Modular vehicle production method for improved efficiency, quality, and environmental responsibility.
Modular vehicle design and construction are nothing new or groundbreaking--several patents even exist for such ideas. However, the modular methods discussed here are new to the automotive industry, by virtue of their application, implementation, and purpose. It is for this reason that the theories presented here are indeed unique. While the implementation of Toyota's revolutionary Toyota Production System (TPS) has proven time and again to be very successful--and has become the vehicle production industry standard--the next chapter of automotive production development will need to incorporate increased dependence on suppliers and the TPS/Just-In-Time theory. With environmental issues at the top of virtually all agendas today, the next phase in automotive production development will also require innovations in green methods and ideologies. Truly modular vehicle design and construction methods can accomplish these next evolutionary steps, satisfying not only substantial improvements in efficiency and quality, but green, renewable practices as well.

Keywords: Reverse Logistics, Modular Design, Automobile Recycling, Green Manufacturing.

Article Type:
Green design (Methods)
Production management (Methods)
Matsubara, K. Todd
Pourmohammadi, Hamid
Pub Date:
Name: Review of Business Research Publisher: International Academy of Business and Economics Audience: Academic Format: Magazine/Journal Subject: Business, international Copyright: COPYRIGHT 2010 International Academy of Business and Economics ISSN: 1546-2609
Date: March, 2010 Source Volume: 10 Source Issue: 2
Event Code: 620 Production data
Product Code: 4953220 Metals Recovery; 9913000 Production Management NAICS Code: 56292 Materials Recovery Facilities SIC Code: 5093 Scrap and waste materials
Accession Number:
Full Text:

Supplier relationships and quality in the automotive industry have seen significant evolution since its inception just over 120 years ago. While vast production improvements were initially offered by Henry Ford's introduction of the moving assembly line in 1913, the automotive industry has seen its greatest strides in the past 20-25 years in its quality, engineering, efficiency, and customer satisfaction. As anyone involved with Supply Chain Management or Production Engineering is well aware, a significant percentage of this can be attributed to Toyota and its lean production-based TPS business model. Toyota's TPS concepts brought drastic improvements not only to the automotive production world, but to the entire industrial world as we know it today (Womack, et al, 2007).


As is already well-known in the supply chain industry, an item that is absolutely critical for effective supply chain management in the automotive industry is forming an efficient supplier relationship--especially at the first tier (or tier-1) level. This relationship, dubbed "keiretsu" by the TPS model, specifies that virtually all company information and knowledge is shared (sans proprietary or sensitive information), so both parties can have a full understanding of what is necessary to get the job done, and what the exact costs and benefits are. With mutual interests at stake, this results in a very efficient relationship--oftentimes innovative and technologically groundbreaking--along with commensurate improvements in quality and profitability (Liker and Choi, 2004).

At the heart of the TPS is a production system that has become known as Just-In-Time (JIT). The JIT method states that instead of inefficiently carrying large amounts of inventory, a manufacturer relies on their supply chain to have the proper components available for production at the right time, at the right place, and of course in the right quantity and at the right quality (Drake, 2006). This heavy reliance upon suppliers is what makes the TPS work, but definitely requires a secure and trusting relationship with suppliers in the supply chain--and the suppliers' suppliers as well (Womack, et al, 2007).

The TPS theory (or lean production theory as it is often now called) relies on a pull-type production system, where only the parts that are needed are present, (plus a minimal number of additional units for the approaching work in progress). As previously mentioned, this type of lean production assembly line is quite efficient, but enormously depends on suppliers to have the right part at the right place, at the right time (Wisner, et al, 2009).


This paper presents the next major evolutionary step for the automotive production model: Further dependence upon suppliers, more efficient production methods, and improved product quality, while at the same time satisfying our constantly-escalating environmental regulations and responsibilities. This cannot be accomplished very easily (if at all) with the current methods in place--hence a new approach must be developed to achieve all of these goals.

While the preceding parameters may seem insurmountable at the present time, the implementation of the modular vehicle construction principles outlined here can easily satisfy these requirements, along with improvements in other important areas as well, some of which include customer satisfaction and transportation costs. Reduction of holding costs, labor repair time and costs, and production delivery time can also be significantly reduced with the application of this production model.


Further dependence on JIT suppliers is crucial for the implementation of our production model and for improved efficiencies in automotive production. An excellent example of capitalizing on JIT supplier relationships is Hyundai Manufacturing's Montgomery, Alabama plant (HMMA) which was put into operation in 2005. The floor plan layout of this plant has taken JIT and automotive supplier relationships to what may be the highest level possible, given current assembly line production methods.

