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Home » essay illustrations » Mass Modification Strategy in Global Source Master of International Business Administration doze Mass Customization International Supply Chain

Mass Modification Strategy in Global Source Master of International Business ...

Master of International Business Administration doze Mass Customization International Supply Chain Supervision Yuliya Samokhina, Olga Baranova, Yuliya Pronkina, Alexander Manzhosov Content The essential concepts of mass customization. Principles and goals. (by Yulia Samokhina) Introduction3 Mass Customization: main definitions3 Development of mass customization………………………………………………………, 4 Mass modification strategies: advantages and disadvantages………………………….

. 4 Mass customization as a process…………………………………………………………6 Conclusion8 Postponement strategies (by Olga Baranova) What is postponement? Postponement typology based on benefit chain activity9 Benefits of using postponement strategy13 Critical achievement factors and ideal prospect for postponement strategy14 Flip concepts (by Yulia Pronkina) Definition of modules in the structure of global supply chain management15 Types of modularity18 Advantages and disadvantages of modularity. Requirements for implication from the concept modularity19 Modularization in automotive industry (Volkswagen’s modular strategy) 21 Shared platform approaches (by Alexander Manzhosov) Introduction23 Platform strategy 24 The causes of putting into action platforms25

Pros and cons of applying shared program strategies26 Shared platform tactics 28 Vw Group. MQB strategy 30 Conclusion29 Sources The basic ideas of mass customization. Principles and goals. By Yuliya Samokhina Launch Today, persons live in the earth with expanding technologies, where everyone wants being distinguished. Businesses compete with different similar businesses, because they need to attract buyers as much as possible. Mass customization can easily satisfy customers’ demand to help these groups buy products with necessary qualities.

Previously, mass production systems can’t be adequate for producer and buyers. However , mass customization made a decision this problem to produce comfortable conditions for all to provide individual item. For example , nowadays retailers avoid want to have even more collections per season, however they want to enjoy more variations within the season. Companies generate new lines of clothes to their shops just about every four to six weeks. H&M and Zara have improved production to work with computer technology. «Zara uses data from its 426 stores to spot new styles, and offers 10, 000 new releases a year.

TopShop sells up to 30 pairs of knickers a minute, 6th, 000 pairs of denims a day and 35, 1000 pairs of shoes every week». Why that occurs? The answer then is very simple: source chain in mass modification business model should be flexible and responsive to customer demand. Main issues will be considered in the essay listed below. Mass Customization: main meanings Usually, mass customization requires very advanced and flexible network, because the unique purpose of mass customization is adapting one-to-one. Now, everyone is able to make products by themselves.

Right here, I want to provide more successful meanings of Mass Customization: «Mass customization is usually not a real but a hybrid production concept, which usually joins the efficiency of operations and differentiation by giving highly value added products». «Mass customization identifies a customer co-design process of products and services, which meet the needs of each individual consumer with regard to certain product features. All businesses are performed within a fixed solution space, characterized by secure but still versatile and receptive processes. Consequently, the costs linked to customization permit a rice level that does not imply a switch in an upper industry segment». (Piller 2005c, l. 315, emphasis in original). Thus, now each client can get any products, but the price for it will probably be higher. Generally, it isn’t issue, because each individual wants to become allocated by crowd. For instance, if two girls can be found in school-leaving party in one dress, it will be disaster for them. Fortunately, our era has got a lot of articles with topic mass customization, and after that we can consider mass modification from different foreshortenings. Development of mass customization

1st, I think you need to briefly explain the development of mass production to mass modification. Mass personalization has been one of the causes of the economic progress in the 21st century. Listed below, you can see number, which shows evolution of mass personalization: Fig one particular: Evolution of mass customization1 The first time the civilization offers faced with mass customization in pre-industrialization age. In spite of this fact, today we likewise have started to develop it. Of course , these times are extremely different, mainly because today people use modern day technologies.

Between these durations we can notice mass production, which come in vogue with important benefit of economic climate of level and it had been peak in mid hundred years. For example , it was time of Soviet Union, then companies made a lot of similar outfits, shoes and etc. In late twentieth century, mass customization was back. Companies offer several variation of products and customization is achievable. Methods of app will take a look at in the next section. Mass customization strategies: advantages and disadvantages It is very important to understand how the mass customization works in practice.

Generally, scientists mark out 4 strategies: translucent, cosmetic, adaptable and collaborative. A few terms about every strategy: * Cosmetic strategy: companies make a standard merchandise but present it in different ways to different clients. Thereby clients satisfied with the item, and if they need, they can modify packaging, as an example, the color, add-ons, and other customer personalities. 2. Transparent strategy: this strategy is employed by firms, which have especially knowledge of wishes and choices of customers. To get transparent technique is actual E-business.

For instance , service in website may analyses buys, then it can recommend something based upon previous acquisitions. * Adaptable strategy: makers try to improve standard product for the needs of shoppers. Thus, corporations try to strategy and symbolize of almost almost all possible blends of product modules, just like Microsoft. Then simply somebody buy software, he/she can add important functions. 2. Collaborative strategy: in this case firms don’t know what customers eventually want. Companies have to appreciate needs of customers and help to ascertain with necessary product, just as result to produce its.

It is extremely often , then simply strategy depends on industry presently there company worked well. For example , businesses which create food and beverages use cosmetic and transparent strategies. In my opinion, producers have to calculate their choices, if they desire have awesome profit. How come companies enthusiastic about mass customization? The answer to the question is usually presented inside the benefits of these strategies: 5. Maximized market share by making the most of customers’ pleasure and range of customers. 2. Cut cost of inventory and material waste: production needs to work as a just on time.

