One of the reasons why so many German companies are able to deliver a steady flow of innovative products at competitive prices, experts say, is their use of a unique production process known as the “Lego principle,” named after the popular Danish building-block toy.
Under the process, manufacturers reuse individual components or complete systems over and over again, allowing them to focus on improving design and performance functions instead of wasting time “reinventing the wheel” again.
“In the production process, we reuse standardized parts that don’t particularly interest customers, and make changes to those parts that do,” said Roland Fischer, a manager in the energy production unit of Siemens in Munich. The approach, he said, allows the engineering company to implement new ideas quickly.
The method is also used by another Munich-based company Osram, the world’s second largest maker of lighting systems after Philips. There, developers seldom design and build a new light bulb from scratch. Far more often, they can be found reusing existing product designs but making changes, for instance, to integrated LED-chips, to improve the energy efficiency.
“The method of using standardized modules has helped German companies solve problems that have come with globalization,” said Horst Wildemann, a professor at the Technical University of Munich. “They are able to quickly and affordably adjust products to meet local requirements,” he said.
The method of using standardized modules has helped German companies solve problems that have come with globalization. Horst Wildemann, Professor at the Technical University of Munich
The trend toward reusing standardized parts originated in German auto manufacturing. In the 1990s, Volkswagen started reusing various components and modules across its brands, including Audi, Skoda and Seat. Today, all cars in the group use the same modules for engines, gearboxes, breaks and steering, while differing in design and driving experience.
Daimler, for example, recently introduced a camera for automatic driving, which can be installed in all its Mercedes Benz models. Thomas Weber, the director of the Daimler development team, said that by reusing a device such as the camera, the product can be produced en masse and thus becomes more affordable.
Rival carmaker BMW also believes in the Lego principle.
“All our side mirrors may look different but they share the same anchor to attach them onto each car body,” said Harlad Krüger, a BMW production manager. The common anchor, he noted, allows workers to use the same tools and same technique when fitting the side mirrors to different cars.
Thanks to the building block principle, BMW is also able to make swift changes, for instance, with seats and even engines within six days before leaving the plant. “This is very important, especially for companies like us that operate on this scale,” he said.
Not only big German companies benefit from the Lego concept; many small and medium-size companies do as well. For instance, Interroll, which makes transport belts for companies such as Amazon, UPS and CocaCola, uses standardized modules to keep prices down and jobs in Germany.
“We prefer to employ people in Germany instead of outsourcing,” said Ralf Garlich, the chief technical officer at Interroll.
At its plant, workers build transport belts using three standardized modules, modifying only the size, diameter and material of the product. Labor accounts for less than 10 percent of the overall cost of the parts.
And that, in turn, enables the company to sell more of its Legos to customers.