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EY Performance Modular PDF
EY Performance Modular PDF
This article is an extract from Performance, Volume 7, Issue 1, February 2015. The full journal is available at
How can diversification be used to unlock
growth potential in emerging markets?
56 Volume 7 │ Issue 1
Volume 7 │ Issue 1
This article is an extract from Performance, Volume 7, Issue 1, February 2015. The full journal is available at
How can diversification be used to unlock
growth potential in emerging markets?
Authors
Jana Golfmann
Consultant, Product Life Cycle Management
Team, EY, Germany
57
Volume 7 │ Issue 1
This article is an extract from Performance, Volume 7, Issue 1, February 2015. The full journal is available at
How can diversification be used to unlock
growth potential in emerging markets?
Introducing modular
product architectures
is a complex task and
many industries do
not have the resources
and capabilities to
modularize their
product portfolio.
“
Any customer can have a car of challenges and risks. As a result of The product architecture maps the
painted any color that he wants globalization, companies have to deal not functions of a product (the functional
so long as it is black.”1 With only with increasing worldwide competition, structure) to the physical components
the goal of making cars more but also with increasingly specific customer of the product (the product structure).5
affordable, Henry Ford introduced demands. While globalized markets force The functional structure breaks down a
the production assembly line of competing businesses to cut their costs, product’s main function into a hierarchical
the Ford Model T in 1908. By applying a the demand for individuality leads to a network of subfunctions and, hence,
production system based on standardized higher variety of products being offered translates customer requirements to a
processes, the costs per unit could be on the market as well as shorter product functional view for product engineering.
reduced significantly. If different colors had life cycles. The emerging conflict between Each function reflects the verbalization of
been offered, it would have meant a break internal cost pressure and the external need a product task and is inherently abstract
in the assembly line, leading to longer lead for product variety has become a strategic and solution-neutral. For example, the main
times, the involvement of more staff, higher factor in today’s manufacturing world.2 function of a pocket flashlight could be “to
error rates and, ultimately, to higher costs. Strategies that allow for both a greater emit light,” while two subfunctions could
A century later, the global environment variety of products and a manageable level be “to create light” and “to store energy.”
for manufacturing companies has changed of internal variety must be implemented The product structure, on the other hand,
significantly, bringing with it a new set in order to solve this conflict. Solution reflects the hierarchical composition of the
methodologies logically revolve around the physical product components.
product and its composition as the central
elements of the conflict. The benefits and risks of
modular product architectures
What are modular product The modularity of the product architecture
architectures? is determined by the level of functional
Modular product architectures are a proven independence of the product components
concept and one of the key aspects of as well as by the level of interface
1. H. Ford, My life and work, (Doubleday, 1922).
2. G. Schuh, Produktkomplexität managen: Strategien, developing an integrated product life cycle standardization between different elements
Methoden, Tools, (Carl Hanser Verlag, 2005).
management (PLM) strategy. They facilitate of the product structure. The more product
3. A. Reisch (PhD), Product engineering and life cycle
management: efficiently manage the life cycle of your the standardization of product components components needed to fulfil a certain
products, EY 2014, http://performance.ey.
while still allowing for a huge variety of function and the more functions fulfilled
com/2015/02/03/product-engineering-life-cycle-
management/, accessed February 2015.
products on the market.3 by a certain product component, the more
4. M. A. Schilling, “Toward a general modular systems theory integral the product architecture will be.
and its application to interfirm product modularity,” Products with modular architectures
Academy of Management Review, 2000.
can be easily broken down into a number On the contrary, biunique relations
5. K. Ulrich, “The role of product architecture in the
manufacturing firm,” Research Policy, 24, 1995. of standardized building blocks, which between functions and product components
6. W. Kersten, T. Lammers and H. Skirde, “Entwicklung eines
can be rearranged to create different are characteristic of a modular product
Kriterienkataloges zur strukturierten Allokation von Effekten
der Modularisierung,“ in F. Bertram and F. Czymmek, Eds. configurations and variants. In this way, architecture. Product architectures can
Modulstrategie in der Beschaffung, (Logos, 2011).
whole product families can be formed based show any degree of modularity between
7. U. Lindemann, Methodische Entwicklung technischer
Produkte, (Springer, 2009). on the same limited number of modules these two theoretical extremes of full
8. J. Göpfert, Modulare Produktentwicklung, (Books on
and the internal complexity can be kept to a modularity and full integrality. The
Demand, 2009).
9. Modularer Querbaukasten. viable level.4 increased functional independence and
58 Volume 7 │ Issue 1
Volume 7 │ Issue 1
This article is an extract from Performance, Volume 7, Issue 1, February 2015. The full journal is available at
How can diversification be used to unlock
growth potential in emerging markets?
Goal setting
Phase 1
Include product requirements
within the engineering process
ok?
Phase 4
Yes
59
Volume 7 │ Issue 1
This article is an extract from Performance, Volume 7, Issue 1, February 2015. The full journal is available at
How can diversification be used to unlock
growth potential in emerging markets?
