Supplying on a modular basis: An examination of strategic issues

Purpose - The purpose of the paper is to explore the strategic issues associated with the implementation and subsequent development of modular supply chains within the automotive sector. Design/methodology/approach - Given the exploratory nature of this research a case study approach was adopted analysing key suppliers within a single developing modular supply chain. The key approach to the topic was to examine strategic operations management literature in order to determine the operational impact associated with the move from traditional supply chains to supplying on a modular basis. Findings - The findings indicate that moving from the traditional approach to supplying parts to a modular approach requires suppliers to consider how they can develop their individual module offerings and to determine what operations do not add value to a modular offering and as a consequence can be transferred to downstream suppliers. Research limitations/implications - Given the exploratory nature of this research and its sectoral specificity one should not view the findings as applicable to other supply chains in the process of developing modular offerings. This said, the findings do correlate with earlier research which indicated that value-transfer activity within modular supply chains is a key characteristic associated with developing supply chains (Doran, 2004) Practical implications - In terms of practical applications, the findings demonstrate that modular activity requires the reorganisation of value-creating activities and also requires those suppliers close to the OEM to strategically position themselves to configure their operations to accommodate the growing modular paradigm. Originality/value - The paper explores supply chain modularization which is a fairly under-researched area supply chain management and as such this paper provides insights into this emerging area. The originality is also evident in the approach and focus of the paper (that is examining the three key suppliers within a single automotive supply chain).