Modularization in the Auto Industry: Interlinked Multiple Hierarchies of Product, Production, and Supplier Systems

This paper analyzes the modularization in the world auto industry. The modularizationin the industry has involved architectural changes in product, production, and suppliersystems with each region (Japan, Europe and the U.S.A.) emphasizing differentpurposes and aspects. As an attempt to understand such multi-faceted, complexprocesses coherently, this paper proposes a conceptual framework that seesdevelopment / production activities as interlinked, multiple hierarchies of products,processes, and inter-firm boundaries. With this framework, drawing on case studies andquestionnaire survey data, the paper examines the on-going processes of modularizationin the industry. It is argued that tensions exist among the three hierarchies, and suchtensions may lead to further changes in product, production and supplier-systemarchitectures in the auto industry, in a dynamic and path-dependent manner.