Rather than physically consolidating all departments in a central location under one roof, the facility was designed with a campus-type layout. This layout enabled additional dock doors to be placed around the exterior of the main factory building, (130 total), allowing for more efficient receipt and processing of deliveries from the surrounding departments, as well as from their local tier-1 suppliers. These dock doors along the perimeter of the building allow deliveries to be as physically close to the point of installation as possible, significantly increasing efficiency by reducing handling time--sometimes down to only a matter of seconds--before the part is installed on a vehicle. During normal production, one trailer arrives to the facility on the average of every 60 seconds, and virtually all processing and unloading duties are automated and sequenced. With this operation, lead time for orders placed to the local departments or suppliers is approximately two hours, at which time all relevant product details, options, and specifications are provided, including delivery time and location (Kalson, 2008).

HMMA's reliance upon its suppliers is not only of utmost importance, but also demonstrates the fact that this level of time-critical dependence is indeed realistic and achievable. For a supplier to provide this level of performance, efficiency, and quality, it obviously requires a serious commitment from both the supplier and automotive manufacturer. Commitment levels and delivery performance of this caliber can provide the building blocks for our modular vehicle production concept.


The majority of today's vehicles are of a unibody-type construction, meaning that a main body structure is the basis for all parts or subassemblies to be attached to--this type of structure is conducive to an assembly-line production method. Body-on-frame vehicles are similar, adding a frame for the body to sit on. Nonetheless, the production method for either type of vehicle is the same: a main body or frame travels down an assembly line, while parts or groups of parts are added along the way. In recent years, the consolidation of certain portions of the vehicle have made the work on the actual assembly line much easier, such as complete instrument panel assemblies, complete subframe assemblies with engines already installed, complete door assemblies, etc. However, it is at this point where the limits of this production method materializes: Parts or assemblies are still required to be delivered to a certain place at a certain time to be attached onto a vehicle traveling down the assembly line at a factory.

Modularly designed and constructed vehicles can be assembled in less space and with significantly less manpower and equipment in compare with current methods. With this reduction of necessary resources, it accommodates the use of smaller assembly locations, with the possibility of placing them closer to demand locations, and thereby reducing transportation time and costs. The increased reliance upon suppliers for larger portions of the vehicles also reduces complexity and allows for easier, quicker assembly.


While the danger of proprietary method or information loss is always present, (and even more so with larger and larger portions of the vehicle being sublet to outside suppliers), the TPS keiretsu model again specifies that trust and an open information exchange between the supplier and customer is of utmost importance if an effective long-term relationship is to be maintained. This has proven to work for Toyota (and those who choose to fully implement the TPS model), while the detrimental opposite also being proven true by manufacturers that have developed a paranoid and vicious treatment with their suppliers, and the accompanying downward spiral in quality and supplier relations (Liker and Choi, 2004).

The actual installation of delivered components by the supplier can pose problems with consistency and final quality, and should be avoided unless absolutely necessary. This allows for tighter regulation and quality control by manufacturer personnel, and contributes to brand integrity as well (Marinin & Davis, 02).


The use of recyclable modules, using eco-friendly materials and reusable or recertifiable cores, can bring a welcome change to the existing automotive production supply chain. Currently, there is virtually no reverse logistic implementation in place, with only a minimal amount of reuse or recycling performed on decommissioned or discarded vehicles, (virtually never by the vehicle manufacturers), with the majority of the remains being relegated to third party scrap metal disposition methods.

Present reverse logistic efforts are minimal at best, with only a handful of components being regularly recycled in this way (alternators, starters, power steering pumps, brake calipers, steering racks, and water pumps). Sadly, the recycling of these components is not for the overall benefit of the environment, but simply for third party vendors to save costs while marketing remanufactured items (at a lower retail price than new replacements from the OEM dealership). There is little to no involvement from the OEMs with this segment of the recycling and remanufacturing market at this time, and in fact, in an almost irresponsible manner, they vehemently advise against purchasing non-OEM third party parts for vehicle repairs.

As mentioned previously, by utilizing modular subassemblies to construct vehicles that have the ability to be reused or recycled, a significant improvement in the automotive industry's attempts at being environmentally friendly could be achieved. In the event that a vehicle is damaged and determined to be un-repairable, a credit could be issued to the customer based upon the value of remaining reusable or recyclable parts. Depending on the subassembly or part, it could be refurbished and recertified for subfactory use in the construction of a new vehicle, sent back to one of the first tier suppliers for reuse, (picked up at the same time that modular assemblies are being delivered, for the ultimate in transport efficiency), or packaged for resale as a service part for the dealership.

