Modular Design Playbook1

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2010 The Corporate Executive Board Company. All Rights Reserved.

FINANCE AND STRATEGY PRACTICE

RESEARCH & TECHNOLOGY EXECUTIVE COUNCIL

Modular Design

PlaybookGuidelines or Assessing

the Benets and Risks o

Modular Design


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Report Authored By

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Mattias Velinder


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2010 The Corporate Executive Board Company. All Rights Reserved. RTEC5 2136 09SYN

Executive Summary 1

The Modular Design Concept 5

Advantages and Disadvantages 9

Advantages o Modular Design 10

Disadvantages o Modular Design 12

Application Considerations 15

When to Insert Modularity in the Design Process 16

Targeting Products or Modular Design 17

Deciding on the Degree o Product Modularity 17

Examining Modular Design in Dierent Industries 20

Implementation Steps and Tips 23

Typical Modular Design Implementation Process Steps 24

Organizational Barriers to Implementing Modular Design 27

Implementation Tips rom Experienced Companies 28

Case Examples 31

Betas1 Market-Aligned Modular Design 33

Alphas1 Cross-Functional Modular Design Scorecard 36

Gammas1 Central Product Strategy Team 39

Assessing Post-Implementation Performance 43

Sample Metrics or Evaluating Modular Design 46

Table o Contents

1 Pseudonym.
http://www.riskmetrics.com/knowledge/conversations/2009proxy_seasonhttp://www.riskmetrics.com/knowledge/conversations/2009proxy_seasonhttp://www.riskmetrics.com/knowledge/conversations/2009proxy_seasonhttp://www.riskmetrics.com/knowledge/conversations/2009proxy_seasonhttp://www.riskmetrics.com/knowledge/conversations/2009proxy_seasonhttp://www.riskmetrics.com/knowledge/conversations/2009proxy_seasonhttp://www.riskmetrics.com/knowledge/conversations/2009proxy_seasonhttp://www.riskmetrics.com/knowledge/conversations/2009proxy_seasonhttp://www.riskmetrics.com/knowledge/conversations/2009proxy_seasonhttp://www.riskmetrics.com/knowledge/conversations/2009proxy_season


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Executive Summary


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2 Modular Design Playbook



EXECUTIVE

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OVERVIEW

Companies employ modular design to be more agile and competitive in rapidly

changing market environments, while driving cost-eciencies internally. Usingmodular design allows companies to recombine modules across product lines

and increase product variants to satisy changing customer needs. Furthermore,

manuacturing becomes more cost and time ecient by capitalizing on economies

o scale and streamlining assembly lines. Benets withstanding, implementing

modular design is a complex and vast undertaking with enterprise-wide implications

that will challenge many organizations. Nevertheless, companies across industries

increasingly adopt modular design and are thereore continually developing new

methods and tools to successully implement and manage a modular product

architecture.

KEY TAKEAWAYS

1. Denitions o Modular Design Vary Across Companies, but Fundamental

Ideas Remain the SameAlthough exact denitions vary, the undamental

principles o modular design are common: break systems into discrete modules,

ensure modules can interchange with each other, and provide well-dened

interaces. Furthermore, modular design acilitates the design o modular product

architectures and/or the creation o modular manuacturing processes.

2. Benets o Modular Design Accrue Across the FirmEmploying modular

design has myriad well-documented benets, the most common rom cost-savings

and product line diversication. Companies that employ modular design can

produce benets across the organization, in R&D, Manuacturing, Procurement,

and Marketing and Sales.

3. Manage Against Less Well-Known Implementation Risks o Modular Design

Early on to Minimize Chances o Business DisruptionAlthough employing

modular design can provide numerous benets, companies ace less well-known

implementation risks associated with new suppliers, changes in talent skill

proles, IP protection, and coordination execution complexity. Companies that do

not consider and manage against these risks early on can lose out on the benets omodular design and signicantly damage operations.

4. Do Not Determine the Degree o Modularization Based Solely on Cost-

Efciency OpportunitiesMany companies seek to make both new and existing


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Executive Summary 3



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DISADVANTAGES

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products as modular as possible to capture the greatest possible internal cost-

eciencies. However, executives must consider many actors to determine the

extent o product modularization. Besides the requisite ocus on a products

technical eciency and reliability, companies must also consider the eect

modular designs will have on customers perceptions and cross-unctional risk

exposure. Companies should identiy and employ design alternatives that satisy

all ronts, not just cost-eciencies.

5. Select High-Volume Products with Multiple Shared Components Across

Products LinesAny product could potentially be modularized, but companies

must be selective in choosing which products to redesign, especially when rst

piloting modular design. To more easily benet rom the advantages o modular

design, successul companies initially target products that have a large number o

shared components with other product lines, high sales volumes, and/or containplatorm technologies.

6. Secure Early Internal Stakeholder Buy-In or Modular Design to Enable

Successul ImplementationCompanies that implement modular design

undamentally change their product and manuacturing architecture, which

impacts the entire organization. Implementation barriers or modular design

arise rom the lack o early widespread support. For successul implementation,

executives need to obtain buy-in rom internal stakeholders rom the outset.

7. Use Direct Customer Voice to Screen Modular Redesigns BeoreImplementingExecutives need to ensure that new design alternatives are

aligned and accepted by the market to prevent alienating existing customers.

Companies should test and screen any new product design directly with the

customer beore adoption.

8. Establish a Cross-Functional Team with Broad Technical and Market Skills

to Evaluate Modular Design AlternativesAs R&D and engineering teams

are traditionally comprised o individuals with particular niche expertise in

their elds, this specialization can inhibit the ability o individuals to look across

product lines to distill modular components. Companies should establish a cross-

unctional team that possesses a broader technical skill set as well as acute market

insight to understand and explore the ull range o modular design possibilities

that exist across product lines.


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5



The Modular Design Concept


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DEFINITION

To oer greater product variations at lower costs, many companies employ a

modular strategy that explicitly leverages and reuses existing product design ideasand materials. To ully understand the modular concept, it is important to contrast

modular product design with a more conventional approach1:

Conventional Versus Modular Product Design

Design Approach Development Approach

Conventional Product

Design: R&D and

Marketing conduct

market research to

determine optimalattributes o product

design.

Desired unctionality

decomposed into

components, but

component interaces

are not specied in detail.

Component development

and product design

co-evolve in an iterative

process. Product

architecture is denedat the completion o the

development process by

the nal product design.

Modular Product Design:

R&D and Marketing

create product platorms

upon which they will

architect product

variations according

to market needs.

