Modular Sourcing
Modular Sourcing is a delivery strategy in which not individual components are purchased, but previously prepared and completed modules or subsystems.
Brief description
With this type of product delivery, total partial products and platforms are acquired in place of raw materials and individual parts that exhibit a relatively high volume of functionality. These modules are built as a whole into the final product. Examples of this strategy include the automotive industry, where very often pre-assembled modules (seats, cockpits, doors, etc.) are delivered from so-called system or module suppliers.
The benefits of Modular Sourcing are the reduction of suppliers. Acquiring modules that have already been manufactured means fewer parts to acquire in total, which also reduces the number of suppliers. Also, companies can focus more on their core competencies. It is also possible to reduce the variety of types through the principle of modularization.
As a disadvantage, there is an increased dependence on suppliers and all the associated risks. There is also a loss of competence within the company, and purchasing activities become technically and economically more demanding.
If Modular Sourcing finds its way into an enterprise we are then talking about modular or platform manufacturing.