The impact of product complexity on ramp-up performance

Abstract

Fast product ramp-ups are crucial in consumer electronics because short product lifecycles prevail and profit margins diminish rapidly over time. Yet many companies fail to meet their volume, cost and quality targets and the ramp-up phase remains largely unexplored in new product and supply chain management research. This study identifies the key product characteristics that affect ramp-up performance using operational data from the cell phone industry. We investigate three research questions: (1) How to measure software and hardware complexity characteristics of consumer electronics products – and specifically cell phones? (2) To what extent drive product complexity characteristics manufacturing performance? and (3), in turn, to what extent drive manufacturing performance and complexity characteristics ramp up performance? The findings contribute to operations management literature in three ways: First, our model reflects the growing importance of software characteristics in driving hardware complexity, an aspect that prior empirical ramp-up studies have not yet addressed. Second, specific hardware and software complexity characteristics (i.e., component count, parts coupling and SW code size) primarily drive the performance of the manufacturing system in terms of final yield and effective capacity. And finally, effective capacity together with the novelty aspects of both software and hardware complexity (i.e., SW novelty and product novelty) are the key determinants of ramp-up performance.

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