Companies ought to avoid large inventories of finished items. * Boost cash flow: reduce inventories, prepayment (thus reduced receivables) boost cash flow. 5. Shorten time of responsiveness (accumulative time by receiving requests to delivering): organization composition and flexible manufacturing in mass customization permits the company to adapt to diverse demands rapidly. * Capability to supply a full line of products or service with lower costs: the objective of mass modification is to identify products to particular requirements, resulting in larger product lines with the company and a much manage risk of out of date inventory.

It really is obvious, that companies won’t be able to have only positive sides. It is important to understand, which problems may arise: 1 . In mass customization costs are often greater than in mass production. In some cases the product may not be not the same as standard item, but the cost will be bigger. Buyers will be unhappy, as a result mass modification is inefficient. 2 . Raising of information in the production of individual goods could lead to costs. In this case the probability of production of defective merchandise rises. several. Requirements for workers should be larger. Educated staff have to offer the perfect variant responding to the ustomer’s needs, otherwise, company can lose the loyalty of shoppers. 4. The availability process may have problems with flexibility. Mass customization as being a process I do think that it is very important to know how the customization method can be split up into many sub-processes including the main stages with the value chain. Moreover, it will help us to know mass personalization in information. First, I wish to enumerate all sub-processes and explain at greater duration. * The development sub-process, 5. The interaction sub-process, * The getting sub-process, * The production sub-process, * The logistics sub-process, The information sub-process. 1 . The development sub-process. The product always should develop, if organization wants the mass customization will be successful. Requirements of buyers will be satisfied and costs of production will probably be reduced. The modularity is fairly effective decision as it allows achieving the economic climate of range and economy of opportunity. On the other hand, the modularity could be simple to get imitation by simply competitors and development much more expensive. Additional strategy, like a commonality and platform strategies help to job to the corporations to increase reusability in mass customization.

Therefore, product development in the mass modification is accomplished through design engineers. Extremely high effect is definitely reached, if the client participates in advancement products him self. Companies ought to use customers’ innovative talents. 2 . The interaction sub-process. This process is likewise elicitation method. Thus, buyer has to get the product that exactly fulfills his requirements. Company must understand that everyone wants. Usually, to distinguish four types of elicitation process: recognition (e. g. name and address), customers’ selections coming from menus of alternatives, physical measurements and reactions to prototypes.

Generally, customers order items in the Internet (in different Internet-shops) or see a retail middle and also buy necessary thing. Today, it is extremely quickly and easily to use Internet. For instance , Adidas gives to buy tennis shoes in their web-site, there everyone is able to create personal style. The interaction method is associated with electronic features. Another important point that in mass customization consumers are definitely involved in creation process. It is normal then simply customers tend to be called «coproducers» or «prosumers». 3. The purchasing sub-process. Suppliers in mass customization are the very important part in reducing costs.

Companies with good suppliers have got seriously competitive benefit. It is fact that the accomplishment of high income lies in an effective and efficient component and material purchasing. Outsourcing approaches have been produced due to the do it yourself architectures. The modular sourcing applies to lessen difficulty in purchasing process. In this case, companies need to trust one another and strongly cooperate, in the event they want to achieve incredible outcomes. 4. The production sub-process. Firms should focus on the monetary order amount (EOQ). Thus, the processes of production in mass personalization should be minimized.

The optimization of the creation is the main process in the process. If a company really wants to meet all the needs of shoppers, the production should be flexible. Corporations need to understand then they want to make individual merchandise, I mean, for what level. Producers have two crucial key terms: delayed product difference and post ponement. They are two related concepts, whereby the means putting your decoupling level at after stages in the production processes. Another describes that some development activities are generally not initiated till customer purchase arrives. a few.

The strategies sub-process. This technique includes assist clients and suppliers, as well as accompanying. Usually, it phone terms upstream and downstream. Upstream logistic is transportation, warehousing of materials and components to get production and consolidation. The downstream logistics is the packaging and delivery of end products to customers. Sadly, these types of strategies face serious problems in mass personalization, because costs of individualization increase. The all logistic has extremely heavy costs. Companies spend a lot of money for transportation and warehousing equipment.

It is a good reason that these companies use outsourcing. Mass customization noesn’t need inventories of end product. The companies try to operate individually with each person. No one wants to resemble another. six. Information sub-process. This process cooperates with all operations described over. The purpose of the knowledge sub-process is the providing of information stream. The effective information system will need to capture pursuing stages: clients needs, develop a list of item requirements, determine manufacturing technical specs with respect to course-plotting, material digesting, assembly and etc.

Radio Regularity Identification can help to make id. In spite of the very fact that modern day technologies are incredibly useful, this remains very costly. Another valuable method for the coordination in mass personalization is Merchant Managed Inventory (VMI). Any supplier offers timely information regarding stock degrees of modules and components. Additionally , the integration of ERP (Enterprise Resource Planning) helps to improve the agility and flexibility to unforeseen events. The mass modification will make revenue if the application is constantly designed and current.

Finally, firms should make use of a large number of info very accurately. I try to consider mass customization not simply as one complete process, but separate sub-processes. It helps to know the nature of mass customization. However , I should point out interrelated approaches such as post ponement and modularization, because usually these approaches allow the corporations to work successfully. Inside my essay I will give brief concepts of strategy because below through this work other students can describe them in details. Modularization is necessary to get the success of mass customization in which set-up costs are important.

Also, modularization allows making rapid set up and costing efficiency. Modularization usually uses in this discipline such as computer system science, construction, design engineering and creation. The main thought in modularization is the digesting of the product into standardised components or perhaps group of elements, which is called quests. The second technique is post ponement: «Postponement means delaying activities in the source chain till customer orders are received with the objective of designing products, rather than performing individuals activities in anticipation of future orders». These strategies are quite frequently used.

