Measuring variety reduction along the supply chain: The variety gap model

To meet the demand for variety, many firms widen their product ranges, increasing not only revenues but also operational inefficiencies. Managerial choices can mitigate the negative effects on costs, but they also limit the ability of a firm to deliver variety to the market within the timeframe and costs requested by clients. Therefore, the variety actually offered in the market can be different from the level of variety that had been defined during, for instance, product development. We call the series of decisions whose interaction results in the variety actually distributed in the market the “process of variety reduction”. This paper introduces a descriptive model of this process. The model has been applied to a real case to highlight the main variety reduction decisions.