Precisely separating the two terms known as standardisation and variety reduction is as difficult as separating research from development and mechanisation from automation. The exercise is barren. Both are concerned with the elimination of unnecessary diversity in any sphere of company operations. Standardisation is most commonly used in the sense of reducing a series of items all serving the same purpose to one item or a very few items, e.g. all inter-office memoranda to be written on A4 paper. Variety reduction is widely interpreted as a reduction in a range of items all serving the same or similar purposes by removing the least profitable and those with least user appeal. There is a wide overlap between this technique and standardisation (q.v.).
The difference between the two techniques is brought about when one considers the way in which they are applied. Variety reduction, though it can be employed on any aspect of company operations, is usually in practice restricted to three areas; the product range, the raw materials list and stocks of engineering spares. Furthermore, a variety reduction effort is normally organised as a special project for a team, special consultant or committee. A big effort is made and then the team is disbanded, leaving a residue of variety reduction concepts as a permanent legacy for the managers who are permanently concerned with the product range.
A common approach to variety reduction of products is to appoint a full-time team of three or four people to study the problem, report on it and assist with implementation. The team will systematically cover each product group looking for identical products with different code numbers and for those whose sales are very low. The arguments for removal of products must be based on profitability considerations: a profitability analysis of the product range is an important aspect of a variety reduction study.