Assessing the financial potential for modularization: A case study in a global OEM
Editor: Anja Maier, Stanko Škec, Harrison Kim, Michael Kokkolaras, Josef Oehmen, Georges Fadel, Filippo Salustri, Mike Van der Loos
Author: Løkkegaard, Martin; Mortensen, Niels Henrik
Institution: Technical University of Denmark, Denmark
Section: Product, Services and Systems Design
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.