The conflict between marketing and operations stems from the fact that while they share the same overall goals of company profitability and growth, they have very different perspectives on how best to achieve them. Marketing prioritizes product differentiation as the best way to appeal to different customer segments to drive growth and customer loyalty. Operations prioritizes product standardization to drive efficiency and reduce costs.
This struggle has been going on for decades.
“Any customer can have a car painted any color that he wants so long as it is black.” —Henry Ford
Interestingly, when the Model T was introduced in 1908, it was offered in several colors including gray, green, red, and blue. By 1914, the Model T was offered exclusively in black to streamline production. In 1908, Ford’s primary competition was the horse, as other cars being produced at the time were custom-built and very expensive. Today, there are ~40 different car brands available in the U.S. offering over 5,000 unique models.
To Each His Own
Product variety and complexity exist well beyond cars, and we didn’t get here overnight.
- 1960s & 1970s: Era of one-size fits all. Sears and Kmart dominate. The first Walmart opens in 1962. The typical grocery store carries ~6,000 SKUs. General Motors, Ford, and Chrysler (“Big Three”) consistently capture ~85 percent of total U.S. car sales.
- 1980s & 1990s: Dawn of product variety. Specialty retailers (e.g., Toys “R” Us, The Gap) begin to emerge. The “Big Three” market share begins to decline as Toyota and Honda make inroads into the U.S. Amazon is founded in 1994, and eBay is founded in 1995.
- 2000s: Rise of online retailing. Amazon transitions from an online book seller to a diversified retailer, finally turning a profit in Q4 2001. The number of online users buying products roughly doubles in the decade.
- 2010s & 2020s: Product customization and personalization. The typical grocery store now carries ~47,000 SKUs. Nike launches Nike By You, allowing customers to personalize sneakers and apparel. Tesla launches the Design Studio, which allows customers to customize their own vehicles. Carvana is founded in 2012.
Consumers today expect to be able to get what they want, when they want it, all from the comfort of their couch. Amazon and other marketplaces now offer millions of SKUs to cater to the wide variety of consumer demand. While modern ecommerce platforms make it relatively easy for consumers to research products to buy exactly what meets their needs, it isn’t quite as easy for manufacturers to handle the manufacturing complexity.
Embrace the Opportunity
The conventional approach to balancing product variety and manufacturing complexity has been to initiate a SKU rationalization project to analyze sales, margin, and strategic value to prune the “long tail” of products that are underperforming. This is a necessary activity that should be done routinely to keep SKU proliferation in check. However, the bigger strategic advantage is modernizing and optimizing your manufacturing and distribution operations to efficiently manage complexity.
- Offering extensive choice attracts customers by offering what others don’t have.
- Customized/specialized products often command higher prices.
- Offering variety correlates with being viewed as being innovative.
Tackling the impact complexity has on production planning, manufacturing changeovers, inventory management, warehousing costs, logistics, etc. isn’t easy. But it is easier today than ever before with advanced technology.
- Real-time shop floor data collection
- Data analytics using machine learning and AI
- Advanced Manufacturing Execution Systems (MES) and Supply Chain Planning (SCP) solutions
- Automation and robotics
Modernizing a manufacturing operation can be daunting. The fear of making the wrong investment decision can paralyze an organization. But consumer demand for product variety isn’t going away. Companies that can handle manufacturing complexity are the ones that are going to flourish. The ones that can’t likely won’t survive.
July 22, 2025
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