Modular product

architecture ully

species component

interaces and limits

subsequent component

development.

Component development

processes are concurrent,

autonomous, and

distributed. Product

architecture is dened

at the design stage and

does not change during

development.

Modular design oers an ecient method or mass customization, enabling multiple

product variations while keeping costs low. Especially in turbulent economic times

with unpredictable customer behavior, R&D teams can recongure products quickly

to react to changing customer needs. Companies use dierent denitions o modular

design depending on their specic organizational context.

1 Liang, Wen-Yau, and Peter OGrady, A constrained evolutionary search ormalism or remote design withmodules, International Journal o Computer Aided Manuacturing, Vol. 13, no. 2 (2000): 6579.

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The Modular Design Concept 7



Client Perspective: Descriptions o Modular Design

It is the breakdown o

a product into building

blocks (modules) with

dened interaces,

driven by strategic

goals.

VP, Global Technology

Consumer Product

Manuacturing Company

All design is modular;

we try to break all

our code down into

the most granular

components that can

then be reused.Technology Engineer

Aerospace and Deense

Company

[In modular design]

components are

created that can be

easily changed to be

adapted to dierent

products.Director, Engineering

Electronics Company

Although exact denitions vary, the undamental ideas are common throughout:

Break systems into discrete modules.

Ensure modules can interchange with each other. Provide well-dened interaces.

Modular design acilitates the design o modular product architectures and/or the

creation o modular manuacturing processes.

The Research & Technology Executive Councils denition o modular design is

broadly applicable or most organizations:

The Councils Denition o Modular Design

Modular design is the organization o a complex system into a number o smaller,

complementary, and distinct components, which can be designed separately andthen assembled to orm the entire system again seamlessly. Driven by strategic

goals, module interaces must be well dened with interchangeable components.

The individual components can be used to create other systems and thereore drive

multiple unctionalities.

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Advantages and Disadvantages


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I. ADVANTAGES OF MODULAR DESIGN

Employing modular design has many well-documented benets, the most common

o which are cost-savings and product line diversication. However, employingmodular design can produce benets across the organization, in R&D, Manuacturing,

Procurement, and Marketing and Sales.

Research and Development

The product design and development process undamentally changes as a consequence

o employing a modular process. As opposed to an integrated design approach where

product designs only aim to address specic market needs, a modular approach seeks

to address market needs as well as employ a ramework that can house and leverage

a variety o discrete modules. Furthermore, companies can signicantly shorten the

development process by using existing know-how and modular components whencreating a new product.

There are several benets we have seen as a result o using modular design,

like standardizing manuacturing processes, decreasing assembly lines, and

reducing changeover costs, plus part counts are down and products are

easier to servicebut this all comes down to delivering cost-efciencies.

Manager, Product EngineeringConstruction Materials Company

Manuacturing

A key component o modularization is the ability to standardize independent modules

and drive scale. This can translate into huge cost savings rom manuacturing

simplication and consolidation.

Procurement

Modular design decreases the number o unique parts needed in a product, as modules

and interaces become more standardized. This can rerame supplier management

to drive more strategic partnerships with ewer suppliers and enhance negotiating

power with scale.

Marketing and Sales

Modules provide specic unctions and benets to the overall product, which

companies can map to customer needs and segments. For example, companies can

use a high- versus low-perorming module in a product to target a high- versus

low-income customer segment. This provides Marketing with the ability to oer

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customers a wider product range.

We have been able to reduce part numbers, which has helped inventory,direct cost reductions, increased product quality, and standardized assembly

lines. We work with ewer suppliers, too, which means we have better

partnerships and purchasing conditions.

Manager, New Product DevelopmentIndustrial Manuacturing Company

The ollowing table contains a ull overview o the specifc advantages that many individual

departments can achieve as a direct result o implementing modular design:

Department Specic Benets Description

Research andDevelopment

Increasedreliability

R&D can test individual modules to identiy specicproblem areas more easily than with integrated productdesign. By improving individual modules and interaces,the entire system becomes more robust.

Reuse o designand materials

Assembling and reusing modular components in multiplecombinations to orm dierent products creates savingsknown as economies o substitution. Leveraging existingdesigns and materials saves time and money.

Diversicationo product lines

Although the number o unique components in any givenproduct typically decreases through modular design, thenumber o potential product variations increases,providing a more diverse product portolio.

Manuacturing Assembly linereduction

Reducing the number o unique manuacturedcomponents oten enables companies to consolidate andretire nonessential or redundant assembly lines.

Changeover costreductions

A higher volume o more standardized modules leads toa reduction in changeover costs and the number o toolsrequired or production.

Shared processplanning

With dierent product lines using the same moduledesign, Manuacturing can implement shared processesacross product lines.

Agility andexibility

Assembly lines can manuacture modules independentlyand concurrently, enabling more agile and exibleresource planning.

Procurement Inventoryreduction

Reducing the number o unique parts required in designalso reduces the inventory o spare parts required. Thisconsolidation o unique purchased materials also leads tosimpler stock keeping and inventory management as thereare ewer product categories to manage.

Improved suppliermanagement

Managing a smaller supply base with higher volumesenables the development o strategic supplierrelationships, which can translate into higher trade credits,prolonged payment deadlines, and better pricing.


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Procurement

(Continued)Increasedsupplier designcollaboration

Asking suppliers to create sel-contained modular unitsthat interace with a variety o products oten requiresdeeper and new technical skills rom suppliers. By moreclosely integrating suppliers into the modular design

process, companies can improve easibility testing andbenet rom unique supplier design capabilities.

Marketingand Sales

Increasedcustomization

Modular products can be easily customized by switchingdierent components across product lines and interaces.Changing customer requirements can be more readilymet, and new product variations can be created tocapture new market segments or more market share.

Incrementalupgrades

As companies create new or next-generation modules,they can oer new eatures or product lines using thesenew modules either in the orm o a chargeable eatureupgrade or a new premium product line.

Quicker servicingand repair

With modular design, deects generally do not aectthe entire unction o the product. Deects can be tracedto specic malunctioning modules or interaces and

quickly rectied through repair or replacement withouta complete product overhaul. Customers value the asterservice turnaround times and decreased cost o repair.

Faster timeto market

Modular design signicantly decreases the time it takesto move a product rom concept to commercializationthrough design reuse and quicker manuacturing.

Simplersales process

Reduced complexity in product design simplies the salespitch and enables sales teams to oer a higher degree ocustomization to meet customer needs.

