SDM 5001 SYSTEMS ARCHITECTURE

LECTURE 7
PRODUCT ARCHITECTURE
MODULAR ARCHITECTURE

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 SDM 5001 SYSTEMS ARCHITECTURE

LECTURE 7.1
PRODUCT ARCHITECTURE/MODULARITY

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PRODUCT ARCHITECTURE

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 Systems Architecture for Product Development
System Architecting involves clustering various components in a product such that the
resulting modules deliver behaviors and performance desired by stakeholders

Product Modules
o comprise sub-systems or elements and functions which are put together in the module
o have identifiable specific functions and behaviors
o can be operated and managed independently
o are made up of components (parts)

Product Module (element)

Portfolio Module Boundary

Product Module (sub systems)

Systems Representation of Product and
Function Logic (linkage of common components/interfaces)
Product Portfolio
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 Modularity
1. A Method for building larger systems by combining similar and smaller subsystems
which could be taken apart and re-assemble to produce different systems
o How to make modular?
o example:
modularity design of the product allows the product to be used in many ways
software modularity describes a logical grouping of related code

2. The Degree to which a system is composed of discrete components such that a

change to one component has minimal impact on other component (SEBOK)
o How much modular?
o example: the modularity of the product is low because it does not allow external
accessories to be connected

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 Three Types of Modularity 1
1 Modularity in Use
o User can combine several functions or physical objects and use them,
choose them when buying, or upgrade them together

o Modularity in use is associated with two effects:

– User Level: it allows for customization, that is, users can mix and match independent
elements to establish a final product that matches their particular preferences
(example: accessories in cameras, Swiss Army knife)
– Organizations Level: modularity increases innovation, it allows manufacturers to
experiment independently with new products and concepts, as long as these conform to
established standards
(example: modular platform design)

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Ref: Baldwin, Carliss ; Clark, K (2000) Design Rules Cambridge Mass. MIT Press © LGChan
 Three Types of Modularity 2
2 Modularity in Design
o Designer can design each function separately and place in one physical object, or
several functions and their objects are combined and designed together
Example: a system is decomposed into subsystems or modules using design rules
created by the designer
o Standardization is the result of designs come into common use, and there is no further
change in the design
Example: camera lens and flash mount are designed to specifications

3 Modularity in Production
o Manufacturer can assemble a group of functions or physical objects or buy these as a package
o Example in manufacturing:
Complex products are divided into production process using separate process modules
(example: assembly line for mass production, Intel chip fabrication plant)
Modules can be outsourced to other suppliers for production when they can be specified
precisely

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Ref: Baldwin, Carliss ; Clark, K (2000) Design Rules Cambridge Mass. MIT Press © LGChan
PRODUCT ARCHITECTURE: MODULAR AND INTEGRAL

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 Product Architecture
Product Architecture is the abstract conceptual structures underlying the functioning of
engineering artefacts (Ulrich 1995)

Product Architecture is the scheme by which the functional elements of the product are
arranged into physical chunks and by which the chunks interact…. links architecture to
system-level design and the principles of system engineering (Whitney)

chunk

Product Architecture = Decomposition + Interaction

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Ref: Ulrich, K. (1995), “The Role Of Product Architecture In The Manufacturing Firm,” Research Policy Vol 24 No 3 pp 419-440 © LGChan
 Two Types of Product Architectures
Modular Product Architecture
o Functional partitioning into discrete, scalable, reusable modules consisting of isolated, self-
contained functional elements
o Rigorous use of well-defined modular interfaces, including descriptions of module
functionality
o Ease of change to achieve technology transparency and, to the extent possible, make use of
industry standards for key interfaces
o Modular architecture sub optimize performance and increases costs because of redundancy
o Capability to assemble modules

Integral Product Architecture

o Functional elements are interconnected by multiple chunks, or a chunk may implement
many functions
o Interactions between chunks (sub-modules) are poorly defined (no clear divisions exist
between components)
o Integral architecture generally increases performance and reduces costs for any specific
product model
o Capability to integrate components

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 Modular and Integral Architectures
Modular Architecture has
o many independent physical
component/function
o de-coupled interfaces
o one to one function mapping
Integral Architecture has
o many interrelated
functions/physical component
o coupled interfaces
o one to many functions mapping

product systems

physical components

functional elements

Hot Cold COUPLING Hot + Cold

MAPPING

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 Example: Computer Hardware
Modular Architecture (Ulrich 1995)
1. arrangement of functional elements
2. mapping from functional elements to physical components
3. specification of the interfaces among interacting physical components

Flexible design allows components to

be substituted, replaced, or added

New modules can plug right into

standard sockets without disturbing
rest of hardware.

