Assessing the financial potential for modularization: A case study in a global OEM

Martin Løkkegaard; Niels Henrik Mortensen

Assessing the financial potential for modularization: A case study in a global OEM

Martin Løkkegaard, Niels Henrik Mortensen

Research output: Chapter in Book/Report/Conference proceeding › Article in proceedings › Research › peer-review

Abstract

Assessing the financial potential of implementing a strategy, based on sharing of key modules and interfaces across a portfolio is difficult. However, this is a critical input when deciding strategic direction in industrial organizations. Through a case study, this paper gives an example of how to map and evaluate the architectures in a portfolio to identify the financial potential for implanting a platform-based modularization strategy. The approach has been applied in a global world-leading OEM with 50.000+ product variants and a turnover of USD 3,5b (2015). The results show a potential for reducing the cost-base by up to 15% through systematically sharing of key design principles across 80% of the company’s portfolio. This has supported the discussion of adjusting innovation strategy in the organization. The core contribution of the paper is the operational application of the systematic Architecture Mapping and Evaluation approach (AME) and discussion of how it can support strategic decision-making related to modularization. The approach builds on the understanding that a top-down assessment can give a starting point for implementing a level of modularity across a portfolio.

Original language	English
Title of host publication	Proceedings of the 21st International Conference on Engineering Design (ICED 17) : Product, Services and Systems Design,
Editors	Anja Maier, Stanko Škec, Harrison Kim, Michael Kokkolaras, Josef Oehmen, Georges Fadel, Filippo Salustri, Mike Van der Loos
Volume	3
Publisher	Design Society
Publication date	2017
Pages	021-030
ISBN (Electronic)	978-1-904670-91-9
Publication status	Published - 2017
Event	21th International Conference on Engineering Design - The University of British Columbia, Vancouver, Canada Duration: 21 Aug 2017 → 25 Aug 2017 http://iced17.org/

Conference

Conference	21th International Conference on Engineering Design
Location	The University of British Columbia
Country/Territory	Canada
City	Vancouver
Period	21/08/2017 → 25/08/2017
Internet address	http://iced17.org/

Keywords

Platform strategies
Product architecture
Case study
Decision support

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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Løkkegaard, M., & Mortensen, N. H. (2017). Assessing the financial potential for modularization: A case study in a global OEM. In A. Maier, S. Škec, H. Kim, M. Kokkolaras, J. Oehmen, G. Fadel, F. Salustri, & M. Van der Loos (Eds.), Proceedings of the 21st International Conference on Engineering Design (ICED 17) : Product, Services and Systems Design, (Vol. 3, pp. 021-030). Design Society.

Løkkegaard, Martin ; Mortensen, Niels Henrik. / Assessing the financial potential for modularization: A case study in a global OEM. Proceedings of the 21st International Conference on Engineering Design (ICED 17) : Product, Services and Systems Design,. editor / Anja Maier ; Stanko Škec ; Harrison Kim ; Michael Kokkolaras ; Josef Oehmen ; Georges Fadel ; Filippo Salustri ; Mike Van der Loos. Vol. 3 Design Society, 2017. pp. 021-030

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abstract = "Assessing the financial potential of implementing a strategy, based on sharing of key modules and interfaces across a portfolio is difficult. However, this is a critical input when deciding strategic direction in industrial organizations. Through a case study, this paper gives an example of how to map and evaluate the architectures in a portfolio to identify the financial potential for implanting a platform-based modularization strategy. The approach has been applied in a global world-leading OEM with 50.000+ product variants and a turnover of USD 3,5b (2015). The results show a potential for reducing the cost-base by up to 15% through systematically sharing of key design principles across 80% of the company{\textquoteright}s portfolio. This has supported the discussion of adjusting innovation strategy in the organization. The core contribution of the paper is the operational application of the systematic Architecture Mapping and Evaluation approach (AME) and discussion of how it can support strategic decision-making related to modularization. The approach builds on the understanding that a top-down assessment can give a starting point for implementing a level of modularity across a portfolio.",

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Løkkegaard, M & Mortensen, NH 2017, Assessing the financial potential for modularization: A case study in a global OEM. in A Maier, S Škec, H Kim, M Kokkolaras, J Oehmen, G Fadel, F Salustri & M Van der Loos (eds), Proceedings of the 21st International Conference on Engineering Design (ICED 17) : Product, Services and Systems Design,. vol. 3, Design Society, pp. 021-030, 21th International Conference on Engineering Design, Vancouver, Canada, 21/08/2017.