II. DISADVANTAGES OF MODULAR DESIGN

Although employing modular design provides a number o advantages across the

organization, companies must also consider the less discussed risks when evaluating

the decision to implement modular design or reviewing existing modular processes.

High Initial Investment

The initial costs to recongure existing systems and processes are high. Modular

design is a signicant undertaking, which may disrupt the existing fow o the

product pipeline. Visualizing and predicting the possible return and benets o such

an investment is done speculatively with no direct link between investment and

return. As such, some R&D departments struggle to secure buy-in rom the rest o

the organization.

Lack o Customer-Centricity

In an integrated design, companies determine product specications based on

customer needs; however, a modular architecture uses both customer needs and

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cost-eciencies. With a dual goal, companies can become too internally ocused

while searching or cost-eciencies and lose sight o customer needs. At its worst,

this can lead to lost market share and revenue. (See Beta1 solution on page 33.)

The danger o modular design is that i it is taken to the extreme or done

wrong, the product will not meet customer needs, while a customized

process will always create something that meets customer specications.

Manager, New Product DevelopmentIndustrial Manuacturing Company

Coordination Complexity

Modular design requires a signicant restructuring o processes and can increase

product development complexity i companies do not assign clear ownership and

responsibilities in a well-planned implementation process. Post-implementation, a

lack o cross-unit collaboration can cause 1) duplication o processes, 2) inconsistency

across product specications, purchase orders, and manuacturing plans, and 3)

incongruous interaces across business units. I companies do not address these

coordination issues, products may suer rom a quality and stability standpoint.

The main disadvantage is that there is a high cost and major overhaul

needed when undertaking modular design. But in the long term, it pays o,

allowing you to be quicker in and to the market.

Vice President, Global TechnologyAppliances Manuacturing Company

Supplier Risk

Companies that adopt modular design will alter their supplier base and the services

needed. When collaborating with new suppliers, companies can experience delays,

incorrect specications, and poor material quality. Also, companies may have to

share inormation and technical expertise to ensure suppliers deliver according to

new specications and cost. A company surrendering too much technical expertise,

especially in areas that provide a competitive advantage, may lose technical control

to the supplier. (See Alpha1 solution on page 36.)

Low Flexibility or ExceptionsTo ensure consistency o product lines and reap the rewards o modularity as an

organization, companies must sometimes apply modular design to products that

1 Pseudonym.


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would be cheaper to produce through an integrated design. This can reduce margins

and decrease competitiveness or certain products. When making these tough

modular decisions, companies should leave the nal verdict to business units. (See

Gamma1 solution on page 39.)

You may have to make a ew tough callssome products, which would make

more sense i they were let as integrated products, are orced into a modular

conguration to t in with the wider product line redesign.

Manager, Product EngineeringConstruction Materials Company

Broad Skills Requirement

Design engineers must have a broad technical understanding across product lines to

identiy modular components or synergies. This is a departure rom more traditional

engineering activities, and companies may not capture potential benets i the design

team lacks this broad skill set. (See Gamma solution on page 39.)

Intellectual Property Risk

Producing discrete modules simplies the product architecture, enabling competitors

to more easily discern technologies employed and mimic modules. To counter this,

organizations must increase patent documentation to prevent competitors using key

modules in their product architectures.

1 Pseudonym.

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15



Application Considerations


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OVERVIEW

Companies apply modular design in various ways, depending on actors such

as industry, brand strategy, organizational structure, product architecture, etc.Independent o these issues, most companies cite very similar screens or deciding

when to implement modular design. This section helps companies determine the

ollowing:

I. When in the design process to consider modular alternatives

II. How to target individual products or modular design

III. To what extent a design should be made modular

IV. How modular design maniests itsel in dierent industries

I. WHEN TO INSERT MODULARITY IN THE DESIGN PROCESSCompanies need to explicitly dene the particular phase in the development process

where they will apply modular design. Ater assessing the market and technical

capabilities and determining a high-level design vision, companies typically consider

how to apply modular design in the easibility stage.

Product Development Process

During the easibility stage, manuacturing, engineering, project management, and

marketing team members meet to discuss various modular alternatives and design

possibilities. The outcome o these discussions is a decision on design architecture

design parameters. This process ensures that the design can be made modular and

can also meet product unctionality considerations incorporating both customer and

technical considerations. Once designs are approved, companies must assess how

the modular design choices will impact supplier relationships: the number o unique

suppliers, required supplier technical expertise, and preerred supplier locations.

Furthermore, R&D needs to select the right projects or applying modular design.

Study

market to

identiy

customer

segments

and marketneeds.

Design

vision based

on market

segments

and needs.

Assess

current

and uture

technological

capabilities

againstdesign

vision.

Determine

easible

design

alternatives

by

assemblingstakeholders.

Develop

prototypes

based

on best

designs to

test againstmarket.

Present

internal

business

case

or bestprototype.

Open

project

or

commerc-

ialization.

Modular Design

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II. TARGETING PRODUCTS FOR MODULAR DESIGN

Although companies could potentially design any product modularly, they should be

selective in which products to redesign, especially when rst piloting modular design.

Successul companies initially target products that exhibit the traits described below

to more easily benet rom the advantages o modular design:

Design Architecture

1. Common ComponentsProducts that have a high number o components in

common with other product lines should be primary modular design targets.

Time and cost savings rom reuse combined with higher potential product

variation possibilities make these products the most benecial or leveraging

modular design.

2. Platform InfrastructureProducts that have a platorm inrastructure to

support various modules (opposed to a wholly integrated design) makeinterace design a simpler and quicker process.

3. Non-Client-Facing ModulesProducts that can be redesigned modularly

without changing the outward appearance or unctionality o the product

enable customer perceptions to go unchanged (reducing uncertainty

associated with redesign), while the organization can benet rom

cost-eciencies.

Production Processes

4. Ability to Leverage Existing Production ProcessesProducts produced on

similar assembly and production lines that can generate the highest-potentialreturns through improved utilization o manuacturing capabilities and

acilities.

Demand Considerations

5. High VolumeProducts manuactured and sold in high volumes will benet

most rom modular design through reuse savings. Low-sale volume products

typically do not generate enough margin to justiy the high initial cost

attached to implementing modular design.

III. DECIDING ON THE DEGREE OF PRODUCT MODULARITY

Many companies strive to make both new and existing product lines as modular as

possible to gain the highest degree o cost-eciencies. But there are many actors

executives must consider when deciding on the extent to make any product modular.

Besides the obvious requisite ocus on technical eciency and reliability, companies

must also ocus on the impact on customers and other unctions.

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Customer Impact o Modular Design

Companies can group modules into either client-acing or non-client-acing modules.