Slots, Sockets, Connectors, USB ports

are “plug and play” to anticipate
changes in peripherals without having
to change the computer itself.

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Ref: Ulrich, K. (1995), “The Role Of Product Architecture In The Manufacturing Firm,” Research Policy Vol 24 No 3 pp 419-440 © LGChan
 Example: Computer Software
o Modular software design is a design strategy in which a system is composed of relatively small and
autonomous routines (procedure, function, and subroutine) that fit together
Interfaces are provided by Application Programming Interface (API)
– Example
Adobe CS Suite, Microsoft Office, R Packages, MATLAB library

Module
Manager

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 Example: Consumer Products
Pre-Fabricated Houses System Modular Office Furniture System

House owners can choose standardized Office space can be partitioned to different
building components to design their houses workstations with removable panels, desks,
and cabinets

Modular Architecture
o Flexibility is important
o Sections/Modules of product connect
strongly within themselves (as subsystems, tight cohesion) and
weakly to other sections (systems, loose coupling) at their interfaces
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 Example: Complex Manufactured Products
o An automobile comprises several modules made o An aircraft has a flexible manufacturing
from different manufacturers which often supply design that allows it be customized to buyers
the same components to different car makers. requirements.
– Example: battery, chassis, air bags, air conditioners – Example: jet engines from different suppliers,
commercial vs freight carriers

Volkswagen: VW, SEAT, AUDI, Skoda

Airbus : France, UK, Germany, Spain

Platform Architecture
A product family comprising many parts planned and scaled to work together and to be fairly
interchangeable within the platform 15
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 Example: Sony Walkman (1979-2003)

Sony Walkman
200 models in
4 platforms

Sony Walkman modular design extends the reusability and product life of its cassette player

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Source: Sanderson and Uzumeri (1996) Managing Product Families. Irwin © LGChan
 Advantages and Disadvantages of Modular Architecture
Advantages Disadvantages

o Facilitates product change and product o Easier to reverse engineer

variety o Modular products tend to sub-optimal
– modules can easily be upgraded, o Design costs are higher
degraded, and added-on
o Reduced performance
– modules can easily be reused or replaced
o Decoupled design teams
o Modular products can be quickly
reconfigured to meet changing market o Requires clear definition of interfaces
requirements o Expensive Tooling
o Improves economies of scale through o Longer planning/lead time
component and module sharing across o Redundancy in design
products (economies of scope)
o Increased flexibility
o Independent testing
o Mass production and Outsourcing

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Advantages and Disadvantages of Integral Architecture
Advantages
o Facilitates the optimization of holistic
performance characteristics and
those that are driven by the size,
shape, and mass of a product
o Minimizes redundancy through
function sharing
o Minimizes number of parts which
must be assembled
Disadvantages
o Difficult to upgrade and reconfigure
o Customized production needed
o Adjusting or “fine-tuning” a single
function can be more complex and
difficult
o Late testing
o Components and modules cannot be
easily replaced if worn or broken
o Tightly coupled design teams
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 Limits to Modularity
Modularity Limit Test

If there is a partitioning of the set of the smallest

parts into sub-assemblies such that there is a one-
to-one mapping between these sub-assemblies
and functional elements then the product has a
one-to-one characteristics of a modular Well Defined
architecture (Ulrich 1995) Interface
One to One
Mapping
Possible

Practical Guide
Partition until you can obtain the Smallest Part
from COTS (commercial off the shelf) at the
lowest costs to purchase and assemble Unclear Interfaces
One to One Mapping Not
Possible

Different Interfaces
One to One Mapping Impossible 19
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MODULAR DESIGN

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 Typical Modular Interfaces

Interface Description Schematic

Slot- Unique interfaces for attachment to a base element
Modular Each module has a different interface with the overall system
Interface (Example (SCSI, Ethernet, USB ports, pacemaker leads)

Bus- Common interfaces for attachment to a base element (eg.

