Matching Product Architecture and Supply Chain Configuration

Abstract

I n this paper, we examine the suggested link between product architecture (i.e., the extent to which a product is modular vs. integral) and supply chain configuration (i.e., whether the product development is done internally by the manufacturer in an integrated supply chain or in collaboration with a supplier in a decentralized supply chain). Our model suggests that the choice of product architecture depends on firm, market, and product characteristics in addition to supply chain structure. In contrast to other studies, we find that the optimal mapping from architecture to supply chain structure is not always one-toone. A decentralized supply chain may be associated with a more integral product when the technical collaboration penalty is not excessive and suppliers have significantly superior product development capabilities. Furthermore, in a decentralized supply chain, the nature of the relationship between the original equipment manufacturer and its supplier (adversarial or collaborative) plays a role in the choice of product architecture: modular architectures are more likely when the parties have adversarial relationships, while long-term trust-based relationships facilitate more integral product architectures.

How Sourcing of Interdependent Components Affects Quality in Automotive Supply Chains

“…They find that in the decentralized supply chain, interdependence between the subsystems increases with product development capability of the supplier, and that the level of interdependence between the subsystems depends on whether the OEM has a collaborative or adversarial relationship with the supplier. Our work differs from Ülkü and Schmidt () in two ways. First, in our analytical models, we consider an OEM who works with two independent suppliers.…”

“…In a conceptual and foundational paper, Ulrich () points out that the interfaces between interacting physical components (i.e., interdependence between components) can be a key driver for the performance of manufacturing firms. Ülkü and Schmidt () extend this idea using analytical models to highlight that the interdependence between sub‐systems can also have implications for the configuration of supply chains. In their analytical models, an OEM develops a product with two subsystems, either internally or with an external supplier.…”

Directions for instilling economic and environmental sustainability across product supply chains

“…Defining sustainability and re-manufacturability targets early in the design of a product can be difficult when requirements and design specifications are still evolving. Some attempts (Nepal et al, 2011;Ülkü and Schmidt, 2011;Chung et al, 2011) have been made at a holistic design approach but the science is still evolving. Ülkü and Schmidt (2011) have found analytically that supplier relationship and product architectural design are interdependent.…”

“…Some attempts (Nepal et al, 2011;Ülkü and Schmidt, 2011;Chung et al, 2011) have been made at a holistic design approach but the science is still evolving. Ülkü and Schmidt (2011) have found analytically that supplier relationship and product architectural design are interdependent. However, to our knowledge, there are not any mathematical models available in the prior literature that quantifies the influence of product architecture design on supply chain configuration considering sustainability metrics.…”

Using Value Chains to Enhance Innovation

“…While the mirroring principle described above is a good rule of thumb, Ülkü and Schmidt () show that it may not always be an optimal strategy. They make an analogy between a modular architecture in a design setting, and inventory in a production setting.…”