Client-acing modules are visible to the customer and/or directly contribute to aunctionality that satises a customer need. Non-client-acing modules provide

hidden unctionality, where customers do not directly interact with or observe the

technologys unctionality.

For non-client-acing modules, companies do not need to limit the degree o

modularity, but rather should seek to maximize modular design or cost savings.

However, client-acing modules need to align with customer needs and preerences

and should not solely be designed or cost-eciencies.

Companies can modularize a product in dierent ways depending on the technical

capabilities o the company, existing component structure, materials available,know-how, etc. Companies should initially assess which modular design to choose

based upon the balance between cost savings and market alignment by overlaying

the product lines and modular design options on a matrix as shown below.

Modular Design: Market Alignment Matrix

Design Y

Design ZDesign Y

Design X

Design X

Design Y

Design X

High

Low

Low HighCost Savings

MarketAlignment

C D

A B

Product

Line 1

Product

Line 2

Product

Line 3

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A Lower-Let Quadrant: These product designs should either be revised or discarded.Implementing either o these alternatives may cause harm to the brand image o the

organization by not ullling customer needs. Plus, the complexity and/or costs associated

with these designs typically prevent them rom achieving acceptable ROI levels.

B Lower-Right Quadrant: These design alternatives benet rom substantial cost savings, butclient-acing modules ail to properly align with the market needs, either by not providing

unctionality expected by customers or visually impairing the perception o the product

by customers.

C Upper-Let Quadrant: These design alternatives ensure that client-acing modules are marketaligned, but do not reap the ull potential rewards o modular design. Companies may either

explore urther potential cost savings or decide that sales orecasts and/or margins are high

enough to warrant implementation. Furthermore, some organizations opt or break-even or

even loss design alternatives to benet rom the experience o implementing modular design

or because these products support a avorable brand image in the market. Typically, however,

companies discard these design options as they do not yield high enough cost savings.

DUpper-Right Quadrant: These products and design alternatives successully balance

maximized cost savings with customer expectations. Products and designs in this quadrant

should be prioritized or uture commercialization.

Cross-Functional Impact o Modular Design

Dierent modular designs can have varying consequences or unctions across

the company. These repercussions play a signicant part when deciding on

the nal modular design. I a company is presented with a number o dierent

designs to modularize a product, it should review the impact each o these design

alternatives will have on costs, process eciency, and risks specic to dierent

departments. The design alternative chosen may not be the most benecial in

terms o cost savings, but one that minimizes risks across the most areas.

Companies should establish mechanisms to ensure that repercussions or

going modular are ully considered or all stakeholders. To track these risks,

some companies establish simple stoplight risk assessments or each design,

monitoring potential risk levels by unction. Each department determines

the acceptable level o risk and tracks parameters. For example, i quality and

manuacturing risks reach a certain threshold, it triggers a red light status,

which orces the company to abandon Design X and consider Design Y that has

acceptable risk levels across departments.

Cross-Functional Risk Monitoring

Illustrative

Quality Risks Engineering

Risks

Procurement

Risks

Manuacturing

Risks

Marketing

Risks

Status

Design X

Design Y

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IV. EXAMINING MODULAR DESIGN IN DIFFERENT INDUSTRIES

A modular strategy provides rms with fexibility, agility, and new design

alternatives. However, modularization should be adopted cautiously. The ability oindividual companies to capitalize on modular design advantages is oten dependent

on industry-specic dynamics. Provided below are examples o how companies

across various industries have capitalized on modular design.

Automobile Industry1

Modular design helps car manuacturers cut costs and reduce complexity. A good

example o this comes rom Mercedes-Benzs sports vehicle manuacturing plant in

Alabama. The vehicles design required them to source parts rom a large number

o external suppliers and manage a vast supply system. Instead o trying to manage

this system as a whole, Mercedes-Benz structured the manuacturing process into a

number o smaller production modules. They outsourced the production modules to

suppliers, who were ully responsible or manuacturing and delivery. For example,

the entire drivers cockpit is a separate module produced at a nearby supplier plant,

under the complete responsibility o the supplier.

Volkswagen adopted a similar approach or its truck actory in Brazil by making the

actory available or use by its suppliers. Suppliers procure their own materials and

manpower to create separate modules, while Volkswagen provides the inrastructure

and designs the interace between manuacturing units.

High-Technology Industry2

In the high-tech industry, product customization is in high demand. For example, Dell

modularizes its product designs and supply chain to ensure high customization or its

customers. Customers can choose rom a wide array o modules like motherboards,

power systems, operating systems, and input devices. The modularity o Dells PCs

helps them deliver against a wide array o customer wants quickly and eciently.

Dells made-to-order strategy enables the company to be a supplier o choice or its

customers.

Sotware Industry3

Modular sotware design reers to a design strategy that organizes relatively smallroutines together to compose a system. With signicant modular development, the

sotware industry has rapidly become decentralized, as smaller companies begin to

share their technology with outside programmers. For example, Salesorce.com, a

ast-growing CRM provider, externally published standards or interconnecting its

1 Garud, Raghu, Arun Kumaraswamy, and Richard N. Langlois, Managing In The Modular Age, Blackwell PublishersLtd. (2002).

2 Fine, Charles H., Are You Modular or Integral? Make Sure Your Supply Chain Knows, Strategy+Business(Summer 2005).

3 Marko, John, Sharing Lego blocks: Modular sotware reshapes the computing landscape, The New York Times(5 April 2006).

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sotware. This enabled developers inside and outside the company to add powerul

abilities to its core products and create new ones rom scratch. The ollowing drive

organizations to apply modular sotware:

Complex problems can be broken down into simple parts and solved part by

part, simpliying project management.

Developers can reuse sotware code written modularly as part o other

programs, saving time by providing standardization and consistency.

Construction Industry

Construction rms regularly apply modular techniques, where a building is built in

three-dimensional sections (or modules) in an enclosed actory environment.1 Every

modular building starts with a foor plan design. This plan is divided into smaller

sections or modules that are constructed separately using existing technologies suchas conventional commercial wall, foor, roo, and ceiling materials. To maximize

time savings, the site development teams prepare the site and perorm any needed

on-site construction (a process called concurrent construction). Manuacturers cite

the ollowing reasons to apply modular design:2

Time Savings: Modular construction allows or building and site work to

progress simultaneously, reducing the overall completion schedule by as much

as 50%.

Weather Autonomy: Dierent weather conditions do not aect assembly,

which increases work eciency and avoids damaged building material.

