The 5 segments explained
Discover the advantages of Modular 5
A modular product portfolio allows for fast innovation and efficient operational processes. The first step to achieving a modular portfolio is to map the varieties; the functional and technical varieties are listed and connected via logical business rules. These varieties & requirements are input to set a modular product structure and connected to the modular product design. Per module, a driver is set so re-use of the module can be maximised and innovation speed can increase to improve the product continuously. These modular products are the configure-to-order foundation for future client configurations.
The engineering, production and services departments gain complete insight with the overview of varieties and requirements transparently linked to the modules. The number of SKUs (Stock Keeping Units) is lower when parts and assemblies are re-used in more product configuration. A lower SKU leads to a decrease in your working capital.
To boost your sales, a maximum of functional varieties should be offered to a client. This will give the client the flexibility to configure his product to fit his needs. The modular product design should be the foundation to configure the product. All product varieties and options are adopted in this design. The way a client feels the freedom to choose while the internal organisation delivers standard modules.
Product management delivers a configured price quote template for the modular, standard products to the sales department. With this configurator, the sales manager guides the customer order toward the pre-defined configurable products. The production costs of the standard products are predictable, so the sales manager can sign a product and accurately predict the profit for the project.
A configurable product has fewer project risks and, most likely, a better delivery time. All benefits for your company but also for the client.
Having your sales process standardised allows you to expand your sales forces towards agents or dealer networks. This will generate more leads, and as sales is a numbers game, it will end with more orders! Next to this results in less travelling for your sales force which lowers the cost and environmental impact.
In a low-volume/high-complexity product mix, client customisation is inevitable. This is acceptable for the right sale price and delivery time. During the order acceptance, these aspects should be carefully considered.
By having the modular product design as a foundation, the order engineering can configure the client’s order. One of the benefits of configure-to-order is that engineering can release the configuration within days instead of weeks, taking engineering off the critical path. Other benefits are that the product quality is higher, all product information is available, and fewer new parts are introduced within your company.
For the customisation process, fixed module interfaces should be accepted. New engineering-to-order solutions must follow the Smart Customisation process by using the parts assortment and production process not to disturb the rhythm of the main assembly line!
Customer-specific options, Engineering to Order (ETO), remain possible in Modular Companies within pre-defined limits. Releasing production information for the standardised part of the product utilises a limited amount of resources. The Engineering and Production Planning departments can focus on preparing the production information for the ETO part of the client order.
The production department is the last in the process to order fulfilment. This means that the production department only has the lead time left in the project; they must often recover delays incurred in the previous process steps.
A low volume / high complexity market characteristic is that the clients require products fit for their operations; therefore, the client optimises the product design to a large extent, as much as they are allowed to by the vendor.
Projects often start with a tight schedule already. Late decisions by the buyer, or last-minute change requests, put more pressure on the plan. Next, the design usually takes more time than anticipated at the start of the project.
The production department can be part of the solution by starting a lean manufacturing initiative. Lean manufacturing focuses on reducing lead time and quality defects by eliminating waste in the process. The time needed to manufacture the product decreases, which relieves the time pressure on the project.
The bonus is that the cost per product decreases swiftly as well. These savings can be reinvested in the transition into a modular company.
The obvious benefit of a modular design for your service organisation is that they need to keep fewer spare parts and always bring suitable materials to a service job.
The result is that your service department is more efficient, and client satisfaction grows.
A good set-up modular design allows for the exchange of (electronic) modules during the product’s life cycle, either replacing a defective module or implementing an upgrade to the client’s system. With this ability, you can offer your clients higher value while reducing the environmental impact of your products since the product’s economic life is extended.
Smarter maintenance and repair yield a higher availability of the product.
Overall, modular design and intelligent customisation are the foundation for companies in a low volume / high complexity industry to significantly reduce their products’ environmental impact.
Becoming a modular enterprise is not a linear journey. The steps in the transition impact more of the other segments.
Once implemented, the work is not finished. For example, errors and improvement opportunities may be identified during the manufacturing of a module for the first time. These are inputs for the engineers to consider implementing in the next update of the design.
Each phase in the Modular5 framework advances the performance of different parts of your enterprise. Each improvement raises profitability and leverages the advances made in the previous phases. The overall effect on the bottom line is difficult to assess. That is why Modular5 made a business case calculator.
To determine the estimated results after fully implementing the Modular5 framework, sensitive data is needed. The calculator is therefore a file that you can download and use safely. The data that you input is not shared or sent anywhere.
You can download it by pressing the button below.
DISCLAIMER: The case calculator is based on results achieved in the past. The results for your organisation depend on many factors. The outcome of the case calculator is, therefore nothing more than indicative of the possible results after transformation to a Modular enterprise. The calculated results and the performance improvement statistics should not be taken as a guarantee from Modular5.