Product portfolio complexity contemplation under aspects of total supply chain cost (TCO) and customer relevancy

Fast-paced technology innovation and market globalization are leading the firms to mass customize in order to fulfill all their customers’ needs. This causes portfolios of products to grow both in number of items and in relationships between them making them more and more complex. This has many drawbacks like increased difficulty in forecasting, reduction of production capacity and higher inventory costs. In this thesis, a review of existing best practices to reduce portfolio proliferation has been carried out to choose the most fitting methods for the portfolio of products of Business Unit Diamond Systems in Hilti AG. An adapted framework has been created to clean-up the portfolio taking into account aspects such as sales, profit margin, inventory turnover and customer relevancy. The first run of the process resulted in 40% of the items in the portfolio being candidates for deletion. Furthermore, the process has been plotted out and simplified to make it sustainable for the future and not just a one-time clean-up. The framework created consists of two differentiated steps. The first approach targets those items that have no longer activity in the portfolio. The second approach identifies the less profitable items which are taking up resources that could be of better use allocated differentl