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Mass customization

From Academic Kids

Mass customization, in marketing, manufacturing, and management, is the use of flexible computer-aided manufacturing systems to produce custom output. Those systems combine the low unit costs of mass production processes with the flexibility of individual customization.

Tseng and Jiao define mass customization as "producing goods and services to meet individual customer's needs with near mass production effiency" (Source: Tseng, M.M., Jiao, J. (2001): Mass Customization, in: Handbook of Industrial Engineering, Technology and Operation Management, 2001, 3rd. ed., p.685; ISBN: 0471330574)

Joseph Pine II in his book Mass Customization: The New Frontier in Business Competition descibed this paradigm at the beginng of the 90s. Pine suggested a business model that he called the 8-figure-path which describes the process from invention to mass production to contionous improvement to mass customization and back to invention.

Pine also describes four types of mass customization:

  • Collaborative customization - firms talk to individual customers to determine the precise product offering that best serves the customer's needs (see personalized marketing and personal marketing orientation). This information is then used to specify and manufacture a product that suits that specific customer. For example, some clothing companies will manufacture blue jeans to fit an individual customer.
  • Adaptive customization - firms produce a standardized product, but this product is customizable in the hands of the end-user (the customers alter the product themselves)
  • Transparent customization - firms provide individual customers with unique products, without explicitly telling them that the products are customized. In this case there is a need to accurately assess customer needs.
  • Cosmetic customization - firms produce a standardized physical product, but market it to different customers in unique ways.

The spread of mass customization

Today we can observe many implementations of mass customization, like software-based 'product configuraters' which make it possible to add and/or change functionalities of a core product (Example: http://www.landsend.com/ ). But this has only spread to certain sectors of industry. If an enterprise's marketing department offers individual products (atomic market fragmentation) it doesn't often mean that a product is produced individually, but tends to mean instead that similar variants of the same mass produced item are available.

Example: If an automotive company talks about "individual cars" they may imply individual assembling of a car, but typically this only occurs at the last stage within the manufacturing process, and not directly in response to customer demand. That wouldn't include an individual wish of a special auto body. Auto body production is, firstly, a fully automated welding process, and secondly, one of the first processes in creation of value. A frequent change of an automated production process would include a frequenly set-up change within programming, tools and apparatuses. Try it, call a automotive company and ask them for a personalized auto body, and tell them you would only pay an economy price!

Many industries have found that lengthy supply-chains, and the economics of configurability do not allow them to economically offer "mass customization". Famously, some of the early businesses attempting mass-customization (e.g. in bicycle production) went out of business. In 1999 boosters of the mass customization trend proferred Cannondale as the exemplar of the new model. For instance:

"Cannondale (www.cannondale.com), for example can configure over 8 million different frame and colour variations in its bicycles." ([1] (http://www.smeal.psu.edu/ebrc/publications/res_papers/1999_06.pdf) eBusiness Research Centre Working Paper).

Although the company's subsequent bankruptcy was blamed on other causes (a failed attempt to enter the motor industry (http://www.totalbike.com/news/article/786/)) the "mass customization revolution" certainly failed to save it, and it was dropped as a role model by business gurus. (In some cases, business consultants used the company's business model as an example whilst it was out of business; see "The Dilbert Future" for a satirical attack.)

Those companies which have succeeded with "customerization" business-models, tend to supply purely electronic products (iTunes, etc). However, these are not true "Mass customizers" in the original sense, since they do not offer an alternative to mass production of material goods.

Companies in which the production of tangible goods is now immediately directed by consumer demand include:

Also, companies throughout the tourism industry have been offering package holiday alternatives through mass customization.

See also

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