Modularization in New Product Development: A Mathematical Modeling Approach

The recent trend on outsourcing is forcing many firms to reconsider their research and development strategy to facilitate supply chain management. Modularization, the opportunity for mixing-and-matching of components in a modular product design, is one of such strategy as it can significantly reduce and standardize manufacturing processes and assemblies, subsequently changing the nature of collaboration shared between a firm and its suppliers and customers. Because modularization is often supported by the use of standard components, customization is possible through mix-and-match of these components. Naturally, the degree of modularization inherent in a product is highly dependent upon the number of components and the interface constraints shared among the components, modules, and sub-systems. In this paper, a mathematical model is proposed to analyze the opportunities for modularization of a product with respect to its interface constraints at four levels: component, module, sub-system, and system levels. The model also illustrates how supplier-buyer partnerships can impact modular product design.