Area of expertise 01
Modularization & Variant Management
Variety in the market. Simplicity within the organization.
We connect customer needs, business objectives, the portfolio and product architecture. This enables market-relevant variety without allowing parts, processes, data and systems to grow uncontrollably.
01
Impact
Reuse
Complexity costs
Configurability
Market-relevant differentiation based on stable platforms, modules and interfaces.
Starting point
Market variety creates value. Internal complexity does not.
Highly configurable products create differentiation, growth and attractive margins. Variety becomes problematic when every market requirement immediately creates new parts, structures, rules, documents and special processes. Internal complexity then grows faster than customer value.
Modularization is therefore neither a purely engineering method nor an end in itself. It translates market and business objectives into a product architecture that enables reuse, standardization and controlled differentiation at the same time.
The portfolio grows without an architecture
New applications and market segments lead to additional product lines even though functions, components and solutions could often be reused.
Special requests become the standard
Unclear boundaries between standard products, configuration and engineering multiply technical solutions and lengthen quotation and order processes.
Rationalization remains a one-time exercise
Parts and variants are reduced, but grow again without clear accountability, KPIs, approvals and lifecycle management.
Key question: Which variety creates tangible value for which customers – and which technical variety behind it can be standardized, combined or avoided?
Market and operations
A modular product architecture resolves the central conflict of objectives.
The market demands broad choice, individual solutions, short delivery times and reliable quality. Operations require standards, repetition, predictable processes and manageable data. The two can be reconciled only when variety is created through clearly defined modules that can be combined by rules.
Conflict of objectives and resolution
Alignment of internal and external requirements
A modular product architecture decouples market variety from internal variance: Product variants are created by combining reusable modules through rules – not through ever more one-off engineering.
Resolution levers
Decisive point: For highly configurable products, economies of scale do not necessarily arise at end-product level. They arise through reusable modules, common parts, stable interfaces and late differentiation.
Portfolio and process classes
Clear boundaries between selection, configuration and engineering.
Before modules are defined, it must be clear what will be offered and how orders will be fulfilled. MTS, PTO, ATO, MTO, CTO, CTO+ and ETO are not linear maturity levels. They connect the customer-order decoupling point with the path to specification and describe different business and process patterns that must be designed deliberately.
No order-specific intervention: the finished product already exists; the order only triggers withdrawal from inventory.
| Order intervenes at | SelectionSelectionfrom existing items | Rule-based configurationRulesapproved solution space | Limited engineeringCTO+defined packages | Open engineeringETOnew solution content |
|---|---|---|---|---|
| Warehouse / PickingOrder selects from inventory | ||||
| AssemblyOrder triggers assembly | ||||
| ManufacturingOrder triggers manufacturing | ||||
| EngineeringOrder triggers engineering |
Selected process pattern
MTO + CTO · Make and Configure to Order
Order intervention: manufacturing. Specification: fully rule-based within the approved solution space. Product structure: 150% structure, rule set and order-specific 100% resolution. Management impact: low finished-goods inventory with predictable manufacturing and stable delivery times. Boundary: without a rule set it remains MTO; with an engineering delta it becomes CTO+.
Management impact: Only a clearly defined process class determines which product structure, rules, data objects, approvals and system support are actually required.
From need to architecture
A robust solution space emerges from five decisions.
Customer needs, portfolio, process class and product architecture must be developed together. Only then do platforms, modules, interfaces and permitted variant spaces emerge that remain robust across product generations.
Modularize more than mechanics
Modern industrial products combine mechanics, electrical systems, electronics, controls, software, parameterization, documentation and services. These elements follow different lifecycles and rates of change – but require a shared product logic.
Design for configurability from the outset
A modular product system is not automatically configurable. Performance characteristics, product options, modules and rules must be connected so that the solution space is technically valid, economically manageable and understandable for sales and customers.
Connection between the areas of expertise: Modularization structures the solution space. CPQ & Product Configuration makes it usable in the sales and order process. Product Structures & End-to-End System Consistency represents it consistently in data, bills of materials and system roles.
Complexity management
Avoid, reduce and manage variants over time.
A one-time variant cleanup is not enough. Economics must be managed before developing the modular product system, during concept development and throughout the entire product lifecycle.
Avoid
A structured portfolio and clear boundaries prevent unnecessary variants from arising in the first place.
- Define value-creating market variance
- Define the boundaries between standard, CTO, CTO+ and ETO
- Define preferred solutions
Reduce
Existing variety is rationalized, harmonized and economically consolidated through reuse.
- Identify low runners and duplicates
- Increase common parts and commonality
- Establish roadmaps for phase-in and phase-out
Manage
Accountability, KPIs, approvals and releases keep product and variant logic stable over time.
- Establish accountability for modules and variants
- Manage change, migration and replacement
- Make usage and profitability transparent
Typical management metrics
Boundary: This concerns portfolio, module, variant and complexity profitability. Specific price determination with conditions, discounts, margins and approvals belongs to the area of expertise CPQ & Product Configuration.
Five perspectives on modularization and variant management
Approach and outcomes
From an evolved product range to a robust target model.
We do not begin with generic methodology training, but with real product families, robust data and specific business objectives. The aim is an implementable model that is technically and operationally sound and can be validated early using a pilot product.
01
Assessment and objectives
Create transparency regarding the product range, variants, process classes, reuse, complexity costs and strategic objectives.
02
Target model and pilot
Develop and validate product families, process classes, platforms, modules, interfaces and variant logic using a representative pilot product.
03
Roadmap and organizational embedding
Prioritize introduction, migration, phase-in and phase-out, and embed accountability, KPIs, approvals and maintenance processes in the organization.
Typical outcomes
- Portfolio with clear boundaries between standard products, configuration and engineering
- Modular product architecture with defined interfaces
- Assessed variant space and preferred solutions
- Module and variant roadmap across product generations
Foundation for implementation
- Characteristic, rule and structure concept for product configuration and CPQ
- Guardrails for product structures, data models and system roles
- Governance with accountability, KPIs, approvals and lifecycle
- Prioritized implementation steps instead of disconnected individual measures
Frequently asked questions
Key decisions before the project starts.
How do we distinguish pragmatically between CTO and ETO?
By defining clear boundaries for each product family: a controlled, tested variant space on one side; defined engineering content and genuine new development on the other. CTO+ forms the controlled transition for limited, repeatable deltas.
When should we reduce variants – and when should we develop a new platform?
Variant reduction makes sense when variety provides little customer value or technical solutions are redundant. A new platform is required when reuse, interfaces and technology paths need to be fundamentally reorganized across several product generations.
How do we prevent a return to uncontrolled proliferation?
Through binding accountability for the portfolio, modules, characteristics and rules, supported by KPIs, approvals, testing, release processes and an active product and module roadmap.
Is modularization a prerequisite for CPQ?
Not every CPQ implementation requires a completely new modular product system first. Without a clarified solution space, characteristics, rules and boundaries between standard and engineering, however, CPQ often merely digitizes existing complexity.
Independent. Experienced. Implementation-oriented.
Assess modularization and variant management challenges on a sound basis.
In an initial conversation, we clarify the current situation, objectives and key risks. We then assess whether a focused assessment, a target-model and workshop phase, an independent review or an early pilot is the right starting point.