Supplier Bargaining Power: Large-scale manuacturers can eectively bargain

with suppliers or discounts on materials.

Reduced Complexity: Reusing the same plans or modules means that the

manuacturer has records o the quantity o materials needed or a given job,

reducing waste and maximizing the use o purchased material.

Environmental Impact: Modular construction generates less material waste

and less site disturbances than comparable site-built structures and is more

environmentally riendly.

Consumer Packaged Goods (CPG) Industry

The CPG industry generally implements modular design to introduce greater

customization in their product oerings. For example, Nike uses modular design to

empower consumers to choose the component parts, both or aesthetic and unctional

1 What Is Accelerated Construction?, Comark Building Systems, www.comarkbuilding.com.

2 Modular Homes Make Sense, www.bobvilla.com.

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reasons, to compose their own shoes. This enables Nike to serve customers with

diering preerences equally well.1

Furthermore, Whirlpool employed modular design to produce a new built-in (opposedto stand-alone countertop) microwave oven with two new cooking modes while

decreasing costs by 60%. Although the new product line is still evolving, Whirlpool

reports initial benets o reduced prices o purchased components, increased quality,

and improved product variation or the new product range.

The mind-set o modularity allows us to predict the impact o any

request or change much more quickly than beore. This saves time and

energy. In our old, non-modular designs, when someone asked us or a

styling or perormance change, we had to review the entire design. Now we can

easily see which modules are impacted and provide a response much more quickly

than beore.

Jorma MkilWhirlpool Employee and Owner o the Opera Platorm2

1 Sacks, Danielle, The Fast Company 50, Fastcompany.com , www.astcompany.com/ast50_09/prole/list/nike (11February 2009).

2 Whirlpool Opera Case Story, Modular Management AB, www.modular.se.

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OVERVIEW

While the degree to which companies implement modular design varies, the

steps taken to implement are airly typical. This section provides an overview o atypical six-step modular implementation process, highlights some o the common

organizational barriers that companies should watch out or, and outlines a ew

implementation tips rom experienced companies.

I. TYPICAL MODULAR DESIGN IMPLEMENTATION PROCESS STEPS

1. Determine Product(s) to Modularize

Beore starting the journey to implement modular design, a cross-unctional team,

composed o individuals rom Marketing and Engineering, initially decides on the

extent to which the company will employ modular design. This team will drive

the modular design project orward and needs expertise that will refect the voice

o the customer as well as the technical capabilities o the organization.

Some organizations decide to launch a pilot run on a single product to gain

experience and demonstrate the success o using modular design with a view to

implement this approach incrementally. Other organizations consider all product

lines across the company to implement on a large scale. This decision depends

upon careul evaluation o the individual risk and reward proles or each product

line.

2. Dene Customer Requirements

The second step ensures that designs align with current and uture requirements

o customers. The cross-unctional team, through primary and secondarymarket research, creates a high-level uture product vision and specication

requirements. Teams oten use various voice-o-customer tools at this stage, such

as the quality unction deployment (QFD) matrix, to ensure customer needs are

well documented.

1.

Determine

product(s) to

modularize.

2.

Dene

customer

requirements.

3.

Assess

and select

technical

solutions.

4.

Identiy

modules

and create

designs.

5.

Evaluate

modular

design

alternatives.

6.

Implement,

improve,

or reject

modular

design.

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3. Assess and Select Technical Solutions

Once everyone is aligned on what modular design must achieve rom a market

standpoint, the cross-unctional team explores the viable design alternatives thatwill meet customer needs and are possible rom a technical standpoint. The team

should view the product(s) in terms o unctional purpose. By breaking down the

product(s) into the unctions that satisy distinct customer needs, the team can

choose the technical solution that delivers against each unction. There may be

several technical solutions available, depending on technical capabilities, or any

given unction. When several technical solutions exist, the team chooses the most

applicable solution based on criteria such as production goals, part number count,

and material reuse. The outcome o this stage is to create a diagram o a products

unctional structure (which satises customer needs) and technical solutions

(that deliver the required unctions).

4. Identiy Modules and Create Designs1

This phase identies potential modules based on technical solutions. Teams

should assess each module by the ollowing criteria: Technology evolution

Reuse possibility

Potential cost savings

Supplier and distributor complexity

I a single technical solution scores high against multiple criteria, the team

considers the solution a viable candidate to become an independent module. The

team then either groups or integrates technical solutions that do not map well

against the evaluation criteria in the design. (For more inormation on evaluation

criteria, see Alpha2 case on page 36). Following this analysis, the team should

identiy and suggest the most relevant modular concepts or review, pairing them

with some rough specications and structures.

5. Evaluate Modular Design Alternatives1

For any modular design, the interaces between modules have a vital infuence

on the nal products architecture and fexibility. Thereore, it is essential thatteams closely examine each interace and its relation to dierent modules. This

examination serves as an indicator o the interaces that need improvement and

guides the modular manuacturing process. Based on the relationship between

modules and interaces, the team organizes assembly lines or optimal eciency.

1 Modular Function Deployment, Lean Directions, www.sme.org/cgi-bin/get-newsletter.pl?LEAN&20060609&1& (9 June 2006).

2 Pseudonym.

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With inormation on modular designs, interaces, and assembly orders in hand, the

team must assess the ull view o eects each modular design alternative carries

and create a summary or each alternative. Companies assess each alternatives

eect on the overall product using the ollowing parameters:

Quality

Variation fexibility

Lead time

Development costs

Development capacity

Production costs

Service and upgrade possibilities

6. Implement, Improve, or Reject Modular Design

In the nal step, the cross-unctional team chooses the most promising design

alternatives and documents technical inormation, cost targets, planned

development, and other inormation discovered in the process or each

alternative. From here, the team chooses to either implement, improve, or reject

the modular concept. The team assembles a business case to present to senior

management, which shows that the design alternative can ulll customer needs,

is technologically possible, and can generate tangible benets. At this step, the

team should also reach consensus on the metrics strategy or tracking ongoing

perormance o modular implementation. (See Assessment section on page 43 or

more inormation on developing a metrics strategy.)

Pilot Implementation Case Snapshot: ESAB Welding Equipment1

Company Overview

ESAB manuactures and supplies welding and cutting equipment, welding ller metals, and welding

technology. The ESAB group has annual sales o $1 billion and more than 7,000 employees.

High Complexity

To supply local regions with local products, ESAB bought a number o geographically dispersed

SMEs. Due to these acquisitions, ESAB aced increased internal complexity, high part numbers,

signicant indirect costs, and overlapping projects.

