Product vs. manufacturing complexity

Product vs. Manufacturing Complexity

When investigating a potential new business venture it’s instructive to think about the structure of the product and its associated manufacturing process.

The barriers to entry for a product development project and its associated manufacturing process not only affect whether it makes sense for your operation, but also may determine if you have a lot of competition in the future.

Even if you are the designer/seller of the product, and you are outsourcing manufacturing, this can provide insights into finding and negotiating with suppliers.

We will look at various combinations of product and manufacturing process complexity, and the relative barriers to entry associated with each.

Complex Product/Simple Manufacturing

Complex products comprised entirely of simple components that require simple manufacturing equipment and techniques.  Product complexity is primarily the result of high part count.  Example: Dry van semi-trailers.

Product barrier to entry: Medium.  While complex, the product is more about organizational skills than technical skills.

Manufacturing barrier to entry: Medium.  Simple manufacturing equipment can be purchased at relatively low cost and require low skill to operate.  The number of tools required, and complexity in managing the manufacturing process may provide a barrier to entry.

Simple Product/Complex Manufacturing

Simple products may require advanced manufacturing equipment.  Example: Machined parts.

Product barrier to entry: Low.  Very little technical skill required to design product.

Manufacturing barrier to entry: Medium to High.  Advanced manufacturing equipment has high cost and requires some skill to operate.

Complex Product/Complex Manufacturing

Complex products that have complex components that require advanced manufacturing equipment and techniques.  Example: Automobiles.

Product barrier to entry: High.  Complex components and overall system require specialized technical skill.

Manufacturing barrier to entry: Medium to High.  Advanced manufacturing equipment has high cost and requires some skill to operate.

Simple Product/Simple Manufacturing

Simple products that require simple manufacturing tools.  Example: Metal product produced from structural steel shapes using a saw and welder.

Product barrier to entry: Low.  A simple product that requires low technical skill.

Manufacturing barrier to entry: Low.  Simple manufacturing equipment can be purchased at relatively low cost and require low skill to operate.