Component sharing in the management of product variety: A study of automotive braking systems

Product variety in many industries has increased steadily throughout this c entury. Component sharing-using the same version of a component across mult iple products-is increasingly viewed by companies as a way to offer high va riety in the marketplace while retaining low variety in their operations. Y et, despite the popularity of component sharing in industry, little is know n about how to design an effective component-sharing strategy or about the factors that influence the success of such a strategy. In this paper we cri tically examine component sharing using automotive front brakes as an examp le. We consider three basic questions: (1) What are the key drivers and tra de-offs of component-sharing decisions? (2) How much variation exists in ac tual component-sharing practice? and (3) How can this variation be explaine d? To answer these questions, we develop an analytic model of component sha ring and show through empirical testing that this model explains much of th e variation in sharing practice for automotive braking systems. We find tha t the optimal number of brake rotors is a function of the range of vehicle weights, sales volume, fixed component design and tooling costs, variable c osts, and the variation in production volume across the models of the produ ct line. We conclude with a discussion of the general managerial implicatio ns of our findings.