Every year, the mass customization will be more popular in the companies. Conclusion with this part Through this essay, I consider the most crucial aspects of mass customization. Initially, it was given the basic concepts of mass customization. I tried to examine the most important explanations and to clarify the importance of mass customization. Next, I explained a little history from mass production to mass customization. History shows that the mass customization had been applied to date. Now companies are using modern tools, so the result of up-to-date mass customization is different.

Companies generate products quicker than ever before. Technology is used in all stages of production, which helps businesses to satisfy customer preferences. Also, I evaluated mass customization not only as being a single procedure, but as well to separate the procedure in parts, included development, connection, purchasing, development, logistic and information sub-processes. Each sub-process has to be tweaked in order to avoid stagnation in the production and filing facilities. In the dissertation, I as well mentioned the main advantages and often used tactics.

The company selects the technique which this thinks it is the most appropriate technique. Usually, the strategy depends upon what industry where the company works. In my opinion, the mass personalization is producing and is very helpful for producers and consumers. First, customers are satisfied with goods with necessary attributes. Second, organization in the event of mass customization features lower costs when compared with if it was made for each consumer a totally exclusive product. Finally, I want to highlight that the mass customization offers both pros and cons. The company has to make a choice alone.

Postponement approaches By Olga Baranova What is postponement? Effective management of your supply sequence includes considering creatively about how to integrate and carry out logistics and manufacturing activities. Postponement technique offer for you to achieve delivery of products in a timely and cost-effective fashion by rearranging the conventional production and strategies structures, which are generally designed and managed autonomously. Thus, postponement, also known as “delayed differentiation, ” is a source chain strategy that holds off product differentiation at an area closer to the consumer.

This involves designing and growing standard or perhaps generic configurable products which can be customized quickly and inexpensively once real consumer require is known. Postponement also requires the execution of certain inventory ways to deploy inventory farther away from the customer when fulfilling services level objectives and minimizing inventory costs and minimizing risk, techniques for holding the best inventory, in the right place, in the right kind. By driving the point of product difference closer to the client, postponement can easily improve customer satisfaction levels, lessen inventory costs, and enhance top-line revenue.

The postponement strategy is founded on the following two basic principles of demand forecasting: 1 . The accuracy of the forecast demand decreases with an increase in the time horizon. The farther enough time window which is why the demand is being forecasted, a lot more inaccurate it will be. The figure graphically symbolizes this effect as a direct: as time extends even farther into the future, the forecast error grows, displaying that the prediction demand could have larger and bigger variations while time periods progress into the future. installment payments on your

Demand projections for a merchandise group are often more accurate than projections for seperate products. It can be much easier to prediction the total demand for LCD Tv sets than it really is for an individual TV of your specific company, model, screen size, resolution, and color contrast ratio. Postponement typology based on value sequence activity It can be based on the review of 15 studies, Table you was developed to summarize the terms used to determine different post ponement types. These define postponement on the basis of activities or destination to differentiate among different post ponement types.

The check marks in front of just about every study show the postponement terminology intended for that analyze. The following section (table 1) summarizes these kinds of terminologies below product development, purchasing, manufacturing and logistics post ponement. Table 1 Summary of postponement terminologies based on the review of studies Product Development Postponement Approach Product development postponement is considered extreme form of personalization with all actions including merchandise design taking place after the keeping of an order.

Moreover in such a case, the customers are involved during the design level. Product development post ponement strategy is usually preferred in highly unpredictable environments, regarding high degrees of uncertainty regarding consumer needs, technological advancements and govt regulations. a couple of For instance Toyota deals with the high amounts of uncertainty by simply letting all their suppliers produce novel tips and designs without limiting these strict specs constraints. The suppliers include total self-reliance to explore place to place within a broad range of design and style specs.

In that time, persons at Toyota continue gathering market data on customer demands and technological tendencies, till a lot of convergence is usually achieved. several Purchasing Post ponement Strategy When it comes to purchasing post ponement strategy, the purchasing of raw materials is definitely postponed before the information on downstream demand becomes available. Purchasing post ponement strategy can be preferred if the demand is extremely uncertain, natural material provides high obsolescence cost and it is of high benefit in terms of total product price or jewelry up plenty of seed money.

Purchasing postponement would work when the market business lead time can be greater than the manufacturer’s development lead time plus the suppliers lead period. 3 Nevertheless , if the industry lead period constraints the maker from making use of purchasing post ponement, it can be followed selectively for the range of products. This may be possible in the event the company will be able to differentiate among base demand and rise demand. Pertaining to base demand it can move forward with expected demand and buy raw material or even proceed with creation in case of for a longer time production lead times. However for surge emand, the company can easily wait till demand pattern receives and then it may proceed to place orders. In order to manage items for the surge demand, the manufacturers may have independent design of supply chain to deal with the surge demand, seeing that under many scenarios standard production lead time for the surge require would be higher than the market business lead time. This design can be based on velocity and flexibility with focus on fulfilling instructions quickly rather than focusing cheaper by setting up fast development lines and purchasing raw materials from a different group of suppliers.

Even so this would be possible when the increase in cost due to fast paced creation would be lower than the gains built up by using purchasing postponement strategy. This fact is pointed out by the post ponement strategy implemented by Benetton, an clothing manufacturer, which usually separates among base demand and capricious demand. Pertaining to the base demand, Benetton subcontracts to low priced sources, that have higher lead times, while for the capricious part, they utilize their particular flexible features which have bigger operating costs.

However for purchasing postponement to work, it truly is imperative to have high level of collaboration between manufacturers and the suppliers. Suppliers are required to reply to the downstream demand in minimum conceivable time in order that the manufacturers may deliver in the market business lead times, while resorting to purchasing postponement. In recent years e- market places possess sprung up, enabling the manufacturers to receive linked with the suppliers without the geographical constraints3. This increases the options of the manufacturers to respond to actual require.

