Purchasing Management: The Optimisation of Product Variance

The purpose of this paper is to present a new optimised approach for product variance from the purchasing perspective. The research is based on a case study involving a global acting automotive Tier 1 supplier who produces steering systems for cars and commercial vehicles. The case study analysis the product variance of three components. The data were gathered from 116 variants, 13 sub suppliers for three different types of steering system. Time, money, quality and technology can be saved through a greater understanding of such product variances. The results of the case study lead to a generalised method to optimise the existing variance, present cost improvements as well as optimising new key performance indicators to manage product variance out of the purchasing department.