A case study of product modularization on supply chain design and coordination in Hong Kong and China

Abstract

PurposeModular product design is a practice manufacturers frequently adopt to develop new products. Some literature has reported the importance of the modular product design and its effect on supply chain management. However, until now, very few empirical researches have examined the relationship of product modularisation and supply chain design and coordination. Furthermore, the exploration on how manufacturers capitalize upon product modularization with supply chain design and coordination is rarely reported. This paper addresses this gap.Design/methodology/approachThis paper conducted a case study to review the experience of an Audio Consumer Electronics Manufacturer (ACEM) in Hong Kong and China. This company has successfully integrated modular product design with supply chain design and coordination for more than five years.FindingsResults indicate that product modularization affects supply chain design, whereas product innovation influences on supply chain coordination.Originality/valueThis study explores new relationships between supply chain and modular product design into three propositions for further studies. The first proposition shows that supply chain for modular product design has one more level than integrated product design in multiple‐tier supply chain. The second proposition shows that, regardless of either a modular or integrated product, an innovative product requires closer supply chain coordination than a conventional product in new product development. The final proposition shows that product modularization with close supply chain design and coordination brings down the inventory level, improve the quality of conformance and reduce development lead time.