Modularization in the Auto Industry: Interlinked Multiple Hierarchies of Product, Production, and Supplier Systems

This paper analyzes the modularization in the world auto industry. The modularization in the industry has involved architectural changes in product, production, and supplier systems with each region (Japan, Europe and the U.S.A.) emphasizing different purposes and aspects. As an attempt to understand such multi-faceted, complex processes coherently, this paper proposes a conceptual framework that sees development / production activities as interlinked, multiple hierarchies of products, processes, and inter-firm boundaries. With this framework, drawing on case studies and questionnaire survey data, the paper examines the on-going processes of modularization in the industry. It is argued that tensions exist among the three hierarchies, and such tensions may lead to further changes in product, production and supplier-system architectures in the auto industry, in a dynamic and path-dependent manner.Automotive industry, modularization, product architecture, production system, supplier system, hierarchies

Limits to Modularity: A Review of the Literature and Evidence from Chip Design

This working paper has been prepared as part of the East-West Center's research project on Globalization of Knowledge Work: Why is Chip Design Moving to Asia. In this paper, Dieter assesses what we know about the limits to modularity and their impact on firm organization and industry structure. He focuses on evidence form chip design, drawing on interview on 2002 and 2003 with a sample of 60 companies and 15 research institutions that are involved in chip design in the US, Taiwan, Korea, China and Malaysia. It is summarized "stylized" propositions of the modularity literature that are well-established, as well as predictions that are controversial. In addition, important limits to modularity and relevant management responses were reviewed.

Modularization Assessment of Product Architecture

Modularization refers to the opportunity for mixing-and-matching of components in a modular product design in which the standard interfaces between components are specified to allow for a range of variation in components to be substituted in a product architecture. It is through mixing-and-matching of these components, and how these components interface with one another, that new systems are created. Consequently, the degree of modularization inherent in a system is highly dependent upon the components and the interface constraints shared among the components, modules, and sub-systems. In this paper, a mathematical model is derived for analyzing the degree of modularization in a given product architecture by taking into consideration the number of components, number of interfaces, the composition of new-to-the-firm (NTF) components, and substitutability of components. An analysis of Chrysler windshield wipers controller suggests that two product architectures may share similar interface constraints, but the opportunity for modularization of one module is significant higher than the other due to the higher substitutability of its components and lower composition of NTF components.Product architecture, modularization, substitutability, new product development

Modular Production Networks in Electronics: the Nexus between Management and Economics Research

In the last two decades, the electronics industry has evolved from a vertically integrated industry to a vertically segmented one. This transformation has often been attributed to the modularization of electronic products. In this paper, we argue that the degree of modularity is an active choice variable for a firm. As a result, it is necessary to focus on the underlying factors that drive both modularity and the organization of production. This provides insights into the transformation taking place in global electronics production, with vertical fragmentation, horizontal consolidation, and the growth of Asian electronics production.modularity, electronics, outsourcing, contract manufacturing, East Asia

Modular Production Networks in Electronics: The Nexus between Management and Economics Research

In the last two decades, the electronics industry has evolved from a vertically integrated in-dustry to a vertically segmented one. This transformation has often been attributed to the modularization of electronic products. In this paper, we argue that the degree of modularity is an active choice variable for a firm. As a result, it is necessary to focus on the underlying fac-tors that drive both modularity and the organization of production. This provides insights into the transformation taking place in global electronics production, with vertical fragmentation, horizontal consolidation, and the growth of Asian electronics production.Modularity, electronics, outsourcing, contract manufacturing, East Asia

"Automobiles: Strategy-based Lean Production System"

The present situations and future prospects of the Japanese automobile industry are discussed. Selected topics in this paper include the following: analyses of the basic product-industry characteristics of the automobile (e.g., product architecture); the mature of the dynamic competition in the world auto industry; competitive performance (e.g., productivity) of the Japanese auto makers; organizational capabilities of better Japanese firms in production, development and procurement; overall environments in the 1990s; the concept of "balanced lean" system and its adaptation to environmental changes; new flexible production systems that cope with volume fluctuation; architectural strategies of the auto firms; modularization of parts; M&A and alliance; future of the automobile technologies and architectures; future of the capability-building competition.