Implementing Modular DesignTo tackle these problems, ESAB ran a pilot project or a new modularized product platorm, driven

by a cross-unctional team, to prove the advantages o modularity. The pilot proved successul with

a 40% reduction in part numbers; a 90% decrease in lead-time production; and a 50% increase

in product variants. The success encouraged senior management to proceed with implementing

modular management across the division.

1 ESAB Welding Case Story, Modular Management AB, http://www.modular.se.

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Benets o Modular Design

Through implementing modular design across the division, ESAB achieved the ollowing: 40% reduction in part numbers 50% shorter assembly time Order-to-delivery lead-time reduction rom eight days to one 50% reduction in suppliers 50% increase in product variants

40% reduction in time to market

II. ORGANIZATIONAL BARRIERS TO IMPLEMENTING MODULAR

DESIGN

Companies that implement modular design on a large scale must undamentally

change their product and manuacturing architecture. When considering the

potential roadblocks o modular implementation, companies should be aware o a

ew key organizational barriers.

Difculty Achieving Senior Management Buy-In

To implement modular design, a company requires high initial investment o

resources, which requires senior management sign-o. Sign-o proves to be the rst

barrier many companies encounter as uture returns are dicult to guarantee and

quantiy.

Resistance rom Business Units

The decision to use modular design at the corporate level may yield overall cost

savings and increase product variants. However, particular products may be cheaperto produce using an integrated approach. The corporate center may orce business

units to employ modular designs or certain products (although more costly to the

business unit) or the overall benet o the company, which can make divisions o the

organization resistant to adopt modular design.

Lack o Knowledge-Sharing Inrastructure

To enable reuse in modular design, inormation on dierent product and

manuacturing designs needs to be readily available across the organization.

Interoperability and mutual substitution between modules are key success actors

or modular design. Without a centralized inormation-sharing structure, this

cannot be done eectively.

Traditional Innovation Culture

Companies that have a long history o using an integrated design approach where

whitespace innovation and individual ingenuity are praised and protected may nd

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corporate culture to be a big barrier when implementing modular design. Two ways

that organizations can resolve this are by rewarding reuse over design novelty and

implementing modular design gradually, allowing changes to slowly take root.

Organizational Complexity

Preparing any company to implement modular design can be dicult. Implementing

modular design in a large, complex, and/or highly diversied company heightens the

diculty o coordination. Companies should consider organizational complexity and

coordination costs when determining the extent to which modular design will be

successul.

III. IMPLEMENTATION TIPS FROM EXPERIENCED COMPANIES

Gain Senior Management Support rom the BeginningGetting senior management involved with production, engineering, and product

design decisions ensures support or the initiative rom the decision-making ranks

o the company early on. Temporary setbacks and losses can be dealt with in the

moment through direct communication with senior stakeholders, instead o creating

ormal meetings where issues are explained to senior management.

Communicate Adoption Benets

To gain buy-in, clearly communicate and amiliarize the business units o the

long-term advantages o modular design in terms o cost savings and increases in

eciency.

Create and Promote Modular Design Knowledge Sharing

To benet rom time savings, create IT systems that enable divisions to access relevant

designs rom across the organization. Indicate contact details or the lead designer to

assist other divisions that may want to employ a particular modular design. Once the

inrastructure exists or knowledge sharing, usage must be promoted and embedded

in the workfow across the company. For example, in the design phase o any new

product, ensure the design team includes a new step o searching internally beore

creating new designs.

Provide Training on Modular Design

Hold continuous training sessions or sta to inorm them o the benets o modular

design, the resources available to them, and how to apply modular design in their

particular work streams. Training sessions reinorce the message o modular design

and keep the issue top o mind.

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Limit Implementation Risk While Assessing Benets

Focus eorts on implementing modular design as a pilot phase or a specic product

to gain experience in modular design and limit risks o redesign. Use the successes o

this implementation as a stepping stone to harness buy-in and experience or wider

implementation across the company.

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3



Case Examples


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OVERVIEW

Executives ace an uncertain economic landscape with mounting cost pressures.

Against this backdrop, organizations increasingly consider modular design as asolution to achieve cost-eciencies and ancillary benets needed or survival. This

cost-cutting mind-set may cause companies to neglect consideration o the impact

that modular design will have on customer perceptions and its eect on business

activities across the entire organization. Furthermore, specialized engineering

organizations oten lack the cross-unctional, crossproduct line expertise to ully

exploit modular benets across the entire company.

R&D organizations oten all prey to three key downalls in implementation:

1. Lack o ocus on customer impact

2. Insucient assessment o cross-unctional impact

3. Inability to properly assess the ull range o modular possibilities.

The ollowing case examples detail how three pseudonym companies address each

o these challenges to successully implement modular design:

FEATURED SOLUTIONS

1

1

1

Market-Aligned Modular

Design

Beta uses direct voice-o-

the-customer inormation

to implement a customer-

ocused modular redesign

o a key product line.

Cross-Functional Modular

Design Scorecard

Alpha implements a

product design scorecard

to assess the impact o

various modular designs

on dierent departments

and processes across the

organization.

Central Product Strategy

Team

Gamma establishes a central

product strategy team that

possesses broad technical skills

across product lines to ensure

that the ull potential o modular

design synergies are explored and

captured when introducing a new

product.

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Case Examples 33



BETAS MARKET-ALIGNED MODULAR

DESIGN

Industry: Industrial and Consumer Products Manuacturer

FY2008 Revenue: US$1 Billion$5 Billion

FY2008 Employees: 1,0005,000

Beta makes air conditioners, humidiers, gas urnaces, heat pumps, and other products. Beta

sells its products through many independent distributors in one main market.

OVERVIEW

Beta uses direct voice-o-the-customer inormation to implement a customer-ocused

modular redesign o a key product line.

SOLUTION HIGHLIGHTS

Voice-o-the-Customer Review SessionsThe Beta engineering team proposesmodular design alternatives to marketing and sales teams and customers to balance

ecient redesign alternatives with market needs.

SCENARIO

Faced with a new energy directive, Beta reviews its electrical home appliance product

range to ensure compliance and also to assess the possibility o cost reductions

rom implementing modular design. Throughout the review process, the manager

o product engineering solicits eedback rom commercial peers and customers to

ensure that the newly modular products are not only more ecient, but also in line

with customer needs.

1

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Beta ollows a three-stage implementation approach or redesigning its electrical

home appliance product line around modularity and customer needs:

Product Line Redesign Process

1. Product Line Review

Engineering reviews

existing product line

and designs optimal

alternatives based on

cost-efciencies.