Modular USB connectors on a computer)
Interface There is a common bus to which modules connect via the
same interface
(Example: add-on cards in PC, CD and HDD)
Sectional- All interfaces are the same type but there is no single element
Modular to which modules attach
Interface Common interfaces between elements without a base element
(Example: LEGO and water piping)

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Source: Ulrich (1995) Role of Product Architecture in Manufacturing Firm Research Policy Vol 24 pg 419-440
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 Principles of Good Modular Architecture Design 1

Reduce Coupling (Low or Loose Coupling)

o Coupling is relationship/interaction between modules (externally)
o Design modules so that coupling between them is minimized (minimize interfaces)
o Changes in module changes do not affect other modules
• Reduce dependencies between modules

Tight Cohesion (High Cohesion)

o Cohesion is relationship/interaction within modules (internally)
o Module should encapsulate some well-defined,
high degree of coherent piece of functionality

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 Principles of Good Modular Architecture Design 2
Explicit Interfaces
o Make all dependencies between modules explicit (no hidden coupling)

Small interfaces
o Keep the interfaces minimal
• Combine many functions into single modules
• Divide large interfaces into several interfaces

Isolate Volatility
o Identify areas of the design subject to uncertain changes and isolate them

Provide for Growth

o Identify certain portions of the design that are likely to expand or progress in a predictable way

Align with Organization Boundaries

o Align the design teams with product architecture to simplify communication during development

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 Modularization and Standardization
Modular Architecture makes standardization possible
Modular Architecture enables outsourcing of modules to external manufacturers in a supply chain

Standardization Criteria
o Component implements commonly useful functions
o Interface to component is identical across more than one different product
o Interfaces are decoupled: a change in one component does not interfere with operation of the
remainder components

Benefits of Standardization
o Decreases component costs, lower complexity in design, and reduces lead time in product
development
o Higher performance obtained from accumulated learning experience of supplier

o Modularization emphasizes variation and deals with it through the active management of
standardized interfaces
o Standardization attempts to find an average performance level of the interfaces 24
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PRODUCT ARCHITECTING PROCESS
MODULAR OR INTEGRAL?

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 Product Development Process and Decisions
Product Test
Concept System Level
Detailed Design and
Development Design
Refinement

Modular Approach
o Heavyweight system o Components design proceeds o Effort focused on checking
architect as team leader in parallel for unexpected coupling
o Map functional elements o Monitoring of components and interactions
to components relative to interface standards o Required performance
o Define Interface and performance targets changes localized to a few
o Choose technological standards and protocols o Design performed by components
working principles o Division of effort to “supplier-like clients”
o Set performance targets specialists o Components testing can be
o Define desired features done independently
and variety
o Choose architectural
approach Integral Approach
o Heavyweight system o Constant interaction required o Effort focused on tuning
integrator as team leader to evaluate performance and the overall system
o Emphasis on overall to manage implications of o Required performance
system-level performance design changes changes propagate to
targets o Component designers are all many components
o Division of product into a “on the core team”
few integrated o Component tests must be
subsystems done simultaneously
o Assignment of
subsystems to multi-
disciplinary teams
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Source: Ulrich (1995) Role of Product Architecture in Manufacturing Firm Research Policy Vol 24 pg 419-440 © LGChan
EXAMPLES : PRODUCT ARCHITECTURE

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 Example 1: Canon Printer Head Architecture
Ink tank
Printer head
All-in-one: An
exchange module that
integrates head and ink
tank in one unit
Separate head: An
exchange module where
either head or ink tank is
sold separately or only the
ink tank is sold
No head: head is not No head: head is not
exchangeable. exchangeable.
All colors are in one Individual color cartridges
replacement cartridge may be replaced
independently from each
other
Separate head: An Separate head: An exchange
exchange module where module where either head
either head or ink tank or ink tank is sold separately
is sold separately or or only the ink tank is sold.
only the ink tank is sold. Individual color cartridges
All colors are in one may be replaced
replacement cartridge independently from each
other
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 Example 2: HP DeskJet Printer Schematic
Enclose
Printer Print
Cartridge
Provide
Structural Accept
Support Position Display
Cartridge User
Inputs Status
In X-Axis

Position
Store Paper
Output In Y-Axis Control
Printer
Supply
Store
“Pick” DC
Blank
Paper Paper Power

Communicate
with Command
Functional Host Printer
Flow of forces or energy
or Physical
Elements
Connect
Flow of signals or data to
Host

