Principle of Product Modularization

Modularization in supply chain management is needed in order to implement supply chain strategies as well as manufacturing strategies. The assemble-to-order strategy can only be implemented if there is a modular design of products. The end product can then be assembled out of a small number of products. According to the modules, a decision can be made whether to make or to outsource certain modules to other suppliers and focus more on core competencies. In the next section this is discussed in further detail. 

The benefits of modularization are multifaceted. Modularity can help a firm increase the number of products offered while simultaneously lowering costs. 

Through a modular organization not only economies of scale, but also economies of scope such as customization or product variation can be achieved (Mikkola 2006). Furthermore, a firm disposes over increased capability to provide a broader range of products when modularization is applied (Hahnan et al. 2003). In addition, time to market of new products can significantly be reduced through composing a product of modules, and new product development can also be accomplished with more flexibility (Baldwin and Clark 1997). Finally, the frequent combination of standardized and approved components induces a high level of product performance (Halman et al. 2003). 

In general, the scope of product architecture can be defined rather arbitrarily (Ulrich 1995). Two main requirements are identified that need to be fulfilled if a successful modular stmcture of the product range is to be implemented (Halman et al. 2003). On the one hand, the product structure has to permit the division of elements on the other hand, parts of the product architecture have to support standardization. A framework for categorizing the prevalent aspects of product architecture has the following aspects On the top level, the functional elements are arranged this describes what the products characteristics are. These elements are linked to physical components, which are connected by interfaces that specify the interaction of the physical components. The connection of physical components can be further split up into two types modular and integral. 

In conclusion, a graphic is presented that provides a concrete visualization of the concept of modularization. For this purpose Fig. 4.2 depicts an exemplary product architecture. The system chosen for this example is the automobile. The automobile qua system can be split up into various subsystems, such as the instrument panel or the power train. Next, the subsystems consist of diverse modules for instance, the power train is made up, among other things, of the engine and the rotating block. Lastly, a module is composed of different components. For example, the rotating block is composed of components such as the case, the gear box and the motor shaft. 

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