When to enable product configuration
At one time or another, most consumer goods companies will try to expand their customer base to gain market share. As their customer base grows, different customer trends and preferences will start to emerge.
In order to accommodate these different customer choices, companies will need to vary their products. They may offer different colors, sizes, options, etc. As these companies tailor their products for their ever-growing customer base, the product variations exponentially grow. The combination of different options can become overwhelming. The product maintenance may get out of hand. This may be the right time to rethink the product structure and introduce a configuration logic.
We have discussed product dimensions before in this blog. When a product has few dimensions, you can use product variants to manage the SKUs. For example, jeans may have 4 colors and 10 sizes. Each dimension combination will create a product variant resulting in 40 SKUs defined under a single style. This is quite manageable.
However, imagine a furniture piece that comes with different fabrics, finishes, and sizes. A chair, for example, can have 100 fabrics, 5 finishes, 2 sizes - creating 1,000 unique combinations. You can imagine the difficulty managing those SKUs.
As product options (fabric, finish, size) and selections within each option (100 fabrics) increase, the number of unique combinations will grow. I have seen scenarios where companies have tried to force SKU creation with automated scripts, creating thousands of SKUs in their systems. This might sound like a viable option but are all those SKUs even needed? After all, they were not created based on a customer request. They may not ever be produced, inventoried, or sold.
A better way of handling this product structure is to introduce a configuration engine. Rather than defining each SKU upfront, you define a configuration model. The model will have several options and values. When demand is received, different values for each option are selected to create the SKU requested on the fly. This eliminates the problem of creating unnecessary SKUs.
Configuration engines also offer rules-based configuration. Certain options can be defaulted, taken out, or locked in, based on other option selections.
Configuration engines can also manipulate associated Bill of Materials and Routes. BOM lines or route steps can be added, taken out, or modified. Consumption quantities or process times can be adjusted. The product cost can be calculated based on the option selected. Most configuration engines also offer a sales pricing engine that follows the option selection. In most cases, sales price calculation is different than the cost price calculation. Being able to calculate the margin on the fly can be very useful.
There are even more advanced configuration models - where the selection is not necessarily based on options and predetermined value selections, but true measurements. Imagine a custom cabinet for your kitchen. You may pick the style, wood, and finish but you will need to also provide width, length, height dimensions.
Finally, configurations can also help you identify what the most popular option configurations are. Most configuration engines reuse the same configuration ID when the same options are selected. As your business grows, you can monitor the most popular configuration options and offer them as your main, standard, pre-configured products.
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My name is Cem and this has been another gem.