Source: Ulrich K, Eppinger S (2003) Product Design and Development 3rd ed pg 172-176 McGraw Hill, New York
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DeskJet Printer - Cluster Elements into Modules (Chunks)
Enclosure
Enclose
Printer
Geometric Layout
Print
Cartridge

Provide Accept Display

Chassis User
User Interface Board
Structural Position Status
Support Print Inputs
Cartridge
Mechanism
In X-Axis

Paper
Store
Tray Position
Output Paper Control
In Y-Axis Printer Supply
Power Cord
DC
and “Brick”
Store Power
Blank “Pick”
Paper Paper

Communicate
with Host
Command
Driver
Host Software
Printer

Functional Modules Connect

or Physical to
Components Host

Logic Board
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DeskJet Printer – Physical Components Layout
logic
board user interface board

print
cartridge
paper tray
print
mechanism

chassis
enclosure

print cartridge
height
roller
paper
paper tray
chassis
logic board
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HP LaserJet Printer Process Flow Diagram
Copy Fax
Add On Module

Image Function Grouping

Paper Cassette 32
Add On Module
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 Example 3 Black and Decker Versapack Hand Tools

Cordless Multipurpose ScumBuster 2 Speed Drill Wizard Rotary

Screwdriver Saw Scrubber Tool

Black and Deck VersaPack Cordless Screwdriver

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Source: Dahmus et al (2001) Modular Product Architecture Design Studies Vol 22 No. 5 September 2001 pp 409-424 © LGChan
EXAMPLE : COFFEE MACHINE

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 Example 4: Braun KF Coffee Machine

Components
Braun Family Model
A Cord/cord storage G Dial for water filter exchange
B Space compensator H Filter holder with drip stop
C. Water level indicator I.Hotplate
D. Water container J.On/off switch
E. Water filter cartridge
K.Switch for keeping small quantities hot
(not with model KF 130 / KF 148)
(only with KF 145 / KF 147 /KF 148 / KF 155)
F Aroma selector
L Carafe with lid 35
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 Example: Braun KF Coffee Machine

Functional Flow Diagram

Main
Function

Sub-Functions

Optional
Functions

Functional Architecture of Coffee Machine Product Family by Functions

Functional Module

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EXAMPLE : MODULARITY IN AIRCRAFT INDUSTRY

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Airbus Aircraft Components Suppliers

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Boeing Aircraft Components Suppliers

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 Motivation of Modularity in Aircraft
Modularity in Design
o Reduces time for product requirements from different customers
o Enables rapid adoption of new technology
o Builds component and subsystems expertise (focus and specialized training in workforce)
o Enables platform strategies (reuse proven technology and components in a variety of related products)
o Risk sharing with external suppliers in research and design of new technology

Modularity in Manufacturing (Production)

o Economies of scale
o Industry structure of supporting industries
o Mass assembly production lines
o Reduce investments in manufacturing assets

Modularity in Market Competition

o Flexibility in design and production (able to make changes quickly)
o Offsets arrangement with buyers (promote aircraft sales by co-operating in production)
o Lower barriers of entry to new entrants (subsystems and components are sourced from outside)
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 Summary
o Product Architecture choices define the sub-systems and modules of the product
platform or family.

o Product Architecture determines

– ease of production variety
– feasibility of customer modification
– system-level production costs

o Key Concepts
– modular vs integral architecture
– clustering into chunks
– planning product families

o Modularity is good for physical integration but is not enough to resolve overall
performance. Critical competences should not be outsourced

o Modularity leads the way to outsourcing to cut costs, share risks, and reduce
development time

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 Additional Resources

Optional Online Videos

o Modular Management
http://www.youtube.com/user/ModularMgmt/videos

Optional Readings on Product Design Methods

o Dubberly (2004) How do you Design -A
Compendium of Models
http://www.dubberly.com/wp-
content/uploads/2008/06/ddo_desi gn
process.pdf
o Wong (2004) A Graphic Novel About
The Product Design Process
http://www.productdesignhub.com/dow
nloads/product_design_process.pdf

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END OF LECTURE 7.1
PRODUCT ARCHITECTURE

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 SDM 5001 SYSTEMS ARCHITECTURE

LECTURE 7.2
ARCHITECTURE PLATFORM DESIGN AND STRATEGY

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PRODUCT PLATFORM ARCHITECTING

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 Product Platform Planning and Strategy
Product Family
a group of related products that share common features, components, subsystems to satisfy a
variety of markets

