Modularity is the construction of complex products and business processes with small subsystems that can be designed independently and function in a unified manner as a whole . By the way, the antonym of modularization is “integration”.
For example, I will explain the relationship between a word processor and a PC. , A word processor is an “integrated” product that functions by integrating input and printing for creating documents into one unit, but a PC has a fixed OS and “document creation software”, “spreadsheet software”, and “game software”. It is a “modularized” product that can be created and used separately. A word processor is very useful for printing characters, but you can’t add any other functionality later. The feature of modularization is that it is possible to add or extend functions later .
Modularization is an overview that is being described in a wide range of industries, including parts in the manufacturing industry such as automobiles and electrical appliances, as well as independent design of OS and software.
A concept related to modularization is “layering”. Layering refers to “a structure in which complementary relationships within an industry are stacked vertically”, and modularization refers to “each function being created independently”.



Conditions for establishing Modularity

Applicable “standardization strategy”

In a modular business model, cost efficiency and production efficiency depend on whether or not parts and services can be standardized and many variations can be created by combining them.


“Open strategy” for other players

In a modular business model, it is important to create new business with external partners by opening up your platform . When opening up, it is important to investigate the needs of users, select a partner, and consider the appropriateness of revenue distribution to external partners.


High difficulty in imitation

Modules based on the same platform pose a threat that can be easily imitated by other companies. On the other hand, in application services, etc., the stronger the unique technology of the modules manufactured by the company and the higher the difficulty of imitation, the higher the possibility of earning profits from paid billing.


Advantages of Modularity


If the product is not modular, you can’t make a part without knowing the internal structure of the whole product, but if the product is modular, it’s a module as long as you know the interface to which the part is related. There is a merit that you can make. Not only does this lower the barriers to entry to the market, but it also creates technical competition because the modules alone can enhance functionality and performance.
If the functionality of the module is understood and the interface is standardized, the same module can be reused between different products, which can further save system design and transformation costs. Masu . The more opportunities for module reuse, the greater this effect, so it can be said to be a merit based on “economy of scope”.



The loss of efficiency associated with change can be reduced

In the transformation of the entire system, there is an advantage that the loss of efficiency due to the transformation can be reduced by localizing the transformation. This plays an important role in the problem of incompatibility between efficiency and transformation, and according to the mechanical principles traditionally adopted to maximize system efficiency, other than the structure required to achieve the required functions. Should be eliminated as much as possible. The reason for this is that wasteful structures that are duplicated or unnecessarily long can result in unproductive costs and can cause malfunctions.
However, the actual system efficiency is determined by the interaction with the environment, and if the environment changes, it will be necessary to change the system accordingly. On the other hand, there are cases where we try to create a favorable environment through system transformation, but in any case, when we try to transform the system, the design based on strict mechanical principles requires replacement or modification of the entire system, which is a big factor. It costs money. However, if the system is not transformed, there will be a discrepancy with the environment and it will become inefficient, so the long-term efficiency difference before and after the transformation offsets the temporary loss of efficiency that accompanies the transformation. It can be said that the correct form of change is that there is a surplus. However, since it is difficult to predict and measure this in advance, it has the disadvantage that it is easy to force a cautious moment to change. On the other hand, “modularization” enables local system transformation and reduces the burden of transformation .



Facilitate division of labor and outsourcing

Modularization has the advantage of facilitating division of labor and outsourcing because it allows time-independent design from the overall system. As a result, system design time and lead time can be shortened, and design beyond the company’s management resources is possible .
In addition, by exposing the interface, it is possible to incorporate modules by independent developers into your system. Alternatively, you can let the customer design and recombinate the module, making it easier for customers to get a half-customized system . As described above, the second merit of “modularization” is that the design functions can be distributed internally and externally.



Disadvantages of Modularity

Product differentiation may be difficult

When assembled into a complicated and huge system for high compatibility, there is a risk that the entire system such as car body and building will be designed to be versatile and lacking in originality.
Also, if the entire system is complex and too large, small discrepancies can occur, which can add extra cost to the fix and negate the inherent cost advantage.
In addition, if the module is black-boxed or the module is designed by an unspecified number of people, it may be difficult to identify or eliminate the cause of the problem.
As modules become more diversified, the number of combinations increases, which makes it more complicated, and the disadvantage is that it may take time to find the optimum combination.



Concerns about being able to respond quickly to technological changes at the component level

As the number and variety of modules increases, so does the burden of finding the best modules and how to combine them quickly. As a result, parts may not be able to respond quickly to technological changes . If there are variations in quality, reliability, and cost between alternative modules, such work becomes more complicated and requires a high degree of judgment. These may be factors that negate the economies of scope benefits.



Small losses can accumulate and eventually become large losses

Modularization is a loosening of mechanical principles because it allows for wasteful design by abandoning system-wide optimizations to allow recombination with standardized interfaces. .. On the other hand, since it is not a method free from the mechanical principle, it has the property that it is difficult to tolerate drastic changes that ignore interface standards. Therefore, the whole system built by modularization is always a compromise system, and its potential cost is covered by the reduction of transformation cost, but small loss that responds excessively to environmental changes. Can pile up and cause a big loss . The ease of change triggers more change than necessary, and there is a risk of inefficiency in the end.


Modularized company example

Volkswagen MQB

In 2012, Volkswagen announced “MQB (Modulare Quer Baukasten: German)”, a modularization strategy that makes parts common regardless of the type and size of the car body.
In English, it becomes “Modular Transverse Matrix”.
In automobile manufacturing, the specifications of parts differ depending on the car body and design, and the cost increases because the manufacturing is done in a custom-made format for each car model. In addition, applying previously manufactured parts to latecomers imposes restrictions on the design of latecomers and the development of vehicle-specific features.
These were one of the inefficient factors in car manufacturing.
Volkswagen’s QMB has 90 parts in common, and by combining them, it is possible to create variations such as an exhalation module and an exhaust module with just the engine . Modularization that combines parts on a unified chassis brings cost efficiency such as reduction of manufacturing cost, shortening of development time, shortening of production period for companies, and for customers, By using the same parts as the high-end models for popular models, we have made it possible to provide low-priced, high-quality products . We have succeeded in improving customer satisfaction by differentiating each model by designing the car body and in-house space and the comfort of the seats.


Apple’s App Store

The App Store is a download service that sells and provides iPhone apps and iPad apps operated by Apple. Users basically need to get iPhone and iPad apps from the App Store. In addition, any app developer can sell the app created by himself on the App Store and receive compensation according to the selling price. (Open strategy)
The App Store went live in 2008, a year after the first iPhone was sold, and has announced that it has generated $ 155 billion in revenue for app developers over the past 12 years.
The basic functions of smartphones were telephone, internet, and email, but until now, external app developers have provided EC and payment services, SNS such as Instagram and LINE, and music distribution apps such as Spotify. Various services and business models have been created.


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