Building Efficient Product Portfolios at John Deere and Company

Tallys H. Yunes (), Dominic Napolitano (), Alan Scheller-Wolf () and Sridhar Tayur ()
Additional contact information
Tallys H. Yunes: Department of Management Science, School of Business Administration, University of Miami, Coral Gables, Florida 33124-8237
Dominic Napolitano: Deere & Company, Technology Center, Moline, Illinois 61265-8098
Alan Scheller-Wolf: Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213-3890
Sridhar Tayur: Tepper School of Business, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213-3890

Operations Research, 2007, vol. 55, issue 4, 615-629

Abstract: John Deere & Company (Deere), one of the world’s leading producers of machinery, manufactures products composed of various features, within which a customer may select one of a number of possible options. On any given Deere product line, there may be tens of thousands of combinations of options (configurations) that are feasible. Maintaining such a large number of configurations inflates overhead costs; consequently, Deere wishes to reduce the number of configurations from their product lines without upsetting customers or sacrificing profits. In this paper, we provide a detailed explanation of the marketing and operational methodology used, and tools built, to evaluate the potential for streamlining two product lines at Deere. We illustrate our work with computational results from Deere, highlighting important customer behavior characteristics that impact product line diversity. For the two very different studied product lines, a potential increase in profit from 8% to 18% has been identified, possible through reducing the number of configurations by 20% to 50% from present levels, while maintaining the current high customer service levels. Based on our analysis and the insights it generated, Deere recently implemented a new product line strategy. We briefly detail this strategy, which has thus far increased profits by tens of millions of dollars.

Keywords: industries; machinery; marketing; retail/product line optimization; production; applications (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://dx.doi.org/10.1287/opre.1070.0405 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:55:y:2007:i:4:p:615-629

Access Statistics for this article

More articles in Operations Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().