An overview of SAP’s modular production architecture connecting ERP, manufacturing execution, and shop floor systems.
Modular production in automotive Tier 1 suppliers can be defined as a manufacturing approach where products are divided into functional modules, completed in separate processes, and finally assembled into the finished product. For SAP implementation projects, this means that BOM design, process engineering, traceability, and OEM integration must be designed as a unified model from the outset.
While most core capabilities can be implemented using SAP S/4HANA Private Edition and SAP Manufacturing Cloud, practical experience suggests that module configuration rules and OEM-specific requirements often require extensions.
[Source: https://assimee.com/glossary/モジュール生産/]
Modular production is described as a manufacturing method where products are divided into functional units (modules), produced independently, and assembled at the final stage. This represents a simultaneous transformation of both product design and process design.
In the Japanese automotive industry, it is also recognized as a model where OEMs delegate entire functional units to suppliers, shifting Tier 1 suppliers from component providers to functional responsibility holders.
For SAP implementation project managers, this is not merely a manufacturing execution topic. It fundamentally impacts:
If these are not clearly defined during requirements definition, inconsistencies will emerge in:
[Source: https://waseda.repo.nii.ac.jp/record/25055/files/KenkyuShiryoShirizu_2_Dai4Sho.pdf]
Key benefits of modular production include:
The objective is not simply faster assembly, but achieving both product variety and competitiveness through standardization and reuse.
Another perspective highlights that modularization enables common components to be reused across multiple products, leading to:
This directly explains why SAP projects must design:
in an integrated manner.
[Source: https://mitsu-ri.net/articles/module]
Tier 1 suppliers are defined as companies that directly supply OEMs and are responsible for developing and manufacturing critical automotive components such as engines, transmissions, and electrical systems.
In a modular production context, Tier 1 suppliers deliver not just parts, but functionally guaranteed subsystems.
Typical examples include:
These modules are produced independently and assembled based on OEM specifications. Therefore, SAP systems must manage:
[Source: https://www.peaks-media.com/9665/]
From a project management perspective, the following four points must be clarified early:
A critical insight is that modular production resembles building with blocks, implying that:
In SAP template design, engineering modules and manufacturing modules do not always match. Clearly distinguishing these as business requirements is essential for project success.
[Source: https://www.jstage.jst.go.jp/article/sisj1986/2003/18/2003_18_41/_pdf/-char/ja]
Using SAP S/4HANA Private Edition and SAP Manufacturing Cloud, the following areas are typically well supported:
Managing modules as semi-finished goods or subassemblies and assembling them into finished products aligns naturally with modular production principles.
Additionally, producing modules in separate lines or processes fits well with SAP Manufacturing Cloud capabilities for:
From a PM perspective, standardization across four axes is key:
The following areas often require Add-ons or SAP BTP extensions:
Modularization is also described as a tool to enable multiple configurations that enhance customer value, which goes beyond simple BOM management.
SAP architecture also indicates that S/4HANA Private Edition integrates with:
Therefore, planning extensions on SAP BTP is a practical and recommended approach.
PMs must clearly define the boundary between:
at an early stage.
[Source: https://www.modularmanagement.com/ja/blog/]
Modular production should not be deferred in SAP projects. It should be addressed during:
At minimum, the following must be defined before PoC:
In simple terms:
Implementing modular production in SAP is not just about manufacturing—it is about implementing product structure and responsibility architecture.
Understanding this distinction clarifies the roles of:
and significantly increases the likelihood of project success.
Modular production in automotive Tier 1 fundamentally reshapes how products, processes, and responsibilities are structured. For SAP implementation PMs, success depends on treating it as a holistic design challenge across BOM, processes, costing, and supply chain integration, rather than a narrow manufacturing topic. Early alignment on module definitions, OEM integration, and extension strategy is essential to avoid downstream inconsistencies and ensure a scalable, future-ready architecture.
Parts of this article were developed with reference to generative AI suggestions and were reviewed, refined, and supplemented based on the author’s professional expertise and judgment.
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