Essay: Modularization of Automobiles
Many Japanese auto manufacturers have not invested a lot in the modularization efforts unlike their European counterparts. The major advantage of this strategy is that it cuts down the costs and reduces the number of suppliers efficiently. Many Japanese auto manufacturers like Nissan are under pressure to adopt this strategy. Modularization will positively affect the Keiretsu and make them the key supplier for auto part since modularization employs technology.
The key Nissan Keiretsu suppliers, Kansei and Calsonic merged after the commonization of platform by Nissan and Renault with the objective of reducing their cost by modularization efforts (Shinposha, 2006). Many Keiretsu suppliers opt for this strategy during a prolonged recession when the economic conditions are not favorable therefore can only reduce costs by modularization efforts. modular production is an initiative, which is gradually getting rooted in Japan since it is drastic method to reduce the costs rather than the traditional method of cutting costs by considering single units. Modularization efforts come along with many challenges and the Keiretsu suppliers need too take some humble time before yielding its fruits (Law. 1991).