Question

What is cost of complexity? How does it affects the manufacturing company?

Answer 1

Complexity cost is the cost of making something more complex. Generally speaking, complexity always has a cost as adding to things makes them more costly to operate and change. This is a trade off with the value that is delivered by complexity. The following are generalized examples of complexity costs.
Learnability
It is more difficult to learn to use something that has 100 functions than something that has 10 functions.
Usability
It may be more pleasing and productive to use a tool that has 10 buttons as opposed to a tool that has 100 buttons. For example, an air conditioner with too many functions may be unpopular with customers who simply want clean, temperature controlled air.
Efficiency
Complexity may reduce economies of scale. For example, a production line that produces one product may produce far more total value than a production line that is stopped and reconfigured for production runs of different products.
Communication & Politics
Complex organizations face increased communication costs as coordinated efforts involve more stakeholders. Office politics may be more intense in a large firm leading to irrational decisions such as hiring middle managers to boost the status of an executive.
Maintenance
Complex things with many unique parts may be costly to maintain. For example, a machine composed of thousands of obscure parts may be costly to maintain as compared to a machine with dozens of commodity parts.
Operations
The cost of operating complex things. For example, troubleshooting software with 1 million lines of code may be more difficult than solving problems on a smaller code base.
Overhead
Administrative and marketing overhead. For example, it is more costly to manage promotion, advertising, distribution, sales, pricing and customer service for a large portfolio of products.
Supply
The cost of procurement and managing a supply chain. For example, an organic cosmetic company that uses 12 ingredients from 3 suppliers may have reduced supply costs as compared to a competitor that uses 250 ingredients from 28 suppliers.
Performance
Complex things may be slow. Given the same resources, software with 2 million lines of code typically runs slower than software with 20,000 lines of code.
Risk
It can be costly to identify and manage the risks associated with complex things. For example, information security is more challenging in an environment with hundreds of different technologies as opposed to a single platform.
Change
It tends to be costly to change complex things. For example, improving a food product with 3 ingredients is less costly than improving an aircraft with 2.3 million parts.