Mass Customization

Cracking the Code of Mass Customization

Global Sourcing and Supply Chain Management

Mass Customization

Shravan, Unniraja, Vipul, Lukas 2

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Agenda

16.11.2015

Mass Customization

What is Mass Customization ?

• Strategic Mechanism / Process for aligning an organization with its customers need.

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

• “Today I define Mass Customization as the low-cost, high-volume, efficient production of individually customized offerings“. – Joseph Pine

• Managers must tailor process to an existing business and move towards goal (satisfy customers what they want, when they want )

Mass Customization

Development of Mass customization

The paradigm shift to mass customization is mainly driven by 3 forces

• Market Demand –”It is my belief that the mass market is dead and segmentation has progressed to the era of mass customization.” (Kotler -1989)

• Market competition – Product variety is exploding while product life cycle is shortening.

• Technological revolutions – Flexible manufacturing systems allow manufactures to

quickly adapt to changes without incurring high penalties in terms of cost and lead time.

Mass Customization

DELL – A pioneer in Mass Customization

Push (70 % BOM) Pull (30 % BOM)Supply Chain Strategy

• Minimal Inventory counts.

• Direct Sales

• Built to order platform

• Eliminate Markup

• Direct User support 24*7

• Strong Vendor base.

Dell

Mass Customization

Nikeid

Mass Customization

BMW- Mini Cooper Online Tool Kit

Mass Customization

What is common in these examples?

• they all have turned customers’ heterogeneous needs into an opportunity to create value .

• Challenged the “one size fits all” assumption of traditional mass production.

• customers were treated as individual with products tailored to their specific needs

Mass Customization

#3 Organizational Capabilities for Mass Customization

Solution Space Development

Choice Navigation

Robust Design Process

Mass Customization

Solution Space Development

• Company needs to identify its customers’ idiosyncratic needs – specifically, the product attributes along which their customers’ needs diverge the most.

• to provide customers with a design tool like CAD system with easy interface. (eg: concept lab of Fiat 500 ; where 160,000 designs from customers)

• Product concepts – “ Virtual concept testing “ (eg: Adidas AG success)

• Learn the customer preference by analyzing browsing behavior and can develop refined solution space. (eg: Pandora.com uses this feedback to realign)

Mass Customization

Robust Process design

• reuse or recombine existing organizational value chain resources.

• making organization automation more flexible or create more process modularity. (eg: BMW Mini factory relies on individual production cells)

• Adaptive Human capital - managers and employees to deal with new and ambiguous tasks to offset potential rigidness in process structures.

Mass Customization

Choice Navigation

• Many choices can lead to “paradox of choice” .

• “Assortment Matching” is one approach.

• Fast cycle, trail – and –error learning approach.

• Embedded configuration – customized solutions.

Mass Customization

Choice Navigations

Mass Customization

Shravan, Unniraja, Vipul, Lukas 14

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16.11.2015

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