Modularization can have major benefits for a company’s business. Modularization gives a continuous competitive advantage through;
- Opportunities for market variance
- Reduction of internal variance and thereby complexity
- Parallel development
- Shorter time-to-market (increased reuse)
- Reduction of stock, spare parts and handling cost
There are many examples of the benefit of modularization, benefits both based on conclusions from research and from concrete company cases.
”Research [..] has established [..] that use of modular product architectures can substantially shorten development times, increase speed to market, reduce development and production costs, increase product variety”
– Ron Sanchez, Professor Emeritus, PhD at Copenhagen Business School
In the following figure some proven business impact examples are shown.
Other examples of how modularization can impact a business is:
- Product Cost Reduction
- Manufacturing Cost Reduction
- Complexity Reduction
- Reduced Development Time
- Market Flexibility
- Capital Expenditure Efficiency
- Increased Market Offering
- Supply Base Improvement
As can be seen in the above examples, modularization can impact on many different dimensions. However, the business impact will vary depending on the type of business. In the following illustration three types of businesses and their respective key modularization benefits are illustrated.