Modularization in the Auto Industry: Interlinked Multiple Hierarchies of Product, Production, and Supplier Systems

This paper analyzes the modularization in the world auto industry. The modularization in the industry has involved architectural changes in product, production, and supplier systems with each region (Japan, Europe and the U.S.A.) emphasizing different purposes and aspects. As an attempt to understand such multi-faceted, complex processes coherently, this paper proposes a conceptual framework that sees development / production activities as interlinked, multiple hierarchies of products, processes, and inter-firm boundaries. With this framework, drawing on case studies and questionnaire survey data, the paper examines the on-going processes of modularization in the industry. It is argued that tensions exist among the three hierarchies, and such tensions may lead to further changes in product, production and supplier-system architectures in the auto industry, in a dynamic and path-dependent manner

Strategic perspectives on modularity

In this paper we argue that the debate on modularity has come to a point where a consensus is slowly emerging. However, we also contend that this consensus is clearly technology driven. In particular, no room is left for firm strategies. Typically, technology is considered as an exogenous variable to which firms have no choices but to adapt. Taking a slightly different perspective, our main objective is to offer a conceptual framework enabling to shed light on the role of corporate strategies in the process of modularization. From interviews with academic design engineers, we show that firms often consider product architecture as a critical variable to fit their strategic requirements. Based on design sciences, we build an original approach to product modularity. This approach, which leaves an important space for firms' strategic choices, proves also to seize a large part of the industrial reality of modularity. Our framework, which is a first step towards the consideration of strategies within the framework of modularity, gives an account for the diversity of industrial logics related to product modularization.product modularity ; corporate strategy ; technological determinism

Antecendents and Consequences of Modularization in BPO - Based on Transaction Cost Theory and Knowledge-based Theory

Business process outsourcing (BPO) is expected to be “the next big wave” in the development of information technology services. However, managing the tacit knowledge underlying the interfaces is costly and complicated. Modularization of the outsourced business process can mitigate such complexity and the risk of knowledge misappropriation. This research-in-progress paper introduces the concept of modularization of outsourced business process (MOBP), which is viewed as the operational concept of “modular global sourcing” proposed by Infosys, a leading Indian outsourcing provider. Standing the position of the client firm, we examine the antecedents and consequents of MOBP based on transaction cost economics theory and knowledge-based theory. We explore the impacts of process human asset specificity, environmental uncertainty, behavioral uncertainty, small-number trading, strategic criticality of process knowledge, and process knowledge ambiguity on the extent of MOBP and also the impacts of MOBP on cost reduction and knowledge spillover. This paper also describes the research plan to test the research hypotheses. Contributions to research and practice are highlighted

Outsourcing in healthcare through process modularization: a lean perspective

Looking for efficiency, quality and profitability gains, healthcare organizations are adopting outsourcing solutions in the attempt of "doing more with less". Seeking for cost reduction, risk mitigation, adapting to quick changes without compromising internal resources, these organizations also take big risks in control and flexibility variables. In order to understand how healthcare organizations find the best value equation combining internal and external resources in a modular service conception, a case study on a start-up Long-term Care unit with innovative format, great levels of customization and following an outsourcing strategy, was carried out. The main conclusion, among others, is that in ambitious start-ups, having speed of entrance as the conditioning factor, a process orientation and management approach may offer a clear view of the gains related with trade-off decisions regarding time and cost (agility) and cost and quality (Leanness) ie, decisions under the "leagile" paradigm. This study contributes for a wider understanding of the "leagile" concept associated to an outsourcing operational strategy. Additionally, it also provides new insights to the concept of modularity in services settings in a complex service as healthcare