Product Platform
collection of common elements or modules, especially the underlying core technology, from
which a stream of derivative products can be efficiently created and launched

Derivative Product
products derived from the product platform through:
o addition, removal, or substitution of one or more modules (module-based product family)
o scaling or “stretching” the platform in one or more dimensions (scale-based product family)

Commonality p
possession of common features or attributes in either the product or the manufacturing process
for a set of products
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 Two Types of Platform Strategy
Platform Strategy is a planning approach to maximize product development
and market leverage from common technology

Top-down Strategy Approach (Proactive) Bottom-up Strategy Approach (Reactive)

A company strategically manages and A company redesigns/consolidates a group of
develops a family of products based on a distinct products by standardizing
product platform and its module- and/or components to improve economies of scale
scale-based derivatives and reduce inventory

Example: Example:
power tools (drills), aircraft design, prefabricated houses, semiconductors,
consumer appliances (vacuum cleaners, electronic components
toothbrush), consumer electronics (Ref Works: D. Rosen, S. Kota, K. Ishii, Z. Siddique)
(walkman, cameras)
(Ref Works: K. Otto, K. Ulrich, K. Wood, K. Ishii, M. Tseng)

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 Design Rules for Modularity
Partitioning of a System into Modules is best achieved by Design Rules which are clear
and complete at the beginning of the partitioning process

3 Design Rules for Modularity

1. Architecture
o Specifies what modules will be part of the system and what their functions will be

2. Interfaces
o Describe in detail how the modules will interact, including how they will fit together,
connect, and communicate

3. Standards
o Testing a module's conformity to the design rules (can module X function in the
system?)
o Measuring one module's performance relative to another (how good is module X versus
module Y?)

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 Motivation of Product Platform
Benefits of using commonality products in product platform strategy are:
o Increase product variety, revenue and market
o Shorten product lead time in design (and risk) and production
o Improve economy of scale and scope to reduce costs
o Reduce set-up and retooling time
o Fewer components in inventory
o Fewer parts need to be tested and qualified
o Improves overall product quality
o Standardized interfaces facilitate addition, substitution, and removal of modules

Innovative products need to be unique (distinctiveness) to attract users

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 Commonality vs Distinctiveness
100%
Very Unique Parts Scenario D
Products are very
Scenario A distinctive, yet
Products are very sharing many parts
distinctive, sharing
few common parts Architecture 3

Architecture 1 Very unique parts Many common

Degree of Distinctive Parts
to differentiate parts to reduce
products costs

uniqueness commonality

Scenario C
Products are not
distinctive, yet Scenario B
share few parts Products are less
distinctive,
sharing many product
Architecture 2 parts
architecture
Architecture 1
Very Ordinary Parts

Percentage of Common Parts 100%

Trade Off between Distinctiveness vs Commonality (Robertson Ulrich 1998) 7
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 Performance vs Costs
o Decide what should be shared

(More unique parts means better performance)

Individually across products and what should be
Best
Optimized unique across products?
Designs
Designs
o Trade Offs to resolve the
Degree pf Distinctive Parts

requirements between
1. Differentiating the product for
Designs various customers
Based on 2. Taking advantage of the economic
Common benefits by reusing common
components
Platform
Poor
Designs o Product architecture will determine
what trade-offs are available…
if no good options are available, see
Percentage of Common Parts if the options can be improved by
(More common components means lower Costs)
changing the product architecture
Performance vs Commonality (Simpson)

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 Platform Planning Process 1
Three Platforms Plans
1. Product Plan
2. Differentiation Plan
3. Commonality Plan
What model concepts and variants will we
Product Plan deliver at what times to what target
customers?

Segments
What major options do we offer for each model
and variant

Time

Differentiation Plan Commonality Plan

Goal Different Model 1 Model 2 Model 3
Different Model 1 Model 2 Model 3
Attributes Perfect Consistency Attributes

⃝ ⃝ ⃝ ⃝ ⃝ ⃝ ⃝ ⃝
⃝ ⃝ ⃝ ⃝ ⃝ ⃝ ⃝ ⃝
⃝ ⃝ ⃝ ⃝ ⃝ ⃝ ⃝ ⃝
⃝ ⃝ ⃝ ⃝ ⃝ ⃝ ⃝ ⃝

Product
Architecture
How will we differentiate the models from one Which elements are common and which are
another? distinct across the models (and how are distinct
How will we make sure the models attract our elements different)
target customers?
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Ref: Robertson, David, K Ulrich (1998) Planning Product Platforms Sloan Management Review. Summer 1998 pg 19-31 © LGChan
 Platform Planning Process 2
Product Plan
o roadmap: establish which products to offer
over a period of time
o comes from the company’s overall plan
o addresses customer profile and needs

