MASS CUSTOMIZATION

Mass Customization

Concept

‘Future Shock’ by Toffler, 1970 - “future manufacturing enabled by information technology would be able to provide customized products in a large scale with little or no extra cost”

Pine et al.’s Harvard Business Review article, 1993 – the ability to provide individually designed products and services to every customer through high process agility, flexibility, and integration

Hart 1995 et al. - Mass customization is a system that uses information technology, flexible processes, and organizational structures to deliver a wide range of products and services that meet specific needs of individual customers at a cost near that of mass-produced items

MASS CUSTOMIZATION

It aims to deliver product and services that best meet customers’ needs with near mass production efficiency.

The paradigm shift to mass customization is made an imperative for many companies to survive in an increasingly diversified, fragmented and competitive market place.

Currently, the focus of research in mass customization is shifting from its strategic viability to operational feasibility.

Definition

The process of delivering wide-market goods and services that are modified to satisfy a specific customer need. Mass customization is a marketing and manufacturing technique that combines the flexibility and personalization of "custom-made" with the low unit costs associated with mass production. Many applications of mass customization include software-based product configurations that allow end-users to add and/or change certain functionalities of a core product. Sometimes called "made to order" or "built to order."

Mass customization is the method of "effectively postponing the task of differentiating a product for a specific customer until the latest possible point in the supply network."

Cont……. Joseph Pine II's 1992 book "Mass Customization: The New

Frontier in Business Competition" describes four types of mass customization:

1. Collaborative Customization - where companies work in partnership with individual customers to develop precise product offerings to best suit each customer's needs.

2. Adaptive Customization - where companies produce standardized products that are customizable by the end-user.

3. Transparent Customization - where companies provide unique products to individual customers without overtly stating the products are customized.

4. Cosmetic Customization - where companies produce standardized products but market the products in different ways to various customers.

MASS CUSTOMIZATION - THE GENERIC MODEL

Spring et al. (2000) proposed a generic model of product customization :

ADVANTAGES OF MASS CUSTOMIZATION

Maximized market share by maximizing customers’ satisfaction and number of customers.

Cut cost of inventory and material waste: materials and inputs are pushed into production just in time. Also, very low inventory of finished products because of production to orders, not produce to stock.

Increase cash flow: Lower inventories, prepayment (thus lower receivables)... increase cash flow.

Shorten time of responsiveness (accumulative time from receiving orders to delivering): organization structure and flexible manufacturing in mass customization allows the company to adapt to different demands rapidly.

Ability to supply a full line of products or service with lower costs: the purpose of mass customization is to differentiate products to particular demands, resulting in broader product lines of the company and a much lower risk of obsolete inventory.

MASS CUSTOMIZATION STRATEGIES: Design- in this mass customization strategy, customers interact

with suppliers with the objective to design a particular product that fulfills particular requirements (e.g. residential architecture). This strategy allows for customer involvement.

Fabrication- this mass customization strategy includes customized product using basic predefined design, and allows customer to modify the product building block (e.g. Motorola’s Bandit pager).

Assembly- this mass customization strategy refers to the use of standard models that can be combined into different product variants in order to meet particular customer requirements (e.g. Hewlett-Packard products). This strategy allows for customer involvement.

Additional Custom Work- in this strategy, mass customization is achieved by adding custom work (e.g. Ikea’s furniture) to standard product, often at the point of delivery.

CONT…….

Package and Distribution- this mass customization strategy refers to delivery or packaging similar products in different ways (e.g. Wal-Mart’s peanuts).

Usage- in this mass customization strategy, usage occurs only after delivery, through products that can be adapted to different functions or situations (e.g. Lutron’s lighting systems).

Standardization- this mass customization strategy relates to customizing products which self adapts to specific customer needs.

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