This recycling operation could be implemented at the same grounds as the sub-factory, further reducing lead time for processing and reuse of the parts. The vehicles destined for recycling could also be transported from the dealerships to the sub-factory/recycling facilities on the return trip from delivery of new subassemblies, resulting in little to no transportation and handling cost.


HP's complete commitment to their printer division's green business model is evidence that environmentally friendly production and distribution methods can work quite well--even when designed into an existing product. Not only did HP revise their product design to accommodate an effective reverse logistics supply chain program, they realized increased profits and efficiency by doing so. HP's recyclable ink cartridge and electronics recycling program has revolutionized the printer industry, and has become the benchmark for all others to follow (Rose, et al, 2009). A similar renaissance in the automotive industry is long overdue, especially when one considers the size and scope of how significantly it affects our both everyday lives and the environment in which we all live.


With this modular concept implemented, only certain modules or sections of vehicles would be shipped from the manufacturer (rather than completed vehicles). For the ultimate efficiency in supply chain, a complete elimination of the main assembly factory is possible, with modular subassemblies being shipped from first tier suppliers directly to specially equipped regional assembly sub-facilities (or even directly to dealerships). These sub-factories or dealerships would then perform the final mating together of the components (which would be produced and delivered with various customer-chosen options), similar to the way that Dell computers are optioned and assembled (Gunasekaran and Ngai, 2005). This would convert the entire automotive manufacturing process into an efficient and lean pull-type system, as opposed to the current pull and then heavy push system. Note that ironically, the automotive production process has evolved to become a very well-oiled pull system, but once the product is completed, it is still subject to bottlenecking and overstock with a very slow and inefficient push system.

With this system, a further reduction of dealer inventory could be realized, while the customer delivery lead time could be reduced (from months) to a matter of days for a custom ordered and optioned vehicle thereby increasing customer satisfaction by providing more agile production and delivery capabilities (Christopher and Towill, 2000). This would substantially reduce transportation and holding costs, with commensurate increases in profits and efficiency. An evolution such as this would bring the world of automotive production to the next level of lean production implementation (Holweg and Pil, 2004).


A significant benefit would be that the modular pieces could be assembled with less machinery or specialized equipment than current factories require, and would reduce the space and cost necessary for assembly. Dealerships could conceivably be the location where vehicles are assembled.

If modules were to be delivered directly to dealerships from first tier suppliers, (which would result in the shortest and most efficient supply chain), the current concept and function of automotive dealerships would need to be reformulated. In addition to retail sales and repair service, additional areas, equipment, and personnel would be necessary to perform the final assembly of the vehicle from the delivered modular components. This assembly would not be terribly difficult or beyond current capabilities, and would simply require more space and the addition of assembly equipment. It would also vertically integrate the sales, ordering, and production processes into one location, significantly improving the supply chain efficiency.

An accompanying increase in quality level would also result, due to easier testing and quality monitoring of the modular subassemblies by each supplier. In addition, troubleshooting during or after assembly would be much easier--worst case scenarios would simply have complete modules removed and replaced, and the defective part returned to the supplier on their departing supply delivery truck.

The major shift with this process would obviously be to have more dependence on the supply chain's first tier suppliers (and their subsequent dependence on second and third tier suppliers), as they would be doing a larger part of the production of the vehicle, rather than simply supplying parts or minor subassemblies as they do now.


When a vehicle is currently shipped from the factory, it must be loaded onto a special vehicle carrier, and great care must be taken to avoid (or at least minimize) any damage. This is in many ways inefficient and expensive, and still requires after-transport damage repairs on a certain percentage of vehicles. By default, vehicles are shipped to regional staging or pre-delivery preparation facilities (located in various areas around the country) before they are sent to dealerships, so they are transported a minimum of two times from the factory--again, very inefficient and expensive. With modular production, these preparation facilities could be converted to handle both staging and preparation (their current function), as well as sub-factory duties.

With modular pieces of the vehicles or certain subassemblies palletized and stacked safely, a significantly more efficient use of transport space would be realized, and would virtually eliminate any damage during transport that would require repair or touch-up. Cosmetic external or fragile pieces could be sourced locally to each sub-factory, or safely packed and shipped in bulk (in a manner which would still be considerably more efficient than shipping one complete assembled vehicle). These space-efficient transportation methods would substantially lower costs for both transportation and holding (Coyle, et al, 2006).

