Mass customization

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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 efficiency" (Source: Tseng, M.M., Jiao, J. (2001): Mass Customization, in: Handbook of Industrial Engineering, Technology and Operation Management, 2001, 3rd. ed., p.685; ISBN 0-471-33057-4)

Kaplan and Haenlein define mass customization as "a strategy that creates value by some form of company-customer interaction at the fabrication / assembly stage of the operations level to create customized products with production cost and monetary price similar to those of mass-produced products". (Source: Kaplan, A.M., Haenlein, M.(2006): Toward a parsimonious definition of traditional and electronic mass customization, Journal of Product Innovation Management, 23(2), 168-182.)

Joseph Pine II in his book Mass Customization: The New Frontier in Business Competition (ISBN 0-87584-946-6) described this paradigm at the beginning 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 continuous improvement to mass customization and back to invention. The term, however, was coined by Stan Davis.

Pine also describes four types of mass customization (in an article on Harvard Business Review in 1997, co-author by Jim Gilmore):

• 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.

Contents 1 Implementation 1.1 Notable failures 2 Configuration system 3 See also 4 Notes 5 External links

[edit] Implementation

Many implementations of mass customization are operational today, such as software-based product configurators which make it possible to add and/or change functionalities of a core product or to build fully custom enclosures from scratch. This degree of mass customization has only seen limited adoption, however. If an enterprise's marketing department offers individual products (atomic market fragmentation) it doesn't often mean that a product is produced individually, but rather that similar variants of the same mass produced item are available.

Companies which have succeeded with mass-customization business models tend to supply purely electronic products. 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 and services is immediately directed by customer demand include:

• Dell's famous "build-to-order" model facilitated its rise to dominance in the PC direct-purchase industry.
• The Architectural Skylight Company is a Maine firm that uses CAD to automate the production of windows to architects' specifications. (See Architecture week article.)
• Companies throughout the tourism industry have been offering package holiday alternatives through mass customization.
• Most mass customization applications, however, are still in business-to-business industries.

[edit] Notable failures

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 proffered Cannondale as the exemplar of the new model. For instance, a 1999 report [1] touted Cannondale's ability to mass customize:

"Cannondale [...] for example can configure over 8 million different frame and colour variations in its bicycles."

Although the company's subsequent bankruptcy in 2003 was blamed on other causes (including a failed attempt to enter the motorsports market) 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.)

[edit] Configuration system

The term configuration system is intimately connected with the concept of mass customization. Combining the low unit cost of mass production processes with the flexibility of individual customization requires a deep and utmost efficient integration of customers into value creation activities.

Configurations systems thereby represent the crucial interactive interface between customer and manufacturer, enabling customers to add and/or change functionalities of a core product or making fully custom enclosures from scratch. A poorly developed configuration system will lead to decreased customer satisfaction and loyalty, ultimately resulting in low sales. Mass customization success thus depends largely on the development of an interaction tool – the configuration system.^[1]

[edit] See also

• personalized marketing
• product differentiation
• product management
• personal marketing orientation
• manufacturing
• personalization
• Variable Data Printing
• Market customization
• Preorder Economy
• Delayed differentiation (Postponement)

[edit] Notes

[edit] External links

• http://www.mass-customization.de Mass Customization web site by Frank Piller, MIT and TUM, established in 1995
• http://www.mcrcnottingham.org Mass Customization Research & Resource Centre, Nottingham University, UK
• http://www.madeforone.com/ News about enterprises using mass customization and personalization
• http://www.masscustomhome.com Mass Customisation model for housing by Masa Noguchi, Mackintosh School of Architecture, The Glasgow School of Art