Standardization aims at three prime things:
- Variety reduction of the current inventory
- Effective method of entry control
- Establishment of procedures, methods and guidelines to save time, money and resources
Here, the term ‘variety reduction’ is referred to as the reduction in the variety of items with the common purposes, through the removal of the least beneficial and with the least user appeal. It is commonly interchanged with standardization as a technique, while the difference between the two lies in their approach. Variety reduction can be used in any operation of an organization, but is limited to three areas – product range, list of raw materials and stocks of engineering spares. Besides, the efforts on a variety reduction are usually arranged as a special project for a team, or a committee. After good efforts, the team is then disintegrated, leaving the remains of variety reduction concepts as permanent legacy for managers concerned about the product range generally.
Let’s take a look at a common example of the application of variety reduction of products. It is commonly used to hire a full-time/permanent team of 3-4 people to investigate a problem, prepare a report thereon and support in the implementation stage. The team will thoroughly work on each product group and search for similar products yet with different code numbers and for the products with low sales. The rationale for removing products should be based on their profitability aspects, and therefore, the profitability product analysis is a pivotal aspect in a variety reduction study.