Currently, a version of this portion of our modular model is used in Chrysler's Campo Largo, Brazil plant, at which complete rolling chassis assemblies are delivered to the assembly line by supplier Dana Corporation (Marinin and Davis, 2002).


Aside from the engine and engine compartment, there are minimal items--fluid, electrical, or mechanical that are required to traverse from one area of the vehicle to another. Other than electrical items (which will be addressed below), the only major items that typically traverse to the rear of the vehicle are: two brake fluid lines, exhaust pipe, fuel line(s), driveshaft (if rear-wheel-drive or all-wheel-drive), and various small diameter vacuum lines or hoses. Each of these can easily be sectioned or designed in a way to be easily disconnected at any point along their length. Most other items are generally "local," meaning they are installed in their specific area in the vehicle, and only operate in that same area.

Virtually all electronic items in a vehicle generally require a power and ground, and have some sort of signal input and/or output. With today's advanced vehicles housing numerous convenience and technology items throughout the vehicle, this quickly adds up to very extensive wire harnessing around the vehicle. And while simple plugs to separate each modular section would still allow modular vehicle design to be convenient and practical, even this is an archaic picture of things: with the advent and increasing use of bus technology, a simple power and ground with a single bus line going to each section of the vehicle will soon be the norm, which makes the modular concept even more feasible.

Of course, this production method would require a vehicle to be designed in such a manner that it could be modularly assembled, which would require a top-to-bottom change in current design and engineering. As previously mentioned, the move toward modular bus-type data control systems in today's vehicles (CAN, Flex-Ray, Lin, and MOST Bus systems, for example) makes them very conducive to modular design and assembly--even more so if they were battery- or electric-powered (Sangiovanni-Vincentelli and Di Natale, 2007).

The current smart car is probably the best example of a vehicle that could have easily been constructed using this modular technology. The size, vehicle styling, and relative simplicity are conducive to the requirements necessary to construct a vehicle in such a manner. Of course, larger, more complex vehicles could be produced as well with this method, but would obviously need to be designed as such from inception.


An additional byproduct of a vehicle produced in this way would be easier after-sale repair in the case of damage or collision, as each section of the vehicle could be replaced if necessary, with no trace of the previous damage. This is oftentimes not possible with the current unibody-type construction that most vehicles currently employ. Lower labor costs would result due to quicker repair times, and a sizable credit could be issued to the customer for portions of the exchanged modular section that are not damaged, or are reusable or recyclable. This could significantly lower not only repair time, but repair costs as well, resulting in a further increase in customer satisfaction (Cohen, et al, 2000).


Our modularization methods presented here are key to creating a green and sustainable automotive production industry. This ideology should already be at the forefront of every automotive manufacturer's current and ongoing agendas, and can be realized with the implementation of the ideas presented in this paper. At the same time, quality improvements, increases in profits, and customer satisfaction can also be achieved by simple virtue of adopting these production methods.

We are conducting further research on the actual design of the vehicles themselves for this application, as well as logistical modeling of the subfactories, dealerships, and transportation costs and issues. Analysis of production improvement efficiencies (over current methods) and various levels of modularization and supplier dependence are also being modeled.

A forward-thinking manufacturer, if able to capitalize on this modular concept, could achieve a significant first-to-market advantage, not only in marketing, but with initiating new recycling credit programs or more stringent environmental programs with the government, thereby raising industry standards for all to follow. Environmental sensitivity is an important factor for any industry today, especially when looking towards the future. This modular concept, with its complete business process reengineering, substantial gains in environmentally friendly production over current levels, along with its significant improvements in efficiency and quality, would truly begin the next generation of automotive production methods.


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K. Todd Matsubara, California State University, Dominguez Hills, Carson, CA

Hamid Pourmohammadi, California State University, Dominguez Hills, Carson, CA

K. Todd Matsubara, undergraduate student, California State University Dominguez Hills. Currently manager/owner of TM Engineering, designing, producing, and distributing high performance automotive components. Previous position as Product/System Engineer, OEM Division at Clarion Corporation of America (tier-1 automotive OEM supplier), and technical/contributing editor for Primedia, HachetteFilipacchi Media, and Curtco Publishing.

Dr. Hamid Pourmohammadi, earned his Ph.D. in Industrial and Systems Engineering from University of Southern California. Currently, he is an assistant professor of Operations Management at the California State University, Dominguez Hill. His primary research area is on Reverse Logistics, Supply Chain Management, and Optimization.
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