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 proceedingArticle in proceedingsResearchpeer-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 languageEnglish
Title of host publicationProceedings of the 21st International Conference on Engineering Design (ICED 17) : Product, Services and Systems Design,
EditorsAnja Maier, Stanko Škec, Harrison Kim, Michael Kokkolaras, Josef Oehmen, Georges Fadel, Filippo Salustri, Mike Van der Loos
Volume3
PublisherDesign Society
Publication date2017
Pages021-030
ISBN (Electronic)978-1-904670-91-9
Publication statusPublished - 2017
EventICED17: 21st International Conference on Engineering Design - Vancouver, Canada
Duration: 21 Aug 201725 Aug 2017
http://iced17.org/

Conference

ConferenceICED17: 21st International Conference on Engineering Design
CountryCanada
CityVancouver
Period21/08/201725/08/2017
Internet address

Keywords

  • Platform strategies
  • Product architecture
  • Case study
  • Decision support

Cite this

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.