MASS CUSTOMIZATION

BY
SWATHI. A (2T2-38) CH. UDAYA LAKSHMI (2T2-15) CHANDAN PATNAIK SHAD ALI

MASS PRODUCTION:
1970s Slowing Economy Rising Oil Prices Need for alternative approach 1970s-1980s Increasing competition within U.S. market from outside countries, esp. Japan Late 80s-early 90s: Literature proposing MC Development of internet (esp. product configuration systems) in mid-1990s opens door to widespread use of Mass Customization

Mass Production example: Ford

Division of work Low variety of output any colour as long as its black Constantly rising volume sales, and lower input costs = lower prices (economies of scale) OK in permanently expanding economy with favourable demographics

MASS CUSTOMIZATION:
Mass Customization Defined Nuts and Bolts How it Works A Real World Example Summary

Mass Customization:
History:
Mass production, or the ability to produce large amounts of uniform products, first became popular around the turn of the 20 th century. Henry Ford used the concept to produce high quality and inexpensive vehicles starting as far back as 1910. One of the flaws of mass production, however, was that the final product was always the same, and any deviation or customization was minimal. It wasnt until midway through the 1980s that the term mass customization was first used and became in vogue.

Stanly Davis is credited with first using the term in 1987. The basic idea of mass customization is the ability for custom products to be produced on a scale, as well as price, similar to mass production. Although this concept seems almost obvious and inevitable in todays world, true mass customization would never have been possible without the internet, computerization, as well as other technologies that would have been inconceivable almost fifty years ago.

DEFINATION:
Mass Customization is the use of flexible computer-aided manufacturing systems to produce custom output Meeting individual customer's needs with near mass production efficiency Creating customized products with production cost similar to those of mass-produced products

IMPLEMENTATION:
Many implementations of mass customization are operational today, such as software-based product configurations that make it possible to add and/or
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change functionalities of a core product or to build fully custom enclosures from scratch. This degree of mass customization, however, has only seen limited adoption. 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 massproduced item are available. Companies that 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. Service industries are also waking up to the power of a mass customization orientation. Call centers are leveraging Agent-assisted automation to build pre-programmed, pre-recorded call flows to handle customers' inquiries. The agent executes the process, varying it only as they need to because of something the customer says or needs, as opposed to varying everything, every time.

Types of Customization:
Collaborative Customization Adaptive Customization Transparent Customization Cosmetic Customization

Collaborative customization - firms talk to individual customers to determine the precise product offering that best serves the customer's needs. 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)
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 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.

Benefits of Mass Customization:

Higher Profits :
By providing tailored products to meet particular needs, you make comparative shopping difficult and you shift the focus from price to benefits. Whilst it is possible to manufacture at a mass produced price, you have the option to charge a premium whilst still retailing below the price of a custom product. This in turn will open your product to a wider market.

Lower Costs :
Mass customization allows the ordinary man or women in the street to acquire a product that has been produced to meet their own particular needs yet at a competitive price - thus providing exceptional value for money.

Market Exploitation:
Personalized and customized products and services will differentiate against commodity type products. With their similar cost they will be doublely attractive. Lead customers will provide a rich source of new ideas that can also be exploited with other customers or with new prospects. As a result, it has lower risk of failure and a higher chance of beating the competition.

 On-going service can be adapted throughout the customer's life because it can be linked to the unique product. Companies will forge close relationships with their suppliers, distributors and customers as they return time and time again for further unique products. Satisfied and loyal customers provide excellent references and referrals.

Brainstorming:
Make a list of parts you can standardize Make a list of parts to make available for customization Assess the costs involved with eachis it practical to customize certain parts? Determine effective ways for customers to customize Hasten customization/manufacturing process

Nuts and Bolts:

Goal: to provide customers with the ability to customize a desired product without paying a premium

How it Works
Mass Customization requirements
Promotion Design Sales Production Servicing
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 Processes Feedback Organization IT

Process:
It draws on the long tradition of modular design Level of Mass Customization Modular design is the central design strategy for the car manufacturing industry, the computer hardware industry and most industries that manufacture technological products, but the concept is perhaps most familiar in the design of kitchen units. The level of Mass-Customization range from highly individualized products targeted specific customers to very standardized products targeted larger populations of customers. This latter group does not necessarily experience the product as customized for their needs. The differentiating factor can be country specific standards or segment targeted characteristics. The Mass Customization Process is: Customer co-design Define Configure Match Modify

Customerco-design:
The genus of mass customization is customer co-design. Customers are integrated into value creation by defining, configuring, matching, or modifying an individual solution. Customization demands that the recipients of the customized goods transfer their needs and desires into a concrete product specification. Different to a do-it-yourself (DIY) setting, this is done in a mode of interacting with the manufacturer who is responsible for providing the custom solution. Co-design activities are performed in an act of company-to-customer interaction and cooperation. Without the customers' deep involvement, the manufacturer would be unable to adequately fill each individualized product demand. In my understanding, co-design is the core element that differentiates mass customization from other strategies like agile manufacturing or postponement strategies in the distribution chain. Customer co-design in a mass customization context establishes an interaction between the manufacturer and customer which offers also possibilities for building up a lasting relationship. Once the customer has successfully purchased an individual item, the knowledge acquired by the manufacturer represents a considerable barrier against switching suppliers.

EuroShoe: From Customer to Customer

Social Impact New jobs Higher individual satisfaction Proactive vs. passive consumer role More efficient use of materials Better working conditions
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 The challenge of the EuroShoe Project is the design and manufacturing of customized shoes at a reasonable price for consumers at a much higher level of individual satisfaction. The fundamental concept of the project is to move from mass production to a mass customization model. This involves dramatic changes along the whole value-added chain, with the ultimate objective of creating a weboriented business sector offering its customers the extra satisfaction of an unprecedented style choice of style and personalized fitting for optimal comfort.

EuroShoe: From Customer to Customer

Economic Impact Improve global competition Introduce shoe customization on grand scale Increase in product quality Decrease in product costs/materials New market segment

Increased customer satisfaction

The project will improve the global performance and competitiveness of the European shoe companies giving a significant technological edge to the European industry in competing with the low-wage economies. It is predicted that customized products could account for around 30% of total shoe consumption, with an initial price premium of some 20 to 30%.

EuroShoe :
Conclusion
Improved level of personalization Additional employee training Information dissemination Mobile research The challenge for the next generation of integrated projects will be to achieve even more ambitious goals in terms of research, information dissemination, researchers mobility, education and training, and take-up measures. Although details of the new tools have yet to be finalized - large projects such as EuroShoe are already providing valuable lessons to guide their eventual realization in the context of the European research area.

BMW-CASE
BMW combines economic advantage of mass production with the differentiation and exclusivity of customization. Advantage to company: 1. Fewer inventories parked with dealer. 2. Customer satisfaction. 3. Huge sales. Advantage to customers: 1. Cars as per their requirement. 2. Satisfying their ego.
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Challenges: 1. Time taken for an order to process. 2. US consumer protection law. 3. Integrated customer preference. 4. Intensive focus on supply chain management. 5. Changing customer needs. 6. Depend on the suppliers. 7. Different scheduling programs. 8. Having a proper assembly line.

Investors rather than Customers:

1. Differentiation was an essential attribute for a luxury car. 2. Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time. 3. BMW promoted differentiations by proving 1000 bumper variation, 4000 instrument panel choices and 488 different door panels.

References:
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)

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