Mass Customization Prepared for ‘Infotech Applications in Marketing’ Group, University of...

Mass Customization

Prepared for ‘Infotech Applications in Marketing’

Group, University of Delaware, 31 October 2005

Donal Reddington, Editor, MadeForOne.com

31 October 2005 Copyright MadeForOne.com 2005

Introduction Mass Customization – How it evolved Significant Events in Development of

MC Types of Mass Customization Examples – Manufacturing and

Services Future Developments MadeForOne.com – Story of MC News

website


Mass Customization – How It Evolved (1) Middle Ages – Craft Production

Master Craftsmen and Apprentices One off products, high labour content,

expensive 18th Century – Industrial Revolution

Movement of people off land to towns and cities

Sub-division of work loss of traditional skills


Mass Customization – How it evolved (2) United States – Industrial Development

started later, from mid-19th Century Industrial workers had greater skills More use of these skills in U.S. factories Greater innovation – Colt weapons

company developed standardised parts to assist battlefield repairs

Development of mass production in early 20th Century U.S. becomes global power


Mass Production to Mass Customization (1) Mass Production – example: Ford

Division of work Low variety of output – ‘any colour as

long as it’s black’ Constantly 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) 1970’s – Slowing Economy – Rising Oil Prices Need for alternative approach 1970’s-1980’s – Increasing competition

within U.S. market from outside countries, esp. Japan

Late 80’s-early 90’s: Literature proposing MC Development of internet (esp. product

configuration systems) in mid-1990’s opens door to widespread use of Mass Customization


Significant Literature 1970 – Alvin Toffler: ‘Future Shock’

“Consumers and producers working together” = “Prosumers”

1987 – Stan Davis: ‘Future Perfect’ First use of the term ‘Mass Customization’

1991 – B. Joseph Pine: Mass Customization – The New Frontier in Business Competition First 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 Review

1. Collaborative Customization: Consumer and producer engage in a dialogue to

determine customer requirements Computers, 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 occasions

High-end office chairs, R7 golf club, certain electronic devices


Types of Mass Customization (2)

3. Cosmetic Customization: Product is unique in appearance only Customer’s chosen text or image on T-shirts, mouse

mats, baseball caps, mugs etc. Also called ‘Personalization’

4. Transparent Customization: Producer provides customized product without

consumer being necessarily being aware that it has been customized

Can be used when consumer’s 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 Customization True 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 MC Customer has control over product Does not have to pay for features he/she

does not want (computers etc.) ‘Not in your size’ becomes a thing of the past Company does not have finished product

inventory better use of working capital Easier for company to differentiate product Levels out economic fluctuations

When slowdown occurs, less backlog of inventory Prices do not have to be cut as much Therefore, less likelihood of recession


What Mass Customization Isn’t

Massive Product Variety – Customer has Choice but not Control;

E.g. ‘Personalize your cellphone with any of our 2000 skins’

Advanced ordering system linked to craft production; Example: Well known snowboard maker – customer

can specify exact requirements online but boards are hand-made

Personalization 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 quantities

‘Your design on a T-shirt, minimum order 100’


Examples of Mass Customization Dell

Build to order computers Assembly, not manufacture (modular

components) MC sometimes associated with higher

prices but Dell cheaper than most Why? Massive efficiency of supply chain

management ‘Living in Dell Time’ - Fast Company, Nov.

2004


Examples of Mass Customization Clothing and Footwear

NikeID, MiAdidas, Otabo Shoes, Vans Bivolino (shirts), U-Jeans, Land’s End, Target,

Tommy Hilfiger Clothing and footwear very suited to MC due to

each person being unique in size and shape Sports Equipment

Nautilus (treadmills) Industrial equipment, construction

Kingspan – insulated roof and wall panels, made to order for size, colour, insulation type


Mass Customization of Services Difficult to define when a service is mass

customized rather than just ‘customized’ Degree of automation required Examples

MyYahoo, MyMSN, Google Personalized Personalized songs – Instasong.com I.T. – providing services in similar way to object

oriented software – small pre-existing components of work combined to create overall service

Requires increased efficiency and lower prices so as not to be just ‘packaging’ of existing services


Micro Manufacturing CafePress.com, Zazzle.com

Offer personalized products themselves Also offer other websites facility to design

products and market them Visitor to examplesite.net orders an

examplesite.net promotional T-shirt Order is entirely processed by micro-

manufacturer Recent investment in Zazzle by John Doerr

(KPCB) and Ram Shriram (Sherpalo Ventures)


Future Developments MC to be Mainstream by 2009

Prediction by William Halal, management professor at George Washington University

Growth of ‘Online Factories’ Online factories where

customers can not design their own products with easy-to-use software

EMachineShop.com – download software, design product; send completed design which will be manufactured within a few days


More Future Developments

Personalized location-based services

Jambo Networks (Jambo.net) Uses Wi-Fi to find people you know,

or want to meet Sends message to Laptop, PDA,

cellphone: “Joe Bloggs is nearby” Development of Digital Fabrication

Digital Fabrication ‘3D printing’ from data files

User might buy a product online as a datafile and create it at home using a 3D printer

Cost of Digital Fabricators currently prohibitive


MadeForOne.com Story M.Sc. Dissertation on use of e-commerce by mass

customizing enterprises Other MC sites good for concept descriptions, but no

regular news outlet Content free to readers, revenue raised from advertising

Cost per click (Google AdSense), Cost per action (Affiliate marketing)

Directory of sites, discussion forum Email newsletter about to be launched – retain readers Want greater interactivity with visitors new mass

customized services soon e.g. personalized e-cards Might sell to publishing house if price was right!


Your Blogs Potential to develop into long-term

projects Try and take a particular angle on

your subject Ways of bringing back visitors Useful as a (CV) resume item Interesting topics


References / Sources of Information

www.MadeForOne.com (naturally!) www.mass-customization.de Living 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 1-57851-238-7

Anderson, 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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