Research Project: Analyzing the Cost Effects of Modularity (KosMo)

Due to increasing globalization and a rise of competitive pressure, companies from the German Drive Train Industry are facing challenges on both, the market and the customer sides. In order to reach target sales in the future, companies increase the variety of their products which widens the product range. This leads to higher costs, which have negative effects on the total revenues and need to get lowered by cost decreasing programs. To reach the costs and sales targets simultaneously, modularity concepts are applied in industry. The disadvantage at this point is the transfer of direct product costs to indirect costs, for example conception and development costs – generally the overhead costs are increasing. There is no existing operationalization of the cost effects of modularity in detail and according to this, the effect is hardly quantifiable.

Therefore, the aim of the research project KosMo is the development of a holistic approach for a systemized and structuralized analysis of the cost and side effects of modularity. Cost drivers will be indentified and used as a basis for cost comparisons. According to this and the analyses of the cost comparisons, potentials for modularity will be developed.
The systematic evaluation of modularization strategies makes it possible to derive an “optimal degree of modularity” considering market and cost perspectives. Therefore a “Modularity Calculator” will be developed allowing the user to map market effects and especially cost impacts for an increasing transparency. By this, it allows to derive recommendations for an active control of the degree of modularity.

The project was funded by the German Federal Ministry of Economics and Technology via the Industrial Community of Research and Development (IGF) and supported by the “Forschungsvereinigung Antriebstechnik e.V. (FVA)”. Since August 2011 the research work was executed by the Institute of Business Logistics and General Management  (LogU) in cooperation with the Center for Performance Research & Analytics (CEPRA) as well as several praxis partners from the industry. The project runtime was about 24 month.

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