Mass Customization

Mass CustomizationPrepared for Infotech Applications in Marketing Group, University of Delaware, 31 October 2005

Donal Reddington, Editor, MadeForOne.com

Copyright MadeForOne.com 2005

IntroductionMass Customization How it evolvedSignificant Events in Development of MCTypes of Mass CustomizationExamples Manufacturing and ServicesFuture DevelopmentsMadeForOne.com Story of MC News website


Mass Customization How It Evolved (1)Middle Ages Craft ProductionMaster Craftsmen and ApprenticesOne off products, high labour content, expensive18th Century Industrial RevolutionMovement of people off land to towns and citiesSub-division of work loss of traditional skills


Mass Customization How it evolved (2)United States Industrial Development started later, from mid-19th CenturyIndustrial workers had greater skillsMore use of these skills in U.S. factoriesGreater innovation Colt weapons company developed standardised parts to assist battlefield repairsDevelopment of mass production in early 20th Century U.S. becomes global power


Mass Production to Mass Customization (1)Mass Production example: FordDivision of workLow variety of output any colour as long as its blackConstantly rising volume sales, and lower input costs = lower prices (economies of scale)OK in permanently expanding economy with favourable demographics


Mass Production to Mass Customization (2)1970s Slowing Economy Rising Oil PricesNeed for alternative approach1970s-1980s Increasing competition within U.S. market from outside countries, esp. JapanLate 80s-early 90s: Literature proposing MCDevelopment of internet (esp. product configuration systems) in mid-1990s opens door to widespread use of Mass Customization


Significant Literature1970 Alvin Toffler: Future ShockConsumers and producers working together = Prosumers1987 Stan Davis: Future PerfectFirst use of the term Mass Customization1991 B. Joseph Pine: Mass Customization The New Frontier in Business CompetitionFirst detailed description of mass customization concept replace economies of scale with Economies of Scope.


Types of Mass Customization (1)The Four Faces of Mass Customization Joseph Pine and James Gilmore - Jan.-Feb. 1997 Harvard Business Review1. Collaborative Customization:Consumer and producer engage in a dialogue to determine customer requirementsComputers, clothing and footwear, furniture, some services 2. Adaptive Customization: Product is designed so that users can alter it themselves to fit unique requirements on different occasionsHigh-end office chairs, R7 golf club, certain electronic devices


Types of Mass Customization (2)3. Cosmetic Customization: Product is unique in appearance onlyCustomers chosen text or image on T-shirts, mouse mats, baseball caps, mugs etc.Also called Personalization4. Transparent Customization: Producer provides customized product without consumer being necessarily being aware that it has been customizedCan be used when consumers needs are predictable or can be easily deduced, and when customers do not want their requirements repeated.Example- repeat orders for customized clothing, chemicals


True Mass CustomizationTrue Mass Customization requires:System for customer to specify requirements easily e.g. online ordering, call center Advanced manufacturing systems Enable economies of scope (keep cost and price low)Build-to-order approach product is not made until order is received (Book: Build to Order and Mass Customization David M. Anderson)Minimum order quantity of one


Advantages of MCCustomer has control over productDoes not have to pay for features he/she does not want (computers etc.)Not in your size becomes a thing of the pastCompany does not have finished product inventory better use of working capitalEasier for company to differentiate productLevels out economic fluctuationsWhen slowdown occurs, less backlog of inventoryPrices do not have to be cut as muchTherefore, less likelihood of recession


What Mass Customization IsntMassive Product Variety Customer has Choice but not Control;E.g. Personalize your cellphone with any of our 2000 skinsAdvanced ordering system linked to craft production;Example: Well known snowboard maker customer can specify exact requirements online but boards are hand-madePersonalization or mass customization of Marketing: Use of knowledge about customer to personalize marketing of standard products. Data gathered from loyalty schemes, etc.Customized products with minimum quantitiesYour design on a T-shirt, minimum order 100


Examples of Mass CustomizationDellBuild to order computersAssembly, not manufacture (modular components) MC sometimes associated with higher prices but Dell cheaper than mostWhy? Massive efficiency of supply chain managementLiving in Dell Time - Fast Company, Nov. 2004


Examples of Mass CustomizationClothing and FootwearNikeID, MiAdidas, Otabo Shoes, VansBivolino (shirts), U-Jeans, Lands End, Target, Tommy HilfigerClothing and footwear very suited to MC due to each person being unique in size and shapeSports EquipmentNautilus (treadmills)Industrial equipment, constructionKingspan insulated roof and wall panels, made to order for size, colour, insulation type


Mass Customization of ServicesDifficult to define when a service is mass customized rather than just customizedDegree of automation requiredExamplesMyYahoo, MyMSN, Google PersonalizedPersonalized songs Instasong.comI.T. providing services in similar way to object oriented software small pre-existing components of work combined to create overall serviceRequires increased efficiency and lower prices so as not to be just packaging of existing services


Micro ManufacturingCafePress.com, Zazzle.comOffer personalized products themselvesAlso offer other websites facility to design products and market themVisitor to examplesite.net orders an examplesite.net promotional T-shirtOrder is entirely processed by micro-manufacturerRecent investment in Zazzle by John Doerr (KPCB) and Ram Shriram (Sherpalo Ventures)


Future DevelopmentsMC to be Mainstream by 2009Prediction by William Halal, management professor at George Washington UniversityGrowth of Online FactoriesOnline factories where customers can not design their own products with easy-to-use softwareEMachineShop.com download software, design product; send completed design which will be manufactured within a few days


More Future DevelopmentsPersonalized location-based servicesJambo Networks (Jambo.net)Uses Wi-Fi to find people you know, or want to meetSends message to Laptop, PDA, cellphone: Joe Bloggs is nearbyDevelopment of Digital FabricationDigital Fabrication 3D printing from data filesUser might buy a product online as a datafile and create it at home using a 3D printerCost of Digital Fabricators currently prohibitive


MadeForOne.com StoryM.Sc. Dissertation on use of e-commerce by mass customizing enterprisesOther MC sites good for concept descriptions, but no regular news outletContent free to readers, revenue raised from advertisingCost per click (Google AdSense), Cost per action (Affiliate marketing)Directory of sites, discussion forumEmail newsletter about to be launched retain readersWant greater interactivity with visitors new mass customized services soon e.g. personalized e-cardsMight sell to publishing house if price was right!


Your BlogsPotential to develop into long-term projectsTry and take a particular angle on your subjectWays of bringing back visitorsUseful as a (CV) resume itemInteresting topics


References / Sources of Informationwww.MadeForOne.com (naturally!)www.mass-customization.deLiving in Dell Time (www.fastcompany.com/magazine/88/dell.html)Pine, B. Joseph, Mass Customization: The New Frontier in Business Competition, Harvard Business School Press, ISBN 0-87584-946-6 (paperback)Pine, Joseph and Gilmore, James (eds): Creating Customer-Unique Value through Mass Customization, Harvard Business School Press ISBN 1-57851-238-7Anderson, David M.: Build-to-Order & Mass Customization; The Ultimate Supply Chain Management and Lean Manufacturing Strategy for Low-Cost On-Demand Production without Forecasts or Inventory, CIM Press, ISBN 1-878072-30-7


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Mass Customization