However , having suppliers or perhaps their share centers next to the manufacturers will support purchasing postponement approach. Moreover this kind of impulse shopping for contradicts the approach of developing long term relationships while using suppliers and can also endanger the associations with the existing suppliers. By a supply chain perspective, purchasing post ponement involves shifting the ownership of the merchandise to the most suitable location. Yet, in case of an imbalanced electric power structure, a manufacturer may well force their suppliers to keep finished products inventories in order to reduce its very own risk and uncertainty price.

In this scenario the suppliers are left with speculating the downstream require, often causing the overall inventory buildup or ‘Bullwhip’ result in the supply chain, which usually reduces the efficiency in the entire cycle. 3 Making Postponement Technique Manufacturing post ponement is based on having products in platform level later to be customized according to demand design. This is depending on the principle that it is simpler to forecast demand pattern by component level as compared to finished product stage3.

It involves delaying manufacturing activities and holding inventory in simple form until the demand design becomes obvious. Thus this tactic works where there are multiple product derivatives, which could always be due to distinct cultural, technological or marketplace related issues. High product variation makes it difficult to outlook and carry inventory at finished level. Manufacturing postponement allows businesses to operate with no holding done goods products on hand while maintaining almost all their stocks at pre-customized form.

The inventory with this level features lower risk attached with it because their uncooked state enables them intended for wide utilization variations. 4 For example , vogue apparel retail business is marked simply by high product obsolescence costs. This is because that product happen to be planned well before the actual demand information becomes visible. Zara on the other hand have been able to catch market tendencies by lowering the time necessary to introduce new products. Among other steps, Zara uses manufacturing postponement to lessen its business lead times.

Zara concentrates the forecasting work on the kind 14 and volume of fabric it buys. Zara gains even more speed and adaptability by purchasing a lot more than 50% of its textile un-dyed after to be used for various companies lines (platform based). That reduces the charge as well as the odds of forecast mistakes. In un-dyed form it is easier to convert fabric to other uses, while it provides Zara the flexibleness to adapt to colors near to the selling time of year based on instant market needs. 5 Set up postponement Approach

The computer market selling personalized product specifically through the internet practice assemblage postponement approach. The customers choose from various options including color, recollection specs, processors, and the companies such as Dell, HP and Compaq build the required versions from components received in the Original Equipment Suppliers (OEMs). HP postpones the last assembling stage to the previous stage with the local circulation centers and when demand becomes visible, last manufacturing/assembly activities such as power supply, packaging and labeling will be carried out.

Marking postponement Strategy Labeling postponement is followed when the goods are advertised under several brand names and/or distributed to different markets. Such as at times the same OEMs are being used by several brands for their products and the OEMs indicate the products with labels after receiving respective orders. Similarly certain clothing distribution companies keep goods 16 unmarked and upon invoice of orders from several institutions print out their trademarks before dispatching the orders. Packaging postponement Strategy

Presentation postponement technique is followed when the goods are advertised in different packages or deal sizes. six The final the labels is delayed till requests are affirmed. Packaging actions are generally performed in the downstream locations including centralized distribution centers. Strategies postponement Technique Logistics post ponement involves a delay in the final movement of the products. Instead of placing the goods with the final reason for the supply cycle, they are held at a central site, with the aim of following the require pattern to get the final deliveries. This helps to minimize the inventories in the supply chain seventeen while at the same time enhances customer responsiveness. 3 Preserving inventories in final places would raise the inventory costs while at the same time will result in share outs at some locations and excess stock at other locations. Logistics postponement frequently involves the repositioning of the final making activities downstream closer to the conclusion user. This can help particularly where local versions in terms of client preferences are present, which could be better, catered to by carrying out the final personalization at the local distributer level.

Logistics post ponement suits those products, which may have higher products on hand cost and lower travel costs. Logistics postponement in most of the situations requires a more quickly and more reactive transportation program and can result in higher travel costs. Advantages of using postponement strategy Successful postponement implementations improve customer satisfaction while lessening inventory costs. By increasing their capability to respond to within demand by local and global markets, companies are better able to compete promptly while staying cost competitive. Improvement in Customer Satisfaction: Elevated ability to offer a wider array of customized goods * Decreased lead moment for orders Decrease in Inventory Expense: * Products on hand costs shift upstream to less expensive general products, which usually also minimizes inventory obsolescence costs * Enables better planning and allocation of resources by simply reducing the forecasting distance * Decreases inventory costs by as much as thirty percent to forty percent in effective implementations Improvement in Order Load Rates: 5. Since completed products are manufactured from generic elements, companies are better suited deliver done goods promptly as a result of postponement.

Bottom-Line Benefits: * General, postponement’s principal benefits are to reduce the associated with market uncertainty and to meet up with customer demands, while effectively managing supply chain costs. In many cases, reduce overall source chain costs were attained by respondents. Important success factors and great candidate intended for postponement technique The important factors to a effective postponement approach are to create standardized companies to incorporate personalization at the most beneficial point in the provision chain.

Going forward from the aforesaid it is possible to allocate the subsequent factors: 5. Organizational buy-in and support is the primary critical success factor * Implementation of appropriate inventory deployment approach * A postponement technique is meant for failing without consistent top-down support from style through execution * Product design modularity and organization process reengineering are essential to ensure easy execution 2. Collaboration of most internal functions of the source chain, and also with suppliers and buyers * Appropriate metrics and incentives can also be important

Managing the rivalling interests within a company’s source chain is also essential. Without collaboration, which includes changes in the advantages and metrics structures of the supply sequence, the changes connected with postponement typically result in poor execution. In addition , external effort with suppliers and consumers is critical. In the event that suppliers cannot respond to the alterations as a result of post ponement, and if product design can be not tailored to customer requirements, postponement may result in cost overruns and increased lead occasions.

