Impact of modularity decisions on a firm's economic objectives

Research output: Contribution to journalArticleResearchpeer review

Authors

  • Jennifer Hackl
  • Dieter Krause
  • Kevin Otto
  • Marc Windheim
  • Seung Ki Moon
  • Nikola Bursac
  • Roland Lachmayer

External Research Organisations

  • Hamburg University of Technology (TUHH)
  • Aalto University
  • Nanyang Technological University (NTU)
  • TRUMPF Scientific Lasers GmbH and Co. KG
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Details

Original languageEnglish
Article number041403
Number of pages11
JournalJournal of Mechanical Design, Transactions Of the ASME
Volume142
Issue number4
Early online date19 Sept 2019
Publication statusPublished - 8 Nov 2019

Abstract

Research in modularization of product families reveals numerous individual cause and effect impacts of modularity on a firm. There are clearly many interrelated positive and negative economic impacts arising from different activities of the firm impacted by the modular product structures. This makes the construction of an economic business case for modularity difficult, where often the benefits are reduced indirect costs. This paper presents a literature-based network model of how modular product structures affect firm's economics across the design-to-manufacturing life cycle phases. It shows how (1) changes on modularity properties may lead to (2) different effects within the product's life cycle phases that (3) have an economic impact on the firm. For instance, modularization can prolong development time of a platform, while shortening the subsequent development times of product variants and lowering manufacturing costs. To validate the proposed model, the given effect chains were compared by industrial experts against nine case study modularization projects by marking effects that were experienced and observed in their projects. The results first revealed that in design, an increase of commonality drove component reuse leading to lower development costs per unit. Second, in procurement, it was found that increased modularity caused better predictability, less purchasing orders, and better purchasing conditions that ultimately lead to lower costs. Third, in production, it was found that a smaller variety of components allowed less process variety, leading to fewer and more optimized processes and therefore lower production costs. We present these cause and effect impacts of modularity as drivers for quantifying the economic impact of modularity.

Keywords

    Cause and effect model, Life cycle analysis and design, Modularity, Product development, Product family design, Product platform design

ASJC Scopus subject areas

Sustainable Development Goals

Cite this

Impact of modularity decisions on a firm's economic objectives. / Hackl, Jennifer; Krause, Dieter; Otto, Kevin et al.
In: Journal of Mechanical Design, Transactions Of the ASME, Vol. 142, No. 4, 041403, 08.11.2019.

Research output: Contribution to journalArticleResearchpeer review

Hackl, J, Krause, D, Otto, K, Windheim, M, Moon, SK, Bursac, N & Lachmayer, R 2019, 'Impact of modularity decisions on a firm's economic objectives', Journal of Mechanical Design, Transactions Of the ASME, vol. 142, no. 4, 041403. https://doi.org/10.1115/1.4044914
Hackl, J., Krause, D., Otto, K., Windheim, M., Moon, S. K., Bursac, N., & Lachmayer, R. (2019). Impact of modularity decisions on a firm's economic objectives. Journal of Mechanical Design, Transactions Of the ASME, 142(4), Article 041403. https://doi.org/10.1115/1.4044914
Hackl J, Krause D, Otto K, Windheim M, Moon SK, Bursac N et al. Impact of modularity decisions on a firm's economic objectives. Journal of Mechanical Design, Transactions Of the ASME. 2019 Nov 8;142(4):041403. Epub 2019 Sept 19. doi: 10.1115/1.4044914
Hackl, Jennifer ; Krause, Dieter ; Otto, Kevin et al. / Impact of modularity decisions on a firm's economic objectives. In: Journal of Mechanical Design, Transactions Of the ASME. 2019 ; Vol. 142, No. 4.
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abstract = "Research in modularization of product families reveals numerous individual cause and effect impacts of modularity on a firm. There are clearly many interrelated positive and negative economic impacts arising from different activities of the firm impacted by the modular product structures. This makes the construction of an economic business case for modularity difficult, where often the benefits are reduced indirect costs. This paper presents a literature-based network model of how modular product structures affect firm's economics across the design-to-manufacturing life cycle phases. It shows how (1) changes on modularity properties may lead to (2) different effects within the product's life cycle phases that (3) have an economic impact on the firm. For instance, modularization can prolong development time of a platform, while shortening the subsequent development times of product variants and lowering manufacturing costs. To validate the proposed model, the given effect chains were compared by industrial experts against nine case study modularization projects by marking effects that were experienced and observed in their projects. The results first revealed that in design, an increase of commonality drove component reuse leading to lower development costs per unit. Second, in procurement, it was found that increased modularity caused better predictability, less purchasing orders, and better purchasing conditions that ultimately lead to lower costs. Third, in production, it was found that a smaller variety of components allowed less process variety, leading to fewer and more optimized processes and therefore lower production costs. We present these cause and effect impacts of modularity as drivers for quantifying the economic impact of modularity.",
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AU - Krause, Dieter

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AU - Windheim, Marc

AU - Moon, Seung Ki

AU - Bursac, Nikola

AU - Lachmayer, Roland

N1 - Funding information: This work was also supported by a grant from the Academy of Finland (Grant No. 297095; Funder ID: 10.13039/501100002341) for Aalto University together with the Hamburg University of Technology supported by a grant from German Academic Exchange Service (DAAD; Funder ID: 10.13039/501100001655). Thanks to the German Research Foundation (Deutsche For-schungsgemeinschaft—DFG; Funder ID: 10.13039/501100001659) for funding this project within the research grant “WiMo— Entwicklung eines Wirkmodells der Eigenschaften modularer Produktstrukturen zur Bewertung methodischer Ansaetze” at the Hamburg University of Technology.

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