Product Architecture Decision Under Lifecycle Uncertainty Consideration: A Case Study in Providing Real-time Support to Automotive Battery System Architecture Design

Flexibility is valuable when the future market and customer needs are uncertain, especially if the product development process is long. This chapter focuses on what the firm can do to increase their flexibility before a product is produced and sold. The flexibility is built into the product architecture, which then enables the firm to take a staged decision process. Flexibility-in-the-Project approach was developed by de Neufville and Sholtes (2011), and has been successfully applied to large infrastructure projects. Real options analysis has only been utilized in high-level product planning decisions. The case study described in this chapter is the first successful application of the Flexibility-in-the-Project framework, providing real-time engineering design decision support to Ford Motor Company engineering efforts in future vehicle electrification. In hybrid and electric vehicle applications, the high voltage battery pack hardware and control system architecture will experience multiple engineering development cycles in the next 20 years. Flexibility in design could mitigate risk due to uncertainty in both engineering and consumer preferences. Core engineering team decisions on battery pack voltage monitoring, thermal control, and support software systems will iterate as technology evolves. The research team valued key items within the technology subsystems and developed flexible strategies to allow Ford to capture upside potential while protecting against downside risk, with little-to-no extra cost at this early stage of development. The methodology used to evaluate the uncertainty, identify flexibility, and provide the real options value of flexibility is presented.