Effective Modularization How to Link Product Portfolio Strategy and Product Development?

Transcription

1 Effective Modularization How to Link Product Portfolio Strategy and Product Development? Potentials, Methodology, References Arthur D. Little GmbH Leopoldstr. a D München Tel.: Fax:

2 Introduction While many different terms and definitions are used modularization and platform strategies are visible in most industries Modularization Product platforms Standardization? Technology platforms Selection Functional product structure Product families Material handling systems Cars Railway transportation systems Chemical plants Trucks Control Systems

3 Benefits (/2) Modular product concepts yield benefits in many functional areas and finally help to reduce time-to-market and cost Impact on Product development Purchasing Sales/ business development Supply/ manufacturing After sales Flexibility Other Typical benefits Reuse of key modules/ components/ solutions Ability to develop parts in parallel Easier to test products (e.g. key modules already tested) Decreased number of articles Lower product cost Shorter time between order to delivery Improved forecasting Easier way of working with proposals (e.g. less administration, improved price estimations) Easier to make new offer new variants Decrease working capital Improved manufacturability Easier upgrading of products Easier service of products Improved ability to make choices. Possibility to e.g.outsource R&D, develop system suppliers Reduced number or articles in ERP systems 2

4 Benefits (2/2) Arthur D. Little s project experience shows that the Net Present Value of modular product concepts can be almost doubled Project Example Medical Devices 7 % % 4 % 9 % % 4 % 93 % 29 % 00 % Significant NPV (Net Present Value) Improvements NPV conventional products Timeto- Market Service cost Sales in market niches Material-/ productcost Quality cost F&E expenditure Other effects NPV modular products Lever - 0 % - 2 % + 0 % - 0 % - 2 % - 2 % Source: Arthur D. Little project experience 3

5 Methodology Key Success Factor Arthur D. Little's unique approach balances the different functional perspectives and module drivers and thereby secures that the best value in the complete value chain is created Illustrative The triangular balance Area Examples of module drivers Consequence of too much focus Carry over Sales/ Business Development R&D Standardization Ability to test Short customer lead-time Supply Chain Reduced stocks Manageable operations Delivery precision Sales/ Business Development Improved forecasting Variants through modules Upgrades/new variants Supply Chain R&D Portfolio Approach A balance of all above. The right module driver, for the right part of the product 4

6 Methodology Steps Our approach to develop a modular product concept covers all steps from definition of target segments and customer requirements to process and organizational adaptations Modular Product Concepts: Strategy, Development and Implementation Develop Market Strategy 2 Define Product & Technology Roadmaps 3 Develop Concept and Pilot Product 4 Adapt and Optimize Development Process Adapt Organizational Set-up Strategic ambition Market segmentation/ application structure Competitive position Target segments Customer requirements Positioning per segment (draft product & service portfolio) Business case Market/ technology trends and scenarios Integrated roadmap system Trends Concepts Platforms/ products Modules Technologies Product portfolio Define scope/ target segments Product unbundling Concept specification Concept definition Reference architecture Modules Variants/ standardization Business Case Pilot product development Scalable product creation process (platform based development of new products, variants, and modules) Decision making and alignment processes Establish platform responsibilities Structure of local R&D departments Marketing & sales plans R&D project planning Technology strategy development Low cost products for emerging markets Product development process efficiency increase Design-to-life-cycle-cost methodologies Global engineering footprint (R&D offshoring) System supplier integration Related activities

7 Methodology Project Deliverables An "Effective Modularization" project will deliver a modular product portfolio that is based on a well founded product portfolio strategy plus an implementation plan and a "toolbox" Key Project Deliverables Processes, tools, and know-how to maintain the modular portfolio Modular product portfolio Manual Product axis Semi automatic Heavy Automatic Light Medium Heavy Application axis Appl. Appl. 2 Appl. 3 Appl. 4 Tenable 4 Light 80 Low Tenable Favorable Medium 60 Low 38 Medium Heavy Tenable 3 Light 96 Low Tenable 2 Favorable 7 Medium 0 Low 340 medium Strong 8 20 Medium Strong 0 9 Low Strong High Dominant 700 High Strong 9 67 Medium Strong Medium Strong High Dominant 90 Medium Strong 4 43 High Dominant Strong Favorable Tenable Weak (3,6 BSEK) (3,4 BSEK) 3 2 (6,3 BSEK) (3, BSEK) (,4 BSEK) Low Average High Appl. segm Product segment E D C B A Seg - ment priority Segment action New Con - Comp. Growth Profit techn. cept killer gen. gen. carrier tester X X X X X X X 2 Global segmentation 3 Product portfolio 4 model strategy Product plan 6

8 Methodology Scalability Arthur D. Little s approach covers the entire process due to its modular structure it can be customized to clients specific needs Modular Product Concepts: Strategy, Development and Implementation Develop Market Strategy 2 Define Product & Technology Roadmaps 3 Develop Concept and Pilot Product 4 Adapt and Optimize Development Process Adapt Organizational Set-up Examples: Scope of Arthur D. Little Projects Initial entry point for many companies Medical Devices Busses Industrial Sewing Machines Light Rail Vehicles Air Separation Plants 7

9 Arthur D. Little References Arthur D. Little s market driven approach to develop and implement modular product concepts has been proven in different types of businesses across various industries Selection Series Products Medical Device Customer Specific Systems Large Industrial Plants Light Rail Vehicles Industrial Power Plants Transportation Systems Air Separation Plants Boilers Cooling Towers Industrial Sewing Machines Plastic Injection Compressors Molding Machines Busses Drilling Equipment 8