2. Market Alignment

MeetingsMarketing

and Sales provide input

to dismiss or approve

design alternatives

based on high-level

market characteristics.

3. Customer Review

Customers are invited

to review redesign

alternatives or nal

judgment on market

applicability.

1. Product Line Review

First, Betas engineering team scrutinizes the electrical home appliance product

line, breaking each product into subassembly parts. The team categorizes and

clusters similar parts to provide ull transparency on the various existing

components across the multiple products. This analysis reveals that the

electrical home appliance product line had 16 dierent heights, 32 chassis, and

more than 200 SKUs. Where possible, the Engineering team identies areas

where SKU rationalization is possible and components can be modularized or

reuse.

2. Market Alignment Meetings

Next, the engineering team holds a series o meetings with Marketing and

Sales to review product redesign proposals, suggesting the business case or

optimal cost-eciencies. With in-depth consumer insight, Marketing andSales can immediately dismiss alternatives that are misaligned with customer

needs at a high level. As a result o these iterative meetings, Beta redesigns

product alternatives to meet the dual objectives o Engineering and Marketing

and Sales or driving cost-eciency and maintaining market relevance.

There is a balance between cost-efciencies and market needs when

considering modular design. We strive to make our designs as modular

as possible to drive costs down, but we will always ensure were aligned

with what the preponderance o our customers want.

Manager, Product Engineering

Beta Manuacturing

1

1 Pseudonym.

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Case Examples 35



3. Customer Review

Once Beta achieves internal agreement on a uture vision or its electrical home

appliance product line, the team invites key customers to review the suggested

changes through rolling one-day sessions. Obtaining direct customer input

proves to be a key success actor in ensuring that the new modular product line

does not compromise the customer experience.

RESULTS

Armed with commercial team eedback and direct customer input, Betas engineering

team presents the internal business case to senior management to transition the

newly designed electrical home appliance line into production. Once the new process

is signed o and implemented, Beta reduces the number o chassis and heights by

more than 50%.

Impact o Modular Design on Electrical Home Appliance Product Line

Furthermore, Betas modular design reduces overall purchased components by 52%

and rationalizes production rom two actory sites down to one. Beta also reports

other ancillary benets such as increased production eciency, lower costs, and

increased market share.

ActualNumbers

Sample Metrics

Beore Modular Design

Ater Modular Design

32

15 16

7

1

1 Pseudonym.

Chassis Heights

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ALPHAS CROSS-FUNCTIONAL MODULAR

DESIGN SCORECARD

Industry: Electronics


FY2008 Employees: 80,000120,000

Alpha is a global manuacturer o electrical and distribution equipment. The company has

operations in Arica, Asia, Europe, the United States, and the Middle East.

OVERVIEW

Alpha Company implements a product design scorecard (that requires input rom

cross-unctional and external stakeholders) to assess the impact o various modular

designs on dierent departments and processes across the organization.

SOLUTION HIGHLIGHTSCross-Functional Modular Design ScorecardAlphas new product development

team creates dierent modular design alternatives or any new product. These

alternatives are tested using a cross-unctional scorecard across the organization to

decide which designs to implement.

SCENARIO

Alpha recognizes that the potential eciencies that can be gained through modular

design are usually assessed by a ew key technical stakeholders, which provides a

limited picture o modular designs total eect on the organization. Major investment

decisions cannot be made on such a limited view o potential impact. To address this,

Alpha develops a scorecard that solicits eedback rom multiple internal and external

stakeholders to test the potential uture impact o implementing dierent modular

designs across the organization.

1

1 Pseudonym.

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Case Examples 37



Alphas New Product Development (NPD) process begins and ends with the customer

in mind and considers existing and uture technical capabilities to orm the design

vision o a new product. Alpha considers modular design possibilities in the viability

stage o its NPD process. An overview o this process is presented below:

New Product Development Process

1 Market Study Dene target

market. Identiy

customer

preerences.

2 Design Vision High-level design

vision is based on

market studies.

7 Commence Project Open project or

commercialization.

3 Technology Assess current

and uture

technological

capabilities or

design.

6 Sign-Of Assemble and

present internal

business case.

4 Viability Invite internal

and external

stakeholders to

dene platorm

architecture.

5 Prototypes Develop

prototypes to test

on the market.

During the viability stage, the engineering team targets a certain aspect o a

products design that has the most potential or modularity. The team assembles up

to three dierent modular designs that ulll the design vision and are easible rom

a technological standpoint. The team bases these designs upon the various possible

combinations o components, materials, and interaces.

Cross-Functional Modular Design Scorecard

To assess the impact o each design across the organization, the NPD team uses a

cross-unctional scorecard. This assessment shows which o the modular design

layouts will result in the greatest net benet across the organization.

The NPD team divides the scorecard into specic sections or various departments

to ll out. The rationale is that the individual departments have the best insight to

assess the impact each design will have on their own business activity and processes.

The inormation is not just gathered internally, but also rom external key suppliers.

Alpha invites suppliers to meetings to share their perspective and experiences

related to the potential advantages and disadvantages associated with each possibledesign alternative.

1

1 Pseudonym.

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Cross-Functional Modular Design Scorecard

Illustrative

Choosing a Design Alternative

Once the scorecard is ully populated, the NPD team has a clear and ull view along

various parameters rom across the organization o the benets and red fags attachedto each o the design alternatives. The team chooses the modular design alternative

that has the most positive implications across the company (and no major negative

implications) to employ in the new product architecture. This tool helps acilitate

productive discussions and ensures that all potential risk areas are suraced when

making decisions. Once a design is selected, Alpha develops a prototype and tests it

with customers beore moving into the commercialization phase.

Specic sections are sent to dierent departments across the

organization. These departments indicate the impact each modular

design will have on a range o department-relevant metrics.

Departments communicate the

implication through answering

positive, negative, or no change.

FunctionalResponsibility Metrics Impacted by Modular Design Design A Design B Design C

ManuacturingCost per production run

Through rate

Operations

and Quality

Deect rate

Inventory turnover

ProcurementNumber o unique components purchased

Raw materials pricing

R&DR&D spend as a percentage o sales

Time to market

Legal and

Compliance

Regulation compliance

Patent lings

SupplierDistribution efciency

Inventory management

kHealth ri k

S

1

1 Pseudonym.

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Case Examples 39



GAMMAS CENTRAL PRODUCT STRATEGY

TEAM

Industry: Industrial Manuacturing


FY2008 Employees: 80,000120,000

Gamma makes construction and mining machinery with diesel and natural gas engines.Gamma has plants worldwide and sells its equipment globally.

