Modularisation in the auto industry: interlinked multiple hierarchies of product, production and supplier systems

This paper analyses modularisation in the world’s auto industry. Modularisation in the industry has involved architectural changes in product, production, and supplier systems, with each region (Japan, Europe and the USA) emphasising different purposes and aspects. As an attempt to understand such multi-faceted, complex processes coherently, this paper proposes a conceptual framework that sees development and production activities as interlinked, multiple hierarchies of products, processes, and inter-firm boundaries. With this framework, drawing on case studies and questionnaire survey data, the paper examines the ongoing processes of modularisation in the industry. It is argued that tensions exist among the three hierarchies, and such tensions may lead to further changes in product, production and supplier- system architectures in the auto industry, in a dynamic and path-dependent manner.