TY - JOUR

T1 - Impact of modularity decisions on a firm's economic objectives

AU - Hackl, Jennifer

AU - Krause, Dieter

AU - Otto, Kevin

AU - Windheim, Marc

AU - Moon, Seung Ki

AU - Bursac, Nikola

AU - Lachmayer, Roland

N1 - Funding information: This work was also supported by a grant from the Academy of Finland (Grant No. 297095; Funder ID: 10.13039/501100002341) for Aalto University together with the Hamburg University of Technology supported by a grant from German Academic Exchange Service (DAAD; Funder ID: 10.13039/501100001655). Thanks to the German Research Foundation (Deutsche For-schungsgemeinschaft—DFG; Funder ID: 10.13039/501100001659) for funding this project within the research grant “WiMo— Entwicklung eines Wirkmodells der Eigenschaften modularer Produktstrukturen zur Bewertung methodischer Ansaetze” at the Hamburg University of Technology.

PY - 2019/11/8

Y1 - 2019/11/8

N2 - Research in modularization of product families reveals numerous individual cause and effect impacts of modularity on a firm. There are clearly many interrelated positive and negative economic impacts arising from different activities of the firm impacted by the modular product structures. This makes the construction of an economic business case for modularity difficult, where often the benefits are reduced indirect costs. This paper presents a literature-based network model of how modular product structures affect firm's economics across the design-to-manufacturing life cycle phases. It shows how (1) changes on modularity properties may lead to (2) different effects within the product's life cycle phases that (3) have an economic impact on the firm. For instance, modularization can prolong development time of a platform, while shortening the subsequent development times of product variants and lowering manufacturing costs. To validate the proposed model, the given effect chains were compared by industrial experts against nine case study modularization projects by marking effects that were experienced and observed in their projects. The results first revealed that in design, an increase of commonality drove component reuse leading to lower development costs per unit. Second, in procurement, it was found that increased modularity caused better predictability, less purchasing orders, and better purchasing conditions that ultimately lead to lower costs. Third, in production, it was found that a smaller variety of components allowed less process variety, leading to fewer and more optimized processes and therefore lower production costs. We present these cause and effect impacts of modularity as drivers for quantifying the economic impact of modularity.

AB - Research in modularization of product families reveals numerous individual cause and effect impacts of modularity on a firm. There are clearly many interrelated positive and negative economic impacts arising from different activities of the firm impacted by the modular product structures. This makes the construction of an economic business case for modularity difficult, where often the benefits are reduced indirect costs. This paper presents a literature-based network model of how modular product structures affect firm's economics across the design-to-manufacturing life cycle phases. It shows how (1) changes on modularity properties may lead to (2) different effects within the product's life cycle phases that (3) have an economic impact on the firm. For instance, modularization can prolong development time of a platform, while shortening the subsequent development times of product variants and lowering manufacturing costs. To validate the proposed model, the given effect chains were compared by industrial experts against nine case study modularization projects by marking effects that were experienced and observed in their projects. The results first revealed that in design, an increase of commonality drove component reuse leading to lower development costs per unit. Second, in procurement, it was found that increased modularity caused better predictability, less purchasing orders, and better purchasing conditions that ultimately lead to lower costs. Third, in production, it was found that a smaller variety of components allowed less process variety, leading to fewer and more optimized processes and therefore lower production costs. We present these cause and effect impacts of modularity as drivers for quantifying the economic impact of modularity.

KW - Cause and effect model

KW - Life cycle analysis and design

KW - Modularity

KW - Product development

KW - Product family design

KW - Product platform design

UR - http://www.scopus.com/inward/record.url?scp=85074869031&partnerID=8YFLogxK

U2 - 10.1115/1.4044914

DO - 10.1115/1.4044914

M3 - Article

AN - SCOPUS:85074869031

VL - 142

JO - Journal of Mechanical Design, Transactions Of the ASME

JF - Journal of Mechanical Design, Transactions Of the ASME

SN - 1050-0472

IS - 4

M1 - 041403

ER -