19 Mar 2010
The use of a component on multiple products within a firm’s product line, such as the brake rotor on a car, is commonly referred to as component sharing.
Professors Kamalini Ramdas and Taylor Randall’s findings suggest that the popular design strategy of component sharing can, in some cases, decrease the integrity of a component’s design. Their research on component sharing has supported the hypothesis that higher component reliability is associated with components that have been uniquely designed for specific products.
The purpose of Ramdas and Randall’s research was to examine whether, and in which situations, component sharing has the potential to reduce failures (driving down the associated costs of warranties), by focusing on one component of the automotive braking system, the brake rotor, and studying brake rotor sharing strategies at Ford Motor Company. Auto manufacturers often choose to design a new brake rotor for use on multiple vehicle models at once, rather than on a single model. Multiple product models that use the same component may be engineered in slightly different ways, and assembly of these vehicles may occur on different assembly lines, and in different locations. A new car model or model version may also reuse off-the-shelf components.
There are benefits associated with using pre-existing components, including reduction in design costs, reduction in both variable and fixed production costs, and the ability to assess and fix flaws in the manufacture of the component and its assembly into the vehicle, as it is fitted to new products. So why re-create the wheel?
The study provides the first empirical evidence relating to one aspect of quality - the reliability of a component - to component sharing strategies. Ramdas and Randall’s findings indicated that significantly higher reliability is associated with a component specifically designed for a model in a given year.
The professors found that the popular design strategy of developing multiple products from a common platform with shared components can, in some cases, compromise product reliability. Different models are likely to have different design requirements and constraints, so a component’s fit to a model is likely to be highest when it is designed specifically for that model. Specifications for the hydraulic braking system are dependent upon vehicle weight, top speed and stopping distance. As these specifications change in the conception of the new model, the integrity of the shared component can, in some cases, be compromised.
Fifty six different brake rotors were identified in the dataset, and a total of six hundred and ninety three reported occurrences of brakes failure were assessed. Data was obtained from recorded complaints about front-brake rotor quality problems as compiled by the Department of Transport in the United States and from motor research companies, and vehicle characteristics – such as weight and horsepower – were obtained from sources such as Ward’s Automotive Yearbooks (1965 – 2003). Fifty percent of all observations had brake rotors that were shared across two models.
Improved reliability is equally associated with greater experience – often gained in the form of learning by doing and from consumer feedback. Ramdas and Randall found that although greater experience with a component increased overall component reliability, the reliability gains from high volume usage of a component were highest if the volume was attained on a single car model. Increasing component volume by sharing a component across different models dampened this experience effect. Experience gained through production of a car model at one plant might not transfer easily to other models made on different assembly lines or at different geographical locations.
Brake rotors are mechanically similar to many other components in automobiles as well as components found in other products. Ramdas and Randall’s methods to deduce the impact of the failure rate of shared components could potentially be applied to other assembled products.
In conclusion, the evidence found by Ramdas and Randall suggests that quality trade-offs are an important aspect of component sharing decision making. Future empirical research may provide a deeper understanding of the nuances of these tradeoffs in specific industrial settings.
Kamalini Ramdas is Professor of Management Science and Operations at London Business School
Taylor Randall is Dean at the David Eccles School of Business, University of Utah