analysis
Description
- Part number specific granularity
- 25+ parameters assessed
- Bottom-up specific estimation logic
- Multiple data uploads
- Part number specific granularity
- 10+ parameters assessed
- Combination of bottom-up estimations and top-down industry benchmarks
- Selected data uploads
- On-screen data input
- Only key parameters considered for analysis
- Estimates based on industry benchmarks
Ease of data collection
Accuracy
Why use it
Multilevel output
Impact of variant optimization calculated at Functional (module/sub-module level) and Portfolio (Platform, product, model, VC) level
Rapidly deployable solution
Comprehensive and rapid client deployable solution with user management, client onboarding, and data management modules
Industry agnostic
Deployable at multiple product and project based industries spanning auto, consumer goods, energy, pharma etc.
McKinsey team has delivered
>1,000
Cost of complexity analysis run across engagements
>5%
Direct cost reduction opportunity signed off with clients
15–20%
R&D efficiency improvement impact identified
>30%
Module variant rationalization opportunities signed off using Cost of complexity business case
Here are some client examples
An commercial vehicle OEM identified 2% cost reduction when considering standardization of their truck models
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A consumer goods company identified ~$100 million–$160 million in annual savings opportunity by reducing SKU complexity
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A consumer electronics client achieved ~$70 million in savings without revenue loss by dramatic decrease in product complexity
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A leading machinery OEM reduced direct cost by >10% and project execution time from 18 to 9 months
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By working with us, you will have access to
Experts
Our industry and functional experts will be on the ground where and when you need them.
Helpdesk
Our helpdesk will keep doors open and commit to addressing your concerns efficiently and effectively.
Training
We offer coaching and build capabilities for your teams to deliver sustained improvements.
Implementation
We partner with you and co-create a firm path to implementation as part of the project.