S-Space College of Business Administration/Business School (경영대학/대학원) Institute of Management Research (경영연구소) 경영논집 경영논집 vol.35 (2001)
New Trend of Parts Supply System in Korean Automobile Industry; The Case of the Modular Production System at Hyundai Motor Company
- Kang, Jong-Yeol
- Issue Date
- 서울대학교 경영연구소
- 경영논집, Vol.35 No.2/3, pp. 1-14
- An automobile is said to be composed of about 20,000 components or parts (hereafter parts). Korean or
Japanese automobile companies are outsourcing up to 70% of these parts on the basis of production cost from
their outside parts suppliers. Therefore it is essential for an automobile company to establish an effective and
efficient supply chain of materials in order to be competitive.
Regarding the supply chain in the automobile industry, an issue which attracts our attention recently is the
modular production system. It is a parts supply system where a small number of first tier suppliers (module
suppliers) located at the same or very close site as the automobile assembly plant assemble modules of automobile
and supply them on the same sequence in the final assembly line of the automobile assembly plant.
Recently growing number of world automobile companies is adopting this system to enhance their competitive
edge. It was also introduced in Korea late in 1990s by Hyundai Motor Company.
In this paper the concept and the meaning of the modular production system is briefly introduced, and the case
of Hyundai Motor Company and its two module suppliers, Hyundai MOBIS and Duckyang is analyzed in terms
of the problems they encountered as they practiced the modular production system. The paper also presents with
some useful lessons which HMC got through the experience of practicing the system so far.