Managing the Modularization of Complex Products

Doctoral thesis, 2004

Modularization is becoming very common among many companies in different industries. Present literature on modularization focuses on its benefits. There are few illustrations of how a modularization actually should be accomplished, and of which managerial issues modularization brings to the company. Existing illustrations also use relatively simple products, even though modularization is intended to reduce or handle complexity. Therefore, the purpose of this dissertation is to identify managerial issues in modularizing complex products. An in-depth case study has been conducted at Volvo Car Corporation (VCC). The case company was chosen not only because its product – a car – is complex, but because VCC has been implementing a modularization strategy since the mid-1990s and gained substantial experience of modularization. The research has identified numerous problems in the process of modularizing. Problems that the case company faced were not expected to appear when the modularization started, but needed to be managed during the process. The identified problems were clustered into three managerial issues that demand involvement by management because, in order to resolve them, aspects such as company-strategic considerations must be taken into account. It is concluded that for complex products it is impossible to achieve completely decoupled modules; hence there is an issue of deciding the appropriate degree of modularity. In managing this issue, judgments about product performance and industry competition have to be made. It may also be suitable to use different degrees of modularity in different parts of a product. Further, the findings show that different organizational functions have different requirements concerning what they want to achieve by modularizing. Some of these requirements cannot be fulfilled simultaneously. Thus modularizing raises an issue of balancing functional requirements; prioritizations among the requirements are essential. Finally, it emerges that there is an issue of coordinating and integrating modular product development. Different modules cannot be developed entirely in parallel without any coordination efforts. In this coordination work, conflicts also occur that must be dealt with by managerial authority.