What Is Modularization in Supply Chain Management?

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Modular supply chain management was popularized in the automotive industry.
Modular supply chain management was popularized in the automotive industry. (Image: inside of car image by Christopher Nolan from Fotolia.com)

Modular supply chain management is a method of working with suppliers to deliver products in a shorter time frame. With the complexity and speed of manufacturing increasing, modular supply chain management allows suppliers to create complete components quickly.

Function

In a traditional supply chain model, suppliers send basic parts for en element, such as an automobile seat, to the manufacturer. The manufacturer then assembles the parts into a complete seat as the car is assembled. In modular supply chain, the supplier creates the complete seat, and sends it ready to install.

Benefits

In modular supply chain management, suppliers have considerable design and innovation leeway. Suppliers often provide design and cost saving development because they are given such a degree of freedom in production. With long-term commitments and aggressive cost goals, the suppliers and manufacturers work together to create value. Modular components can be reused in a variety of models of similar products, saving money and time.

Scope

Automotive companies were among the first to adopt modularization in supply chain management, but other industries embraced the concept. The electronics industry makes heavy use of modularization, as do the toy, software and airline industries. Modularized supply chains create efficiency in a global marketplace as well.

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