The foundation of every successful postponement implementation is organizational buy-in. If managing is certainly not willing to have risks, apply significant improvements, and keep an eye on adjusted metrics, they will be not as likely to reap the benefits of postponement. Although industries and companies are perfect for postponement, there are certain organization conditions that position an organization for a more fortunate postponement implementation. Prominent among these are businesses that develop a significant variety of products with short support life cycles and which have a supply cycle able to support mass personalization.

Regardless of business conditions, successful postponement implementation still needs collaboration, organizational buy-in, determined effort, plus the right i . t backbone. Flip Concepts inside the Framework of International Source Chain Management By Yuliya Pronkina In recent times, the competitive dynamics on the whole and the demand for product modification in particular possess increased significantly in practically all industry groups: partly resulting from new low-budget competitors inside the global market segments and to some extent by elevating demand for scientific performance.

The cabability to react quickly to sudden market improvements is one of the important reasons for the introduction of modular item architectures. If a company really wants to remain competitive or increase its market share, it is posed to manage the compromise between such conflicting goals because: * low costs, * short business lead times, 5. high quality of product. Do it yourself strategy is supposed to resolve this conflict and also become a way to growing difficulty of easy to customize production. It closely links with modular platform systems.

In fact , modularity allows manufacturer to mix advantages of mass production (high volume, large quantity production) and product range (flexible and versatile manufacturing devices, product dressmaker, etc . ) at reduced cost and elevated economies of scale. All in all product development strategies such as modularity, product flip platform, and so on are the step to achieving inexpensive customization The modular concept has played significant function in the advancement mass modification. This article investigates main aspects of modular strategy in the construction of global supply chain managing.

Definition of modules in the framework of global source chain management To understand what modular approach represents all of us tried to supply the definitions of “modules” and discover its real position amongst other strategies of mass personalization. According to the Oxford Dictionary, meaning of modules generally is pursuing: Module is definitely each of your set of standardized parts or independent models that can be used to create a more complicated structure, just like an item of furniture or maybe a building. You will find convenient statements among experts of studies about general meaning of modularity.

Relating to all of them we can determine that modularity refers to a technique for organize sophisticated products and operations efficiently simply by decomposing sophisticated tasks into smaller parts. It enables the tasks to be managed independently and yet work together as a whole with no compromising overall performance. Thus we can consider modularity as to be able to configure merchandise variants by mixing and matching elements within comparable product structure to create number of configuration without having to lose its functionality. Examples of quests would consist of many parts in cars: engines, gears, audio products, tire/wheel alternatives, etc .

In electronics, segments would contain processor planks, power products, plug-in integrated circuits, and disk hard drives. In application, code could possibly be written in modules (objects) that can be combined into numerous combinations. In fabrication do it yourself strategy is applied while flexible platforms for creation a significant quantity of product variations, enabling a strong to gain cost savings through economies of range from part commonality, inventory, logistics, along with introduce technologically improved goods more rapidly.

Flip architectures enable firms to reduce the physical changes required to achieve a lot of functional alterations. Hence each of the physical improvements can be quickly combined with out adding intricacy to the developing system and, hence, to managerial system. To explore the idea of modularity and consider it inside the framework of supply chain management, we decided to assess the differences between integral and modular product architecture and make even more comparisons among corresponding supply chain structures.

Product buildings. Integral product architectures happen to be those through which each part is supplied directly and specifically to efficiency. Parts and interfaces often be amazing. On a very integrated product like a armed forces aircraft, every part and program has been designed to perform a particular task. Flip product architectures use common interfaces and can employ off-the-shelf components pertaining to much of assembly. Personal computers, garments, and many other items employ modular architectures12.

Source Chain Structure. Integral (traditional) supply restaurants require vertical integration within a primary company or restricted coupling of several firms in order to satisfy demanding, exclusive design technical specs. Modular source chain architectures are side to side, with many contending firms specializing in aspects of the overall product. Quite simply, modularity in supply restaurants implies that the different units of organizations happen to be freely divided, can operate independently, can be easily reconstructed.

The concepts of product modularity and provide chain modularity are rather interconnected: changes in the product buildings result in significant implications to get the supply chain structure and re-distribution of activities throughout the logistics sites. This figure 2 displays us the easy scheme of interconnections of ultimate assembler as well as its suppliers in traditional supply chain and modular source chain. (2) (1) Determine 2 . Made easier scheme of integral source chain (1) and do it yourself supply hain (2) In modular supply chain first tier suppliers are rendering modules in the form of subassemblies, are not only components, consequently a flip supply sequence is seen as the presence of value-adding tier-suppliers that coordinate the job of the second tier suppliers. In no modular supply chain the role of assemblier is definitely played simply by a neighborhood firm. In the result of somewhat different strategy, modular supply chain encourages some distinctions comparing for the traditional a single. In the pursuing table we all compare the main features of supply chain based on its function of business. Table a couple of

Main highlights of supply cycle depending on it is mode of organization11 | Traditional source chain| Mass customization supply chain| Software compatibility effects| * Built-in vertical composition * Extended development business lead times| * Modular item architecture 2. Reduction of development lead time| Element customization| 2. Design and manufacturing target * Under one building product development 2. Standardized components| * Autonomous innovation in NPD * Customer target * Design and style for manufacturability| Value inputs| * Financial systems of scale * Exploiting advantages of market mechanism * Standardization of operations 5. Consolidation of outbound logistics| * Outsourced workers * Overall flexibility towards specific customers’ demands * Financial systems of scale and scope| Supplier-buyer interdependence| * Provider involvement in development not critical * Multiple sourcing| * Early supplier involvement in NPD * Tactical partnership 2. Supplier since system integrator * Large interdependence| The good example of applying modular strategy in practice is definitely the following.