OVERVIEW

Gamma establishes a central product strategy team that possesses broad technical

skills across product lines to ensure that the ull potential o modular design

synergies are explored and captured when introducing a new product.

SOLUTION HIGHLIGHTSBroad-Based Central Product Strategy TeamGammas central team consisting

o midlevel managers looks across product lines to capture modular design

synergies.

SCENARIO

While R&D and engineering teams are traditionally composed o individuals with

particular niche expertise in their elds, Gamma realizes that this specialization

inhibits the ability o individuals to look across product lines to distill modular

components. Gamma assembles a central team, rom the middle management layer,

with a broad technical skill set to understand and explore the ull range o modular

design possibilities that exist across the company.

1

1 Pseudonym.

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Gammas middle management layer o the organization sets the product strategy

where modular design is initially considered. Product managers, Marketing,

Product Development, and Engineering at the corporate center comprise the

product strategy team. These individuals have responsibilities and experience

across at least two or more product lines. When considering product line strategies,

this group meets to discuss market characteristics and the product portolio mix

and also considers opportunities or implementing modular components.

A View Across Product Lines

The product strategy team has the visibility and collective expertise to look across

multiple projects and product lines to identiy optimal cross-business modular

components. Modular design synergies can initially be captured through two

primary means: Reusing existing components and incorporating them into a new product

Creating new components (created or a new product) and making them

available or use by existing product lines

Furthermore, as more modules become available through the introduction o new

products, the central team explores the potential o building a product exclusively

through dierent congurations o existing modules.

The illustration below demonstrates the three lenses employed by the team and the

process at a high level when considering possible modular design synergies.

Identiying Modular Synergies

IDENTIFY AND GROUP

MODULAR COMPONENTS

EXPLORE RELATIONSHIP

BETWEEN MODULES

REASSESS

OR PROGRESS

Three Lenses to IdentiySynergies

Can we make use o existingmodular components andincorporate them into ournew product?

Can any o the new modular

components that we createor a new product be usedby existing product lines?

Ater creating this newproduct, can we createanother product basedsolely on existing modularcomponents and interaces?

Capture SynergyInormation andCascade to RelevantProduct Line

Reassess ROIPotential o ProductLaunch

Yes to AnyQuestion

No to AllQuestions

Engine Engine

Suspension

Axels Chassis

CircuitBreaker

Tires

Rotor

Hydraulics Axels

BrakeSystem

Hydraulics

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Case Examples 4



Decisions at the Business Unit Level

The middle management team cascades the potential opportunities o using

modular components to the business units. Manuacturing, Purchasing,Engineering, product managers, and Marketing hold business-level group meetings

to design and create possible interaces. The design decisions are made with the

inormation about potential modular components in hand.

The business units have in-depth understanding o their specic product lines and

markets and are held accountable and incentivized on the perormance o their

products. As such, Gamma empowers the business units to make the ultimate

decision whether implementing the suggested modular design synergy proposal is

economically sound or their area. I the business unit does not leverage the insight

rom group level, they pursue a design that will be created and produced within the

business unit, as it is more advantageous rom their specic standpoint.

Benets o Modular Design

Since establishing a product strategy group to identiy modular design

opportunities, Gamma has experienced a wide variety o benets, including

the ollowing:

Part number reduction aiding swit inventory management and direct

cost-eciencies

Supply chain benets rom reducing the number o suppliers, increasing

purchase volume, and developing more strategic partnerships Manuacturing eciencies by using shared process planning and

standardized assembly

Product quality improvements rom reducing design complexity

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43



Assessing Post-Implementation

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Accurately assessing the impact o modular design is pivotal or justiying the high

initial implementation costs and maintaining ongoing support or the approach.

Many organizations simply track a ew cost savings metrics to demonstrate that

initial objectives have been achieved, but struggle to establish a metrics strategy

that successully evaluates the broader benets gained rom modular design. To best

assess the impact o modular design, companies should ollow three basic steps:

1. Establish alignment on what metrics to track.

2. Capture perormance on these metrics prior to modular implementation.

3. Evaluate and report metrics post-implementation.

1. Aligning on Metrics

The cross-unctional team leading the modular design initiative should solicit

eedback rom dierent departments to determine the best metrics to track andthe best method or quantiying these metrics. To assess enterprise-wide benets,

the team should ask leaders in R&D, Procurement, Manuacturing, Marketing,

and Sales to choose two metrics they believe will show the biggest impact o

modular design. (See page 46 or a composite table o the most commonly cited

metrics.)

2. Establishing a Pre-Implementation Benchmark

Once all unctions are aligned on the right metrics to track, the lead team must

ask individual departments to quantiy these metrics or a certain period o time

prior to modular implementationusually or a quarterly, semiannual, or annual

period.

3. Evaluating Post-Implementation Perormance

Ater the team implements the modular architecture, they compare the compiled

pre-implementation to post-implementation perormance scores. The modular

design team then uses these individual departmental perormance scores to

supplement the metrics that track the initial goals o modular design. The

team creates a composite dashboard and communicates the results to senior

management, as well as cascades the success metrics to the rest o the organization

to drive urther adoption and buy-in.

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Assessing Post-Implementation Perormance 45



Timing o Assessment and Setting Expectations

There is no general consensus on an optimal timeline or capturing perormance

and reporting the impact o modular design. The timing depends on the extent oredesign, organizational complexity, and average product liecycle. Timelines will

vary signicantly rom industry to industrya CPG companys timeline will dier

greatly rom an energy company. But regardless o the industry, modular design

is a major undertaking or most companies and requires airly long time horizons

to realize benets. As such, executives need to clearly communicate that early

assessments will most likely not capture the ull benets o modular design. I the

team does not manage expectations properly, an unavorable early assessment may

lead to premature abandonment o modular design. Teams must set clear expectations

when developing a metrics strategy to ensure reporting is not required too early.

Realizing the Benets o Modular Design at VBG Limited1

Company Overview

The VBG Group develops, manuactures, and markets trailer couplings with coupling equipment.

VBG is also the distributor o VBG th wheel products on the Scandinavian atermarket.

Fragmented Operations

To accommodate a highly variable order ow, VBG maintained high inventory levels to cover order

peaks and oten employed temporary personnel working overtime. VBG had trouble keeping up with

their competitors in oering the newest customer-requested product eatures, yet struggled with

too many unique parts. This led to elevated procurement costs and long lead and set-up times in

manuacturing and assembly.

Modular Design Playbook1

Documents

Transcript of Modular Design Playbook1