Differentiation Plan Commonality Plan

o specify how products will be differentiated o quantity commonality among products and
by differentiating attributes which components/modules will be shared
o quantifiable differentiable attributes for o estimated cost of developing and producing
comparison each product

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 Marketing Strategies with Product Platforms
Vertical Market Segment Similar User Segment – Differentiated Products
High Cost/
High Performance

Market Segment A

Market Segment B

Market Segment C

Market Segment D
Mid Range

Low Cost/
Low Performance

Segment A Segment B Segment C Segment D

Horizontal Platform Leverage Similar Product Attributes – Different User Segment

High Cost/ High End Platform Leverage
High Performance

Mid Range

Low Cost/ Low End Platform Leverage

Low Performance

Segment A Segment B Segment C Segment D

Use Systems Architecting of Organization/Enterprise to determine where you

are now, and Plan your future Products from the Product Platform
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(Ref: Meyer, H, A. Lehnerd 1997, The Power of Product Platforms, The Free Press, NY) © LGChan
 Platform Planning Strategies
No Leveraging Niche-specific platforms (products) with very little
sharing of subsystems and/or manufacturing
processes

Horizontal Platform Horizontally leverage platform subsystems and/or

Leveraging manufacturing processes across different segments.
Introduce series of related products for different
customer groups

Vertical Market Vertically scale key platform subsystems and/or

Leveraging manufacturing processes within a market segment.
Leverage knowledge of customer wants and needs
within a given market segment

Beachhead Approach Beachhead approach combines horizontal

leveraging with upward vertical scaling. Combine
extensions and scaling to provide step-up functions
required by mid- and high-end users in other
segments

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 Product Platform Strategy Process
1. Segment the markets 4. Analyze competing products
- use planning grid - compare your platforms against your
competitors: technology,
2. Identify growth areas functionality, cost, quality
- expected growth rate, market share,
competitors 5. Consider Future Platform Initiatives
- plan where you want to position
3. Define and map current product your future platforms
platforms
- identify your current platform
position

High Cost/High Performance Entry Premium Product Entry Premium Product Entry Premium Product

Mid Range Entry Mid Range Product Entry Mid Range Product Entry Mid Range Product

Low Cost/Low Performance Entry Low Cost Product Entry Low Cost Product Entry Low Cost Product

Initial Platform Platform Extension 1 Platform Extension 2

Segment A Segment B Segment C

Shared Product Platform

Common Sub-systems and Interfaces 13

(Ref: Meyer, H, A. Lehnerd 1997, The Power of Product Platforms, The Free Press, NY) © LGChan
 Example: Bosch Garden Tools
Bosch Rotak 32 Bosch Rotak 34R
Rotary Lawn Mover ($329) Rotary Lawn Mover ($395)

Similar Users
Bosch AHM 30 Bosch ASM 32
Hand Mover ($140) Electric Lawn Mover ($240)
Vertical Market Leveraging

Bosch ART 23 Bosch ART 23

Easy Trim ($88) Combi Trim ($130)

Horizontal Platform Leveraging Similar Product Features

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 Platform Extension and New Platform

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(Source: Simpson) © LGChan
 Example: Gillette Shaving Razors

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(Source: Simpson) © LGChan
 Example: Apple iPhone Product Strategy

iPhone iPhone 3G iPhone 4 iPhone 5 iPhone 6 iPhone 7 iPhone 8

2007 2008 2010 2012 2014 2016 2017

iPhone 3GS iPhone 4S iPhone 5S iPhone 6+ iPhone 7+ iPhone 8+

2008 2011 2013 2014 2016 2017

iPhone 5C iPhone 6S iPhone X

2013 2015 2017

iPhone 6S+
2015

What is the Product Strategy?