Two German automotive companies, Volkswagen and Mercedes decided to develop the automobile industry’s modularization in the mid-1990s. Their built new plants, which started production in 1996 and 1997 based on the new flip concept over a relatively mass, specifically in Volkswagen’s vegetation in Resende (Brazil), Boleslav (Czech), and Mosel (former East Germany), and Mercedes-Benz’s plants in Vance (U. S. ) and Hambach (France). These plants got two primary features. One is that they have put together cars coming from relatively significant subassemblies. Even as can find out a car is a system consisting of numerous components. At conventional plants, individual components —— for example , instrument panels, gauges, and line harnesses —— one by one to a vehicle body system on the final assembly line.

Rather, at individuals new plants, these person components are subassembled on the separate collection, and then mounted as a component into a physique on the final assembly line14. Suppliers obtain their own materials and labor force to create individual modules, while Volkswagen supplies the infrastructure and designs the user interface between making units. These kinds of measures permit companies decrease their costs, because upon its fresh plants there have been no need in “blue collars” (administrative staff), for instance, and its modular outsourcing made significant advantages which can be resulted in a great ability to issue a wider variety of final products in shorter time periods and at lower cost. Types of modularity

There are six types of modularity for the mass personalization of products and services: 2. component-sharing modularity, * component-swapping modularity, * cut-to-fit modularity, * mix modularity, 2. bus modularity, * sectional modularity. The subsequent characteristics of different types of modularity are carried out by modern authors who are mostly talking about Ulrich and Tung analyze “Fundamentals of Product Modularity” (1991). We supposed it is convenient typology and chose to base more information on this surface (figure 3). In component-sharing modularity, precisely the same component is employed transversely in different products to provide economies of scope.

There is a base product of common components and changeable portion. This kind of modularity never leads to true person customization, yet allows reducing costs and increasing selection of products. Determine 3. Types of modularity In component-swapping modularity it is also possible to change options on a normal product. Modules are picked from a listing of options to can be included in a base product, for example cars. The good case for this may be the “Configurator” around the internet site of Volkswagen, exactly where customers can pick additional features that can be added to the bottom model with several clicks. So client can make a decision which is convenient for him.

Cut-to-fit modularity is similar to component-sharing and component-swapping modularity, except that one or more from the components is usually variable. The module may be changed just before it is along with other themes. The good cases for it happen to be eyeglasses, or clothing. Mix-modularity is also just like component-sharing and component-swapping modularity, but is distinguished by fact that when ever combined, the modules reduce their unique identification. An example is definitely house fresh paint. When particular colors of paint will be mixed jointly, those parts are no longer obvious in the end product16. Bus modularity uses a key platform that can add distinct components to it.

Thus in the result there is the facilities that is genuinely required for every single consumer. Sectional modularity is definitely the type of modularity that provides the most important variety and customization between other types of modularization. Functionally it is extremely close to element swapping, nevertheless focuses on organizing standard segments in a new, unique form16. In this case every component is usually connected to another making possible the settings of any number of different types of pieces. The most popular case in point is Profano. To be able to utilize this type of modularity a producer has to build a special user interface of the product that enables sections or objects of various types to interlock16.

Benefits and drawbacks of modularity, requirements for implementing in the concept Currently taking all into mind we can list main benefits associated with modular strategy: * Economies of size and scope which indicate an capability to improve performance of production concentrating on divided modules. Suppliers and sub-suppliers have an possibility to produce higher volume of the “modules” and apply the core-competencies to production. * Increased prospect of product/component alter and updating. Since each module user interface is totally specified, changes can be made to a component independently of other quests, as in order it is larger open for additional product development. 2. Reduced purchase lead-time.

As modules are designed in relatively large quantity, the strategies of production can be prepared so as to decrease manufacturing business lead time. Therefore, the order lead period can be lowered. * Advancement product selection. The use of modules means that a great product variety can be obtained using diverse combinations of modules. 5. Separated jobs. Since the cadre and segments have been standardised, their extr�mit� enable style tasks and production duties to be decoupled. This separating can result in decreased task intricacy and in a chance to complete duties in seite an seite. For instance it truly is easier to test it before final assembly, quality management can be more efficient as a result of separated quests. The ease of product upgrade, maintenance, repair, and disposal. Buyer without any problem can change one module to another, for example he can buy a better video credit card for his computer, or transform an engine module in his automobile17. Although making use of modular style provides a quantity of advantages across the organization, corporations must also consider the fewer discussed drawbacks when analyzing the decision to implement modular design or perhaps reviewing existing modular techniques. * Substantial Initial Expenditure. The initial costs to reconfigure existing devices and procedures are excessive. Reconfiguring towards the modular design is a sophisticated task, that might disrupt the existing flow from the product pipe. Lack of Customer-Centricity. Focusing on cost-efficiencies company can lose crystal clear vision of customer requirements. * Coordination Complexity. Modular design takes a significant restructuring of techniques and can increase product development complexity if companies do not designate clear ownership and cooperation with suppliers in a well-planned implementation process to avoid replication of techniques and disparity across item specifications, purchase orders, and manufacturing ideas. * Distributor Risk. Corporations can knowledge delays, inappropriate specifications, and poor materials quality. Hence there is a need for well-organized control in this case.

