Supply chain integration and product modularity

Abstract

PurposeWhile the beneficial impact of supply chain integration (SCI) and modular product design are generally acknowledged, few empirical studies have examined how an organization can achieve better performance through SCI with modular product design. The purpose of this paper is to examine the relationship between SCI and modular product design, as well as their impact on product performance.Design/methodology/approachBy surveying 251 manufacturers in Hong Kong, structural equation modelling is used to test the research constructs and the hypothesized model.FindingsThe results confirm that information sharing, product co‐development and organizational coordination are crucial organizational processes within SCI. Companies that have high levels of product modularity appear to be good at product co‐development and organizational coordination directly and at information sharing indirectly. Furthermore, companies that have high levels of product co‐development or product modularity appear to have better product performance.Research limitations/implicationsThis paper theoretically and empirically identifies three specific organizational processes within SCI (information sharing, product co‐development and organizational coordination), which affect modular product design and product performance. These more specific findings were previously absent from the literature. However, the study is limited to the cross‐sectional nature of a survey study, the operationalization of SCI and product modularity, and the nature of the product types.Originality/valueThis paper empirically examines the relationships between SCI and product modularity, which has seldom been attempted in previous research. It clearly identifies exactly which processes within SCI are directly and indirectly related to product modularity.