“Any customer can have a car painted any color that he wants so long as it is black”, stated by Henry Ford in 1908 when he introduced the concept of a standardized process in the production assembly line to significantly reduce manufacturing cost. One century later, the global environment for industrial companies has changed drastically. Products need be tailored to individual customer needs, new requirements and regulations should be met quickly and globalization puts high pressure on cost-efficiency.
Modular product architectures are increasingly used among industrial companies to tackle the tougher competition and accelerating development speed.
A well-defined modular architecture creates multiple benefits. The typical benefits are reduced total cost (direct cost and complexity cost), optimized supply-chain lead-times and capital employed, reduced time-to-market and easier product configuration as well as higher product quality.
However, modularization is a complex task with many associated risks and most company’s development processes and organizations are not capable of modularizing their product portfolio. To succeed with the challenges and to deliver the expected benefits, product modularization should be supported with a pragmatic approach.
Brick Strategy has developed a pragmatic and resource optimized approach, supporting industrial clients to succeed with modularization. The cross-functional approach, called BriX, is based on our long experience from working at Scania and with other leading industrial companies.
The five steps of our modularization approach
The purpose is to understand and align on the company’s individual objectives with modularization, set targets and align on the financial business-case for pursuing modularization. Both targets and business-case should be signed-off by top management officials as they should be committed and actively engaged in the modularization initiative.
The focus of this step is to understand how customer needs differ between segments, as well as to understand how legal requirements and standards varies between markets. It is also important to understand the volume distribution per segment, competitor market offerings and market trends. The customer and market dynamics are translated to product attributes and documented in a product architecture specification.
The product structure is arranged and decomposed from a functional and product attribute perspective. This is a structured way to de-couple the design to a level where, preferably, each technical solution carries one attribute.
The next step is to optimize the product concepts and the value-chain from a cross-functional perspective. A key to to reduce production cost and enable automation is to select common technology concepts. This means that all variants of a components should be based on the same technical principle. Common concepts give opportunities to standardize production and assembly equipment and limit interdependencies between production lines and sites.
One example is the truck air inlet where some manufacturers have chosen to offer cabs with front, rear and top mounted air intake, while some have decided to standardize and only offer front mounted. As the air intake impacts the cab structure, a common position gives significant advantages in the manufacturing and assembly processes.
A modular design enable different models to be produced on the same line
Based on selected technology concepts the product is then structured into modules. The priority is often the configuration modules and module variants, to enable flexibility to customize products. Depending on the situation it could also be important to define modules for specific steps of the value-chain e.g. supplier integration, manufacturing automation, pre-assembly and after-market.
The focus of this step is to describe how products can be created based on configuration of the pre-defined module variants. The result can be static pre-defined products, products that are configured dynamically at the point of sales, or something in between.
Module variants and product configurations for Scania’s P-series cab
This step is about standardizing the interfaces, connection points between modules, across the range of module variants and over time. Critical dimensions that need to keep fixed across the range of products should also be identified. One example from Volkswagen is the distance between the pedal box and the front-wheel center line. This part of the car is among the most expensive parts of a car to develop and the production line also must be built around it. Standardizing it saves substantial costs and allows the plants to build what the market demand dictates.
Our approach results in a modular product architecture with modules and variants having well-defined performance steps with standardized interfaces to accommodate a flexible, agile and cost-efficient range of market driven products. The product road-map, forecast and market demands need to be translated into a module development road-map and supply plans which both are key to for the implementation. A robust governance structure is key for a sustainable result over time. Therefore, a governance structure with decision rights and processes for handling change requests must be defined before or, early in, the implementation phase.
Brick Strategy’s approach to implement modular products is based on our consultants’ long experience from Scania, dialogues with former Scania colleagues, combined with 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 use modularity to increase profitability for your products.
Intensified competition and stronger demand for product variety brought new challenges to the table. Development of a modular product platform across product families increases portfolio flexibility and reduces total value chain cost.
Vehicle electrification and new customer needs puts new requirements to car manufacturers. Implementing a clear structure for managing changing requirements and realize synergies is key to stay competitive in the new landscape.