Also, companies may have to share details and technological expertise to make sure suppliers deliver according to new technical specs and cost. A company surrendering too much specialized expertise, specially in areas offering a competitive advantage, might lose technological control to the supplier * Intellectual Home Risk. Making modules easily simplifies the product buildings, enabling rivals to recognize without difficulty technologies and copy modules. According to this, organizations need to increase patent documentation in order to avoid competitors employing key quests in their product architectures. In modular supply chain administration, suppliers have got a relatively large degree of freedom in development.

However it can be done only with long-term commitments and aggressive cost desired goals. It is crystal clear, that modular strategy provides its fundamental requirements intended for the suppliers and manufacturers which enable them communicate to create benefit. To implement modular approach company are able to meet this kind of requirements, as following: 2. Particular business structure. The business structure needs to be flatter with fewer amounts, and provides an impressive freedom for the dexterity among techniques (modules). This focuses on a higher degree of cross-functional integration and employee involvement. This leads to a much larger degree of decentralization in decision making.

Besides, the structure is open to suppliers as well as customers because that they (suppliers and customers) are considered extensions with the organization, 5. Management focuses on three parts: supplier regards, customer relationship, and resource management, 2. Readiness of inputs as needed (this requires an effective supply network), skillful, highly knowledgeable employees with excellent technical qualifications, 2. High standardization of elements. Also changing a industry�s organizational framework with a flip product structures requires the support and enduring responsibility of the leading management. The amount of quality control and skill in progress modules should be in a higher level.

Effective development and effective use of segments requires modifications in our existing processes in many ways. Modularization in automotive industry (Volkswagen’s modular strategy) As usual, the automotive industry is a head in employing and connecting a modularization strategy. The Volkswagen Group is seen as its global presence and comprises many brands. The Volkswagen Group bases their great success on 3 major themes which are shared on a wide-ranging scale. The successfully implemented modularization approach is one of the key factors that will enable the Volkswagen Group to become the earth leading car manufacturer, with terms of sold products but likewise in terms of superior margins8.

Today The VOLKS WAGEN Group is a large auto empire encompassing 10 brands, 240 versions produced throughout 94 sites in 153 markets, totaling over almost 8. 3 million vehicles made each year. The sheer range of its operations across so many different countries meant that variability of usana products is very excessive. Applying of modular technique by Volkswagen meets customers’ expectations for any growing variety of vehicle designs, equipment features and design. Through the modularization of the body system, vehicles could be produced in distinct stages to get the length, thickness and wheelbase – a technique that rewards the developing process. We’re going discuss the key features of Vw modular strategy created in the “Modular Slanted Toolkit (MQB)” in the next part.

To sum up, businesses that are trying to be competitive and still wish to have a relatively large profit margins and market shares in our circumstance can choose mass customization strategies and modular strategies in particular because: 5. Modularity makes complexity workable * Modularity enables seite an seite work, 2. Modularity can be tolerant of uncertainty. Shared platform approaches in the framework of intercontinental supply sequence management. By Alexander Manzhosov Abstract The logical purchase of progress international marketplaces, industries and customers behavior led businesses to a new frontier of competition to get manufacturing sectors as well as for service industries – to Mass Customization.

The core reason behind such a change in the market strategy was a significantly increase in range of consumers demands within industry segments. As the world recognized guru of management Philip Drucker when said: «It’s a customer whom determines how business is. It’s the consumer alone who is willingness to purchase a good or for a assistance converts monetary resources into wealth, points into goods. » Translated to the genuine terms that meant for the manufacturers a new challenge of getting together with various customers needs whilst carrying about following to basic tendencies of lowering costs and development times during the a product and optimizing key business techniques.

That’s why system strategies had been designed and applied to boost the efficiency and profitability of manufacturing. This daily news seeks to identify the happening of shared platform strategies, research their very own advantages and disadvantages to get supply chains and study the consequences of implementing the strategy within the case of Volkswagen Group. Key words: mass customization, distributed platform strategies, supply sequence. Introduction Many modern producers are seeking innovative ways to improve their Key Overall performance Indicators (KPI) and focusing their establishments on price reducing while offering the collection of competitive products in many diverse market segments. And one of the methods of achieving this aim is by applying shared programs approach.

The main benefit is possible being gained due to coordinating of engineering processes with the genuine production program and supply chains. The platform enables companies to talk about not only elements, but also production tools and machines. Thus the first effort to establish the foundation of the concept of sharing websites among the category of products is always to define the definition of “platform”. Next there is a further more problem of realization by which way does the concept affect the company and how the organization can get a competitive benefit by imply of implementing shared platform strategies. Program concept The ideas of sharing systems have received raising attention in product development and operations management in the period when mass customization era arose.

Thus companies were required to “produce goods and services to meet person customer’s requirements with near mass production efficiency”. The woking platform concept is closely tied to models of merchandise architecture, modularization and standardization. The platform on its own can be defined as “a relatively large set of merchandise components which can be physically connected as a secure subassembly and are common to diverse final models”. The definition continues to be stated previously mentioned can be responded by Number 4. Figure 4. Three different products build on the same platform The figure shows the general thought of platforms posting. Three diverse products happen to be assembled by combining elements A, W, C, M, E.

Based on the illustration it might be concluded, that the product friends and family consists of the element A (platform) and a set of different elements utilized in a do it yourself way. What emerges from your definition and illustration that in general building a platform is about creating common distributed components and systems within a family line, when providing differentiated features and benefits to include value to each production product (Figure 5). Figure your five. Common rule of posting platforms. The secret here is that totally different at the first view products from different brands and from different price segments of the market can be equal in engineering terms.

Still the woking platform is not just a universal cure. And based upon empirical evidence there are some preconditions of putting into action platforms: * The product family members shares simple groups of components * The product family is likely to have an extended lifecycle * The level of interconnected systems among the list of product is relatively large * The technological environment of the industry tends to regular updates 2. The main functionality in the products is usually stable yet variable in the terms of non-core capabilities All these conditions are not greatest and the appropriateness of decisions considered depends on specificity of organizations type as well as the product qualities as well.

