Though not its "downfall," Nazi Germany did suffer material setbacks partially related to its desire to specialize. It opposed "Jewish" practices of mass-production used by the US and the Soviets and favoured specialized, intricate and often costly designs for its war machine. Many of these designs either backfired in terms of pragmatics or were never even used. This wasted material and human resources which contributed to losses like the Battle of Stalingrad, where Germany could not compete with the Soviets' mass produced tanks. While other relevant factors were at play in the loss of such battles, the aversion to mass production hindered Germany's ability to really overwhelm the Red Army. It contributed to Germany's chronic underproduction in some key areas (like tanks, aircraft, and artillery) which only exacerbated the issue of overreach as the war drew on.

Sources:

Gerhard L. Weinberg. A World at Arms: A Global History of World War II. 2005.

Some failed designs: http://listverse.com/2013/09/22/10-experimental-nazi-weapons/

Stats on Production: http://en.wikipedia.org/wiki/Military_production_during_World_War_II#Combat_Vehicles