Modularity increases the differentiation

Posted on 6 May 2014 by The Manufacturer

It is possible to develop new platforms and increase your production's flexibility and variety without compromising on cost says Danish engineering students Anne Louise Broch and Victoria B├╝low.

With the growing tendency of customisation in the mass market, many firms are being forced to look for new ways to combine the low price of mass production with the need to offer a variety of product options.

The desire for mass customisation is forcing companies to choose a strategic approach to satisfy margins while still delivering what the customer wants – endless variety.

One approach is to develop product families to balance the trade-off between product diversity and engineering costs. Trek, the US-based bike manufacturer, uses modularity within the majority of its products. This allows them to decrease their costs of production, while keeping a high standard. As an example, it is possible to find a core module used in a TREK road racer in a TREK mountain bike.

In terms of its components, TREK uses Shimano gears on all of its bikes, thus increasing the strategic flexibility, as the same parts can be used in many different bike models – making it easier for TREK to respond to market change. In addition it allows TREK to order larger quantities – reducing the cost price per unit while ensuring excess component stock from one model can be absorbed by other models if required.

Looking at TREK’s supply chain, high modularity can decrease the order time, as it assists them to maintain an “assemble to order” philosophy, making it possible to move the decoupling point closer to the customer. In a fast moving environment like bicycles, where trends and technology often dictate fast market changes, the ‘assemble to order’ approach also strengthens TREK’s ability to cater quickly to a change in demand.