It also should be added, that depending on criteria stated previously and the concentrate on of the producer, platforms can be categorized in 3 types: * Modular * Worldwide * Generational The main difference by this sort of a categorizing emerges owing to the technique of introducing the product line. The modular system usually enables designing functionally different product variants. To the contrary, scalable 1 aims at creating functionally similar products of numerous capacities. As well as the last a single, the generational platform is employed to be a basis for new technology development. The causes of applying platforms That follows by what continues to be said over, that the platform concept is actually a quite versatile approach for manufacturers, additionally sometimes it seems vital for staying competitive on the market.

Now we can spread to the concerns closely linked to the platform setup and it’s effects for the businesses operations and provide chain framework. Nowadays important issues to get consideration in the Supply Chain Management (SCM) are expense containment, development know-how and resources, item quality and logistics. Because the supply sequence can be represented as the combination of businesses involved in actions from the availability of raw materials for the manufacturing and delivery in the goods to the customers, the success of the whole source chain depends upon how to make the most effective configuration of the products, making processes and supply sources. With this connection a question is bound to come up whether the shared platform approach is an effective method or certainly not.

This brings us to advantages and disadvantages of such a structure. Advantages and disadvantages of implementing shared platform tactics The purpose with platform sharing is to decrease the cost and possess a more useful product development process. And in line with the purpose declared from m point of view one could classify features of shared program strategy in to three essential groups: 5. Quantitative 5. Qualitative * Customer-oriented Quantitative advantages with this mean contain such factors as: 1 ) The Global standardization 2 . The Economy of size 3. The rationalization and the reduction of R&D costs The value of the standardizations is usually quiet evident.

By making a common platform for the merchandise collection the company creates “flexibility”, that enables not only to generate dissimilar versions according to individual consumers’ and even countries’ tastes yet also provides an opportunity to standardize production facilities and reduces costs of logistics and management as well. The economy of scale in this case follows straight from the previous component: the commonality of the exploiting components, segments, mechanisms, assembly lines lessen overall costs and makes simple the business and technological techniques within the organization sparing human and budgetary resources. The next important concern concerns R&D costs. The unity of components under one single system helps dramatically minimize the price tag on developing catalog. Once the system is designed, the company doesn’t ought to spend millions on anatomist new parts.

And system efficiency , “the proportion between the typical R&D costs (or creation time) for derivative item over the expense (or time) spent to get the platform” increases (the lower the ratio a lot more efficient the platform is). Such an effect may be possible because diverse products discuss the same technology process, composition and production mechanisms. Qualitative advantages contain: 1 . Improved quality and innovations 2 . Easer products on hand management The proposed components’ commonality is actually a multi-oriented instrument: platform writing allows companies to design parts with fewer variation. A byproduct of the is increased quality, resulting in lower problem rates.

However, people need value because of their money they really want new solutions. And eliminating the need to engineer separately thousands of parts permits research and development possessions to be dedicated to fewer solutions fostering creativity and quality improvements in the minor pair of technologies. An additional critical stage is inventory management. Is actually apparent that in any supply chain plenty of inventory is held in the form of components. And it’s essential to which the products on hand amount corresponds always towards the uncertainty of demand for the finished product. In that way by implementing a platform the manufacturer is able to use it in multiple finished products.

So the with regard to the platform and all components system consists of can be an crowd of the demand for all cross-platform finished goods. That’s why inches the use of common components (or set of pieces – platform) in a variety of goods has been a very effective supply chain strategy to take advantage of aggregation and reduce component inventories”. Another clear benefit issues the relationships between suppliers and manufacturer. By employing platforms the producer decreases the uncertainty of require on several components. That creates a win-to-win situation for both organization partners by enabling these to build long lasting relationships. The past group of advantages is client oriented and includes: 1 . Faster respond to changing market needs 2 . Greater item variety

Is actually critical to say, that this number of pros can be clearly defined through observation about previous positive aspects. And faster response to changing market needs occurs because platform sharing allows companies to design and launch new products faster and cheaper. As well as the trick is here now that the advancement and cost of the original program for new merchandise have already been purchased. Such flexibility provides an chance to the company to diversify their assortment and satisfy different market shares. However you will never complete the study without showcasing some conceivable problems when you use platform procedure: 1 . Item dilution installment payments on your Incompatibility several. Risk attention

Product dilution means that a platform, depending on common devices and devices, can be expanded thin if this becomes a method to obtain too many barbaridad models. Moreover, platforms that span around models of diverse stature boost the risk of cheapening luxury products or adding unnecessary expense to lower-end segment. One other challenge is usually incompatibility. A platform’s differentiating technologies has to be carefully engineered to combine with the standardised systems. Or else, producers will have to perform adjustments to make the two styles of technology compatible. These compatibility regulations first of all are not differentiating adjustments and second of all they provide no value of their own to the completed product. The last but not the smallest amount of possible problem is the risk focus.

Producers might face increased overall risk if the actual platform they’ve developed and implemented can be accident-prone. A defect in a standardized technology multiplies the danger across the whole product line, which leads to costly potential recalls. Shared platform strategies Because has been mentioned, in general putting into action a program promises considerably more benefits than negative effects. And once the choice to implement platforms is considered, there are various methods for the product setup (Figure 6). Some of the most extensively practiced platform strategies will be no Leveraging, Vertical Leveraging, Horizontally Leveraging as well as the Beachhead Approach. Figure six. Shared system strategies

Not any Leveraging program is usually designed especially for a single market segment. Such technique is executed for excessive scale items wi

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