Measuring the Cost Effects of Modular Product Architectures — A Conceptual Approach

Abstract

Modular product architectures offer a solution for the trade-off between offering the market a wide variety of products and improving a company’s internal cost situation. However, individual cost effects that determine the extent to which modularity should be applied to product architecture are widely unknown in industry. In this paper, we develop a conceptual approach to provide suggestions for improving an examined modular product architecture from a cost perspective. Our work makes an important contribution: The conceptual approach accentuates which steps are necessary in order to recommend whether the product architecture’s current degree of modularity should be enhanced or diminished.

Can product modularization approaches help address challenges in technical project portfolio management? – Laying the foundations for a methodology transfer

“…Reducing dependencies between modules and the standardization of components and interfaces decreases uncontrolled side effects and allows for flexible architectural changes. The use of standardized components across product platforms also allows the use and/or reuse of existing component kits, which leads to cost savings through economies of scale and the division of labour, an effective coordination of processes and the avoidance of bottlenecks [20,21].…”

“…Mathematical models to assess the level of modularity have also been developed [49]. More recent research initiatives are further investigating the cost and complexity effects of modular product architectures and their impact on the design of effective supply chains, and are creating a common language around the manifold approaches [20,44,50].…”

“…These approaches are well-established in fields such as the automotive industry, where they are used to structure complex systems into more manageable subsystems, modules and components [16,17,18,19]. Besides having modules with defined dependencies and interfaces, this enables for standardization across platforms, which in turn allows for the cost-efficient use and re-use of components and modules [20,21].…”

Reviewing Complexity Costs – What Practice Needs and What Research Contributes

“…This leads to a cost optimization of single variants by introducing new, cheaper components and more specialized processes or suppliers, but ignores the indirect costs (Labro, 2004), due to increased complexity within the organization, such as longer administration processes, more inventory or complicated production planning. Especially in the early development stage, during which firms have a larger cost lever, but only a small amount of available information (Fixson, 2006;Skirde et al, 2016), they struggle to evaluate different product concepts' complexity costs. This is a known issue; researchers and practitioners have therefore developed a set of approaches.…”

Modulares Projektportfoliomanagement – Eine Vision zur Beherrschung komplexer Projektlandschaften

“…Diesem Zielkonflikt im Bereich der Produktion und der Herausforderung steigender Komplexität und Interdependenzen von Produkten und Produktfamilien wurde bereits in den 90er Jahren durch die Einführung modularer Produktarchitekturen begegnet (Ulrich, 1995). Auch wenn die Kalkulation möglicher Einsparpotenziale schwierig und Gegenstand aktueller Forschungsvorhaben ist, sind Erfolge nachträglich gut ersichtlich (Kersten et al, 2009;Skirde et al, 2016 (Schrieverhoff, 2015). (Sedlacek, 2010).…”