Organizations looking to gain the advantage of economy of scale, while also augmenting the value for their customers, are increasingly turning to configurable platforms and products through modularization.
Often companies have some level of modularity in their product offerings. But even with some degree of modularity, they often encounter challenges in gaining the projected ROI. It can be frustrating for organizations looking to stay competitive and grow in their space, particularly when competitors are seeing more success with their modularity initiatives.
It can be challenging to internally measure your organization. What are the correct KPIs with which to measure? And more importantly, what are the next steps to enhance your offering to the market and improve your company’s performance? One recommendation is to employ the use of Modular Management’s Platform Maturity Model.
Below we will describe how, as consultants in the field of modular systems and configurable product platforms, we assess your current Platform Maturity and use it as a benchmark for further enhancing your use of product platforms to reach your targets.
This tool is a cross-functional, reality-based understanding of where your organization currently stands and your goals for growth. The Platform Maturity Model is based on the dimensions of Scope and Management, while also covering the cross-functional dimensions of Market, Product Development, and Supply Chain. Platform Management is defined as the “strategy, competence, and structure in place to efficiently enhance and evolve the platforms to include new requirements and solutions“. In other words, how capable is the organization of aligning their product platforms with their strategy, as well as using and governing them to ensure a long productive lifetime and profitability? Platform Scope is defined as “how large a market scope is covered by one product or platform? And how large is the range of selectable performance, values, functions, and features?”
The illustration below describes four archetypes that can be derived from these two dimensions.
Five Levels of Platform Scope and Three Levels of Platform Management
For the dimension of Scope, we have identified five unique maturity levels. While the dimension of Management has three maturity levels listed below. In reality, it is often not this black-and-white. One product, for example, could be a combination of levels II and V. Despite this challenge, the model works great for identifying both current position and to set a desired target state. First, let's have a look at the Platform Scope levels.
The Platform Scope levels
Level I Order Specific
No real, pre-developed products exist. No pre-developed products exist. Each delivery requires unique engineering. Manufacturing and procurement are done on an order-by-order basis.
Level II Product Specific
Many stand-alone products with multiple generations of similar products. Each product is its own silo with a dedicated design and a limited number of options per product. New functions and features never deployed across all relevant products. Many new parts are created per new product. Commonality and reuse between different products are low. No consistent BOM structure cross products. Planning and manufacturing on a product-by-product batching basis.
Level III Family Specific
Product offering is organized in product families based on platforms. Each family and platform have a certain range of specifications. Each family and platform are managed independently resulting in multiple solutions for the same function. Limited sharing of options and reuse between platforms. Commonality and reuse between different platforms decrease over time. New functions and features are not deployed across all relevant platforms and products. Initially higher annual volume per part within each platform. BOM structure is not harmonized between different platforms. Many platforms have dedicated production set-ups.
Level IV Transversal
Product offering is organized into a few platforms. Each platform has a broad range of specifications/performances with a common use of technology for the same/similar function across multiple platforms. Each platform has several selectable options and some intentional reuse between platforms. Many standardized interfaces within each platform. Fast to deploy new functions and features across all products for shared components and sub-systems. Long time to deploy other platform-specific improvements across multiple platforms. High annual volume of parts in each platform, plus higher volume for many shared parts. Each platform has its own dedicated production set-up.
Level V Unified
Product offering is organized in an optimal number of platforms. Each platform has an optimal range of specifications and performance scope with no overlap. There is a common use of technology for the same/similar function across multiple platforms. Each platform has unique options, plus some that are intentionally reused across platforms. Interfaces are controlled and standardized as much as technically and economically feasible. Fast to deploy new functions and features across all relevant products. A large proportion of parts are shared across the entire product range yielding the highest possible annual volumes. Consistent overall BOM structure. A high degree of Configure to Order (B2B) or Configured Products (B2C). Fixed Products (SKUs) are created by configuring new specifications. Maximizes the internal synergies and economies of scale in R&D, supply chain, service, and spare parts.
Next, let's have a look at the Platform Management levels, describing how capable the organization is at using and governing their platforms and aligning them to the company strategy.
The Platform Management levels
Solutions and products are structured by technical function, often with different structures for different product generations. Individuals make uncoordinated decisions on what structure and changes bring value to them. Profit optimization is on a product-by-product basis and ignores non-direct costs. Features are planned according to hardware readiness and availability, and software changes are often a result of hardware changes.
Modules are functional blocks with a near-term view of the expected platform lifetime. One or two functional leaders see value in gaining efficiency within their area. Cost reduction is focused on high-volume products. Hardware-related software modules are isolated and can be updated independently
Modules and Interfaces are created to deliver both customer value and strategic value for company functions. Executive Management values the platform(s) as an asset of the entire company. Profitability and growth are managed at the platform level. Features are planned according to software and hardware module readiness and availability.
Family-specific vs Transversal or Unified product platforms
Products are often grouped together into platforms because they have the same physical size, address a similar customer application, and/or they have a common assembly structure. Platforms are also created for high-end, mid-end, low-end products, and the products meeting the needs of different geographical markets. All of this reduces the scope of a platform. For example, a global appliance manufacturer might have 10 or even more platforms for washing machines alone:
- One or several for vertical axis machines
- Several for 40 cm top loaded horizontal axis machines
- Even more for 60 cm, 25” and 27” front-loaded horizontal axis machines
Each platform will have its own unique components, thereby reducing efficiencies for the organization’s R&D and supply chain. An improvement to one platform must be implemented across others. And even if total volumes are high, the volume of each specific component is diluted by the total variance across the platforms. In the supply chain, each assembly line is typically dedicated to one platform. When volumes shift over time, the non-availability of products results in some lines operating with over-demand, poor quality (third shift syndrome), and lost orders. While other lines may be running with poor utilization due to under-demand.
The difference between the Family-specific approach and the Unified Modular Platform approach can be visualized by the Volkswagen group’s journey from Product specific platforms towards 2025's Unified modular product platform.
If you are interested in the topic of Platforms vs. Modularity, check out “When the Product Architecture is a System of Modular Systems”.
Assessing Current Maturity level
To correctly identify an organization’s current Platform Maturity level, it is not enough to examine engineering alone. There must be a cross-functional evaluation that covers sales, marketing, R&D, engineering, and supply chain. A high degree of Platform Maturity would result in benefits for all functions within the company.
The main parameters per product or platform to examine are:
- Market coverage
- Commonality of parts and designs
- Lifetime (with acceptable profitability)
- New products or platforms per year (diverging platforms?)
- Updates or improvements of existing products or platforms per year
- Volume benefits (or lack of) in procurement
- Footprint in manufacturing (dedicated cells, lines… or not)
Organizations can complete this assessment qualitatively with interviews and a collection of anecdotical evidence. Or they can complete the assessment quantitatively with actual measures for the above parameters that tell you where you are and where you would ideally be.
Defining Appropriate Target State
To define the desired target state, three dimensions should be considered:
- Which improvements and benefits do you want to achieve?
- Which improvements and benefits can you realistically achieve?
- Any constraints in organizational structure, resources, competence, and budget that you are not able to impact?
Keeping the Volkswagen story in mind when you are looking at setting a target state, the goal should always be to decrease the number of platforms in order to increase reuse and configurability while simultaneously increasing market share.
If your organization is ready to assess their own platform maturity, please reach out to a member of Modular Management’s team.
Modular Management Asia Pacific &
Representative Director at Modular Management Japan