PRODUCT VARIETY AND MANUFACTURING PERFORMANCE - EVIDENCE FROM THE INTERNATIONAL AUTOMOTIVE ASSEMBLY PLANT STUDY

This paper examines the effect of product variety on manufacturing per formance, defined here as total labor productivity and consumer-percei ved product quality. Using data from the International Motor Vehicle P rogram (M.I.T.) study of 70 assembly plants worldwide, the paper exami nes three dimensions of product variety, at fundamental, peripheral, a nd intermediate levels. The international sample reveals great variati on in the distribution of each type of product variety in different re gions, reflecting in part different: strategies for variety. Furthermo re, the impact of different kinds of product variety on performance va ries, and is generally much less than the conventional manufacturing w isdom would predict. However, an intermediate type of product variety, here called parts complexity, was found to have a persistent negative impact on produc tivity. Finally, the study provides partial support for the hypothesis that management policies, in both operations and hu man resource areas, can facilitate the absorption of higher levels of product variety, i.e. that ''lean production'' plants are capable of h andling higher levels of product variety with less adverse effect on t otal labor productivity than traditional ''mass production'' plants.