Modularization in the Auto Industry: Can Manufacturer's Architectural Strategies Meet Supplier's Sustainable Profit Trajectories ?

François Fourcade and Christophe Midler
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François Fourcade: CRG - Centre de recherche en gestion - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique
Christophe Midler: CRG - Centre de recherche en gestion - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique

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Abstract: After a promising initial development in the 1990s, modularity in the auto industry is still in the testing phase. The goal of this paper is to understand this ambiguous situation. Our main argument will be that the modularity issue is most of the time addressed from the OEM point of view, as a key ‘descending' architectural decision. We will demonstrate that a consistent and sustainable trend to product modularisation has also to be analysed from the suppliers' ‘ascending' strategies point of view. Section 1 is devoted to definitions of module notion and its expected benefits and pitfalls as analysed in the literature. In Section 2 we focus on the case of Front End Modules, by a longitudinal analysis on the experience of a leader supplier in the domain. The empirical results show that the first modularisation moves reveal a large range of situations, depending on perimeter and responsibility delegation. The result in terms of profitability for the supplier varies and is often not sufficient to sustain offensive development in the future. In Section 3, we propose a typology that illustrates consistent module strategies for suppliers, strategies which are characterised by their value target, the resources and the implementing conditions they require. The paper is based on an interactive research with a first-tier supplier.

Date: 2004
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Published in International Journal of Automotive Technology and Management, 2004, 4 (2/3), pp.240-260

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00278125

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