It is possible to fail in many ways…while succeeding is possible only in one way – the Greek philosopher Aristotle was right in ancient times and is still right today.
It is rather well known that a modular product architecture enables efficient management of a product range, covering a variety of customer needs at the lowest possible total cost.
Over the past 15 years, we have successfully supported industrial companies all around the world implementing modular product architectures and governance to ensure efficiency and long-term effectiveness. We have gained experience from different assignments and would like to share our view on the most common pitfalls related to product modularization.
Some companies have not done their homework agreeing on why they are implementing a modularized product range. They have neither set targets, defined a business-case nor planned the transformation journey. Unfortunately, this is commonplace and often leads to weak decision making, unnecessary re-work and longer-than-needed time to market.
Our recommendation is, even if it might seem like a non-value adding activity, to spend initial time on a business case and on alignment of targets for the end-state – what is it that we really want to achieve and how does that differ from what we do today?
Unless there is a clear and committed go-to-market strategy including a market and a product strategy, and you understand which type of company you “are”, chances are high that the implementation project will go sideways.
Companies that mostly work according to ETO – Engineering To Order – will find it more difficult to succeed with modularization if they have not prepared, from a market perspective, what could vary and what could be common in a structured way. They also face more difficulty in implementing new technology in time and usually wait for customers to dictate their needs rather than taking a step forward and formulate a clear market & product strategy. If such a strategy would be present, they would segment the potential market and prioritize segments from a business perspective.
Companies that operate according to CTO – Configure To Order – have a much better foundation for success in the implementation of a modularized product range. These companies usually have a setup that works in a suitable way for a fully modularized product range. It is possible to succeed with the implementation of a modularized product range for both ETO and CTO companies. For CTO companies, full implementation can be anticipated. For ETO companies, certain parts of the product could be better suited for modularization than others. So, it might be a good idea to set differentiated targets for the product structure in this case.
To enable success, it is key to understand which type of company you “truly are” and want to be – and act accordingly. It is also important that there is a clear and aligned market & product strategy and technology road map that could be used for planning and decision making throughout the implementation.
Product modularization is a top-down activity which needs to be based on priorities and targets, to guide both large gate reviews as well as small every-day decisions taken in all teams. As modularization aims at optimizing the product range from a total cost perspective, it is key that all relevant parts of the value-chain are involved on a day-to-day-basis and that decisions are made cross-functionally.
However, this is usually not the case. Quite often, engineering functions take lead but tend to forget the other stakeholders – the ones that in the end will realize and live with the solutions – purchasing, manufacturing, assembly, sales, after-market service etc. Even engineering teams tend to work in separate silos. And again, this will lead to unnecessary re-work and longer-than-needed time to market.
So, make sure your implementation team is set up properly, with cross-functional representation at all levels – from the steering group through the project management team and to the project teams.
Existing product development processes are usually not prepared to support the development of a wider, more flexible product range. Companies looking for support often come across complex modularization approaches developed for academia. The specific modularization approach used needs to be tailored to each company. It is hard to succeed without profound experience, so make sure to staff your team accordingly.
On top of this, it is important to understand that implementing modularization is a transformation to a new way of working. It will take time and will require patience when the turbulence kicks in. Also, it requires clear leadership and that the top managers walk the talk. Like in any other transformation, remember to communicate and celebrate short term achievements to inspire the organization.
Brick Strategy’s approach to implement modular products is based on our consultants’ long experience from Scania and consulting projects with leading industrial companies in different industries for almost 20 years.
Contact Brick Strategy if you are curious to learn more about how you can make your modularization journey a success.
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