Modular product design aiming to improve the Supply Chain – The case of the PlayStation 5

Portfolio management is definitely a major challenge for Supply Chain managers. The desire to offer more options to consumers and cover different market niches often results in increased complexity and costs for logistics, in addition to making inventory management more difficult.

Since it was launched in 2020, the PlayStation 5 has been available in two models: One with a Blu-Ray player capable of playing games and movies in disc format, and a second, cheaper one, which does not have such functionality, limiting the user to digital stores to obtain content. It's easy to understand that a product like the PS5 isn't exactly the dream of those responsible for logistics. High, heavy and bulky added value, negative margins in the initial years…. The two models add complications to this management, because they end up competing for storage space, vehicles, materials, and invested capital and stocks have to be calibrated individually, with there being a surplus in one model and a shortage in the other, for example, due to any forecast or planning error in the allocation of these resources.

Figure 1- The two original PlayStation5 models, launched in 2020 (Image: Disclosure – Sony)

The company released a review of the video game hardware. It continues to be offered in the two variations mentioned, but now the disc reader that differentiated the more expensive model is now easily attachable and detachable, meaning that one SKU can quickly become the other. This change is very beneficial for the line's Supply Chain, as it offers flexibility and speed in production and stock. It is possible, with the new configuration (which is also 30% smaller), to produce only the basic units, simplifying planning, and later assemble differentiated kits, with or without the reader, more quickly according to fluctuations in demand.

Figure 2 – New smaller models with detachable reader (Images: Disclosure – Sony)

This philosophy is not new to the product line. Previously, Sony had solved the color problem by making the lids (the white parts) easily replaceable, which eliminated the need to plan, sequence production and manage stock and storage of entirely new products, simply carry out the process for the new colored lids, which are much smaller, lighter, cheaper and easier to produce.

Such modularity is not only positive for the company's chain, it can also be very good for the consumer, who can pay much less to customize their product. If you want to change the color of your video game or have a special variation, you don't need to buy a completely new and expensive console, just a much simpler part. With the new model, buyers of the exclusively digital version can still purchase the reader separately, if they decide to upgrade at a future time.  

Figure 3 – Lids of different colors facilitate logistics and reduce the cost of customization (Images: Disclosure – Sony)

This case shows how product development can be a very important step in Supply Chain optimization. The application of a modular design in this case seems like a very interesting way to avoid complexities while still offering options to the consumer. 

If you want to know more about challenges and solutions related to this subject, don't miss the live online course Inventory Management in the Supply Chain, offered by ILOS.

References

• The Verge (10/10/2023): Sony's new PS5 with a removable disc drive launches in November 
• PlayStation – PS5 Console Covers 
• PlayStation – PS5 Console Covers PS5™ Console Covers – Marvel's Spider-Man 2 Limited Edition