In my business ecosystem, I have seen a lot of discussions about technical and architectural topics since last year that are closely connected to the topic of artificial intelligence. We are discussing architectures and solutions that will make our business extremely effective. The discussion is mostly software vendor-driven as vendors usually do not have to deal with the legacy, and they can imagine focusing on the ultimate result.

Legacy (people, skills, processes and data) is the mean inhibitor for fast forward in such situations, as I wrote in my previous post: Data, Processes and AI.

However, there are also less visible discussions about business efficiency – methodology and business models – and future sustainability.

These discussions are more challenging to follow as you need a broader and long-term vision, as implementing solutions/changes takes much longer than buying tools.

This time, I want to revisit the discussion on modularity and the need for business efficiency and sustainability.

 

Modularity – what is it?

Modularity is a design principle that breaks a system into smaller, independent, and interchangeable components, or modules, that function together as a whole. Each module performs a specific task and can be developed, tested, and maintained separately, improving flexibility and scalability.

Modularity is a best practice in software development. Although modular thinking takes a higher initial effort, the advantages are enormous for reuse, flexibility, optimization, or adding new functionality. And as software code has no material cost or scrap, modular software solutions excel in delivery and maintenance.

In the hardware world, this is different. Often, companies have a history of delivering a specific (hardware) solution, and the product has been improved by adding features and options where the top products remain the company’s flagships.

Modularity enables easy upgrades and replacements in hardware and engineering, reducing costs and complexity. As I work mainly with manufacturing companies in my network, I will focus on modularity in the hardware world.

 

Modularity – the business goal

How often have you heard that a business aims to transition from Engineering to Order (ETO) to Configure/Build to Order (BTO) or Assemble to Order (ATO)? Companies often believe that the starting point of implementing a PLM system is enough, as it will help identify commonalities in product variations, therefore leading to more modular products.

The primary targeted business benefits often include reduced R&D time and cost but also reduced risk due to component reuse and reuse of experience. However, the ultimate goal for CTO/ATO companies is to minimize R&D involvement in their sales and delivery process.

More options can be offered to potential customers without spending more time on engineering.

Four years ago, I discussed modularity with Björn Eriksson and Daniel Strandhammar, who wrote “The Modular Way” during the COVID-19 pandemic. I liked the book because it is excellent for understanding the broader scope of modularity along with marketing, sales, and long-term strategy. Each business type has its modularity benefits.

I had a follow-up discussion with panelists active in modularization and later with Daniel Strandhammar about the book’s content in this blog post: PLM and Modularity.

 

Next, I got involved with the North European Modularity Network (NEM) group, a group of Scandinavian companies that share modularization experiences and build common knowledge.

Historically, modularization has been a popular topic in North Europe, and meanwhile, the group is expanding beyond Scandinavia. Participants in the group focus on education-sharing strategies rather than tools.

The 2023 biannual meeting  I attended hosted by Vestas in Ringkobing was an eye-opener for me.

We should work more integrated, not only on the topic of Modularity and PLM but also on a third important topic: Sustainability in the context of the Circular Economy.

You can review my impression of the event and presentation in my post: “The week after North European Modularity (NEM)“

That post concludes that Modularity, like PLM, is a strategy rather than an R&D mission. Integrating modularity topics into PLM conferences or Circular Economy events would facilitate mutual learning and collaboration.

 

Modularity and Sustainability

The PLM Green Global Alliance started in 2020 initially had few members. However, after significant natural disasters and the announcement of regulations related to the European Green Deal, sustainability became a management priority. Greenwashing was no longer sufficient.

One key topic discussed in the PLM Green Global Alliance is the circular economy moderated by CIMPA PLM services. The circular economy is crucial as our current consumption of Earth’s resources is unsustainable.

The well-known butterfly diagram from the Ellen MacArthur Foundation below, illustrates the higher complexity of a circular economy, both for the renewables (left) and the hardware (right)

In a circular economy, modularity is essential. The SHARE loop focuses on a Product Service Model, where companies provide services based on products used by different  users. This approach requires a new business model, customer experience, and durable hardware. After Black Friday last year, I wrote about this transition: The Product Service System and a Circular Economy.

Modularity is vital in the MAINTAIN/PROLONG loop. Modular products can be upgraded without replacing the entire product, and modules are easier to repair. An example is Fairphone from the Netherlands, where users can repair and upgrade their smartphones, contributing to sustainability.

In the REUSE/REMANUFACTURE loop, modularity allows for reusing hardware parts when electronics or software components are upgraded. This approach reduces waste and supports sustainability.

The REFURBISH/REMANUFACTURE loop also benefits from modularity, though to a lesser extent. This loop helps preserve scarce materials, such as batteries, reducing the need for resource extraction from places like the moon, Mars, or Greenland.

A call for action

If you reached this point of the article, my question is now to reflect on your business or company. Modularity is, for many companies, a dream (or vision) and will become, for most companies, a must to provide a sustainable business.

Modularity does not depend on PLM technology, as famous companies like Scania, Electrolux and Vestas have shown (in my reference network).

Where is your company and its business offerings?

IMPORTANT:

If you aim to implement modularity to support the concepts of the Circular Economy, make sure you do it in a data-driven, model-based environment – here, technology counts.

 

Conclusion

Don’t miss the focus on the potential relevance of modularity for your company. Modularity improves business and sustainability, AND it touches all enterprise stakeholders. Technology alone will not save the business. Your thoughts?

Do you want to learn more about implementing PLM at an ETO space company?
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