An evaluation of value-transfer within a modular supply chain

Abstract

The paper explores the impact that modularization is having on the structure of supply chains in general and on the role of first-tier suppliers in particular. Two concepts are presented to illustrate firstly the need to redefine the term ‘first-tier’ supplier and secondly to determine how and why value can be transferred within a modular supply chain. The first concept, the ‘continuum of first-tier suppliers’, contends that only certain ‘first-tier’ suppliers will be able to compete within a modular environment, whilst the second concept, ‘value-added second tier’ examines the role (in many cases, the enlarged role) that second-tier suppliers are likely to play within a modular landscape.

Transferring value-added activities in new product development: A multiple case study in the automotive sector within modular strategy context

“…Implementing and expanding the modular strategy concept to members of the supply chain results in a redistribution of the activities that add value to the final product, and this determines a new configuration for production and NPD activities [5,9]. Starting from the premise that adopting the modular strategy will determine that manufacturing no longer be a core activity for the assemblers [11], one consequence is that they will become susceptible to outsourcing.…”

“…Implementing and expanding the modular strategy concept has resulted in the redistribution of activities among all the members of the supply chain who add value to the final product, and has also given a new shape to production and NPD activities [9]. This new production configuration lends itself to a process of transferring activities, until then carried out by the assemblers, to their suppliers who take on production and project activities, in whole or in part [5,10].…”