Phase 1. Goal setting On the first functional level, the overall of developing it together is that a much
function of the product will be defined. better understanding of the strengths and
Clarify the objectives of product
On the second level, we determine the weaknesses of the products is achieved.
modularization
subfunctional structure, expressed by
Modularity can be used as a measure Connect the functional and product
a certain number of partial functions.
to support technical requirements and structures to form the product
The logical interrelation between these
strategic objectives. In phase 1, the architecture
subfunctions provides the functional
main priority is to identify the company’s The combination of the functional and
structure of the technical system. The
individual aims for pursuing modularization. product structures makes up the product
functional breakdown is then used to define
Company-wide support needs to be architecture, which is the basis for further
the technical solutions.
generated for the creation of universal and modularization steps. We define the
The development of the functional architecture of a product as the “scheme by
sustainable modules. Top management
structure should be executed in which the function of a product is allocated
should actively encourage and be
interdisciplinary teams, and we work closely to physical components.”10 Establishing
committed to the modularization efforts.
with the client during this phase. The the product architecture not only involves
Include product requirements within the process should be repeated and empirically arranging functional elements and mapping
engineering process processed until a valid and accepted them to physical components, but also
Companies focus on exceptional functional structure is created. the specification of the interfaces among
technologies to give their product a interacting components. In order to capture
Arrange the product structure as a
unique selling proposition. However, the structure of the product architecture,
hierarchical composition of the physical
such technologies do not automatically we use the IT tool METUS®.
product components
guarantee market success and, in many
The functional decomposition shows that Consider further views
cases, these products end up as “shelf-
each subfunction may have several practical Beyond the functional perspective,
warmers.” Often, the reason for this is an
solutions. The next step is to determine further product characteristics need to be
incomplete clarification of the product
the relationships between the technical considered to generate diverse perspectives
requirements. Therefore, the focus of the
specifications and the subsystems. on the product structure. An example would
second step of our method is to create a
list of product requirements that reflect In this step, the product components be the identification of variant drivers and
customer needs and for which the market and assembly should be arranged in a values that have an effect on different
dynamics should also be considered. hierarchical form in order to more easily product components in order to generate a
visualize the entire product. The creation variant perspective on modularization.
of the product structure can either be done For example, the variant driver
Phase 2. Product architecture as a workshop or prepared with bills of “water-resistance” with its values “yes”
Generate the product’s functional material, CAD drawings or other structural and “no” could cause the existence of
structure documents. two different variants of a flashlight’s
In the first step of the second phase, it is Again, we work closely with the battery cover. To consider the internal
necessary to determine the functions and client during this phase, as the benefit and external variance, it is essential to
subfunctions of the product while meeting include the product configuration and sales
the requirements from phase 1. To achieve departments. Further perspectives on the
this, a functional decomposition must be product structure could be derived from
undertaken. 10. K. Ulrich, “The role of product architecture in the
manufacturing firm,” Research Policy, 24, 1995. supplier, sales or cost considerations. The
60 Volume 7 │ Issue 1
Volume 7 │ Issue 1
This article is an extract from Performance, Volume 7, Issue 1, February 2015. The full journal is available at
How can diversification be used to unlock
growth potential in emerging markets?
Product architecture
Figure 2. How the product architecture is structured
Subfunction
Subfunction Component
(level n)
(level 1)
Assembly
Subfunction
Component group
(level n)
Subfunction
Main function Product
(level 1)
Subfunction
Component Assembly
(level n)
group
Subfunction Subfunction
(level 1) (level n) Component
Subfunction
(level n) Component
61
Volume 7 │ Issue 1
This article is an extract from Performance, Volume 7, Issue 1, February 2015. The full journal is available at
How can diversification be used to unlock
growth potential in emerging markets?
62 Volume 7 │ Issue 1
Volume 7 │ Issue 1
This article is an extract from Performance, Volume 7, Issue 1, February 2015. The full journal is available at
How can diversification be used to unlock
growth potential in emerging markets?
Conclusion
Since Henry Ford’s first initiatives, the
automotive industry has remained at the Modularization
forefront of modern production processes concepts can be
and is now the most comprehensive
user of modular product architectures. applied wherever
Volkswagen’s MQB9 platform is an example complex systems
of how an abundance of configuration
options can be realized with a limited set of have to be managed
standardized parts and modules. and have already
However, introducing modular product
architectures is a complex task, and many
been successfully
industries do not have the resources and transferred to
capabilities to modularize their product
portfolio. Instead, they continue to
branches such as
struggle with the increasing individuality of logistics and IT.
customer demands.
Originating from the manufacturing
industry, modularization concepts can
be applied wherever complex systems
have to be managed and have already
been successfully transferred to branches
such as logistics and IT. The methodology
presented in this article provides a clear
step-by-step process to successfully
developing modular product structures and
has been effectively applied in the plant
engineering industry.
63