What is the Platform Strategy? iPhone SE
2016

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 Process of Creating NEW Product Platform
Extent of Product Change

Research Next Addition to

Development New Core Generation of Product Derivatives and
Radical Breakthroughs
Product Core Products Family Enhancements o Establish core products and
processes that are
fundamentally different
New Core Radical
Breakthroughs
Process Platform Projects
o Improvements across a
Extent of Process Change

range of performance
Platform Next dimensions
Next
Generation Generation o Target new segment of
customer but design for easy
Process
modification into derivatives
through addition,
Single substitution, or removal of
Development features
Improvements,
Upgrade Hybrids, Derivatives
Derivatives, Hybrids Projects
Incremental o Incremental changes in
Changes products or processes

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(Ref: Wheelright, Steven, K.Clark Creating project plans to focus product development. Harvard Business Review Vol 70 No 2 March April 1992 pp 70-84 © LGChan
 Example: Automobile Chassis Platforms
o Volkswagen supplied chassis (floor group) to the different brand of cars in VW Group
(VW, SEAT, Skoda, Audi)
o The car brands target different market segments

6th generation

5th generation

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(Source: http://en.wikipedia.org/wiki/List_of_Volkswagen_Group_platforms ) © LGChan
 Strategy in Modular Platform - Point of Differentiation

Delayed Differentiation
o A concept in supply chain management where the manufacturing process starts by making
a generic or family product that is later differentiated into a specific end-product
o Common in industries with high demand uncertainty, and can be effectively used to
address the final demand even if forecasts cannot be improved

Point of Differentiation
o The point in the manufacturing process where a product can only be made into a specific stock
keeping unit (SKU, minimum quantity per batch)

Delayed Point of Product Differentiation (Late Point Product Differentiation)

o The point in the manufacturing process where an item is limited to use for a single specific product is
called the “Point of Product Differentiation”

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 Example of Late Point of Product Differentiation
Tee Shirt Manufacturer Paint Manufacturer
o Knitted sweaters are initially all white, and then Colored pigments are added to paint base, mainly
dyed into different colored only when the alkyd resins and solvents, only when the desired oil
seasons customer color preference/demand is paint color is required
know
o It is usually necessary to redesign the products,
and re-sequence to modify the order of product
manufacturing steps
o Similar Examples: Sports Jerseys are late
differentiated with player names

Benetton Apparel Paint Manufacturer 21

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 Late Point Differentiation Application
How to use Late Point Differentiation?
too early
o Differentiating elements of the product
must be concentrated in one or a few
modules (starting module)
o Product and production process must
be designed so that the differentiating Early Differentiation
modules can be added to the product near
the end of the supply chain
Differentiated Product Feature Option Common Product

Advantages of Late Point

o Reduced inventories
o More easily respond to demand variation
and customer requirements
o Easier to Control Design
o Examples:
packaging colors, Zara, HP printers, Dell
computers
Late Differentiation
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 Zara Postponement Strategy
Zara: Roughly half of the cloth arrives undyed
More flexibility by purchasing more than 50% of its fabrics undyed so that it
can respond faster to midseason color changes

Early Commitment Late Commitment

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 Risks of Relying on Product Platforms
o Introduction of undesirable functions and unexpected technical problems in different variants based
on the same platform
(example: chassis platform of small cars are used in heavier SUV which have to carry heavier loads)

o Cannibalization of high-end products by low-end products based on the same platform product
family, especially when customer awareness is high (example: VW Golf versus Skoda)

o Loss of performance competitiveness if the degree of commonality is chosen too high and market
segment is price insensitive
(example: using VW platform components in Porsche cars)

o Negative effects of platforming on long-term product innovation

(example: Volkswagen car designs, Boeing 737 airplanes)

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Source: Olivier de Werck (MIT) © LGChan
 Disadvantages of Product Platforms
o Developing a product platform can cost 2-10 times more than a single product
(Ulrich & Eppinger, 2000)
– In automotive industry, up to 80% of total vehicle development cost is spent on platform including
engine and transmission (Muffato, 1999)
– About 60% of total cost goes to designing a platform (according to Sundgren, 1999)

o Sharing components across low-end and high-end products can increase unit variable costs
due to overdesigned low-end products (Gupta & Krishnan, 1998; Fisher, et al., 1999)

o Platforms are not appropriate for extreme levels of market diversity or high levels of non-
platform scale economies (Krishnan & Gupta, 2001)

o Platform development requires multifunctional teams, and problems may arise over different
time frames, goals and assumptions (Robertson & Ulrich, 1998)

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Source: Olivier de Werck (MIT) © LGChan
END OF LECTURE 7.2
ARCHITECTURE PLATFORM DESIGN AND STRATEGY

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