Assessing the financial potential for modularization: A case study in a global OEM. / Løkkegaard, Martin; Mortensen, Niels Henrik.
Proceedings of the 21st International Conference on Engineering Design (ICED 17) : Product, Services and Systems Design,. ed. / Anja Maier; Stanko Škec; Harrison Kim; Michael Kokkolaras; Josef Oehmen; Georges Fadel; Filippo Salustri; Mike Van der Loos. Vol. 3 Design Society, 2017. p. 021-030.

Research output: Chapter in Book/Report/Conference proceeding › Article in proceedings › Research › peer-review

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T1 - Assessing the financial potential for modularization: A case study in a global OEM

AU - Løkkegaard, Martin

AU - Mortensen, Niels Henrik

PY - 2017

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N2 - Assessing the financial potential of implementing a strategy, based on sharing of key modules and interfaces across a portfolio is difficult. However, this is a critical input when deciding strategic direction in industrial organizations. Through a case study, this paper gives an example of how to map and evaluate the architectures in a portfolio to identify the financial potential for implanting a platform-based modularization strategy. The approach has been applied in a global world-leading OEM with 50.000+ product variants and a turnover of USD 3,5b (2015). The results show a potential for reducing the cost-base by up to 15% through systematically sharing of key design principles across 80% of the company’s portfolio. This has supported the discussion of adjusting innovation strategy in the organization. The core contribution of the paper is the operational application of the systematic Architecture Mapping and Evaluation approach (AME) and discussion of how it can support strategic decision-making related to modularization. The approach builds on the understanding that a top-down assessment can give a starting point for implementing a level of modularity across a portfolio.

AB - Assessing the financial potential of implementing a strategy, based on sharing of key modules and interfaces across a portfolio is difficult. However, this is a critical input when deciding strategic direction in industrial organizations. Through a case study, this paper gives an example of how to map and evaluate the architectures in a portfolio to identify the financial potential for implanting a platform-based modularization strategy. The approach has been applied in a global world-leading OEM with 50.000+ product variants and a turnover of USD 3,5b (2015). The results show a potential for reducing the cost-base by up to 15% through systematically sharing of key design principles across 80% of the company’s portfolio. This has supported the discussion of adjusting innovation strategy in the organization. The core contribution of the paper is the operational application of the systematic Architecture Mapping and Evaluation approach (AME) and discussion of how it can support strategic decision-making related to modularization. The approach builds on the understanding that a top-down assessment can give a starting point for implementing a level of modularity across a portfolio.

KW - Platform strategies

KW - Product architecture

KW - Case study

KW - Decision support

M3 - Article in proceedings

VL - 3

SP - 21

EP - 30

BT - Proceedings of the 21st International Conference on Engineering Design (ICED 17)

A2 - Maier, Anja

A2 - Škec, Stanko

A2 - Kim, Harrison

A2 - Kokkolaras, Michael

A2 - Oehmen, Josef

A2 - Fadel, Georges

A2 - Salustri, Filippo

A2 - Van der Loos, Mike

PB - Design Society

T2 - 21th International Conference on Engineering Design

Y2 - 21 August 2017 through 25 August 2017

ER -

Løkkegaard M, Mortensen NH. Assessing the financial potential for modularization: A case study in a global OEM. In Maier A, Škec S, Kim H, Kokkolaras M, Oehmen J, Fadel G, Salustri F, Van der Loos M, editors, Proceedings of the 21st International Conference on Engineering Design (ICED 17) : Product, Services and Systems Design,. Vol. 3. Design Society. 2017. p. 021-030

Assessing the financial potential for modularization: A case study in a global OEM

Abstract

Conference

Keywords

UN SDGs

OpenUrl availability

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