Mass customization

Mass customization, in marketing, manufacturing, call centres 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.

Mass customization is the new frontier in business competition for both manufacturing and service industries. At its core is a tremendous increase in variety and customization without a corresponding increase in costs. At its limit, it is the mass production of individually customized goods and services. At its best, it provides strategic advantage and economic value.

Mass customization is the method of "effectively postponing the task of differentiating a product for a specific customer until the latest possible point in the supply network." (Chase, Jacobs & Aquilano 2006, p. 419). Kamis, Koufaris and Stern (2008) conducted experiments to test the impacts of mass customization when postponed to the stage of retail, online shopping. They found that users perceive greater usefulness and enjoyment with a mass customization interface vs. a more typical shopping interface, particularly in a task of moderate complexity.

The concept of mass customization is attributed to Stan Davis in Future Perfect and was defined by Tseng & Jiao (2001, p. 685) as "producing goods and services to meet individual customer's needs with near mass production efficiency". Kaplan & Haenlein (2006) concurred, calling it "a strategy that creates value by some form of company-customer interaction at the fabrication and assembly stage of the operations level to create customized products with production cost and monetary price similar to those of mass-produced products". Similarly, McCarthy (2004, p. 348) highlight that mass customization involves balancing operational drivers by defining it as "the capability to manufacture a relatively high volume of product options for a relatively large market (or collection of niche markets) that demands customization, without tradeoffs in cost, delivery and quality".

Implementation

Many implementations of mass customization are operational today, such as software-based product configurators that 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, 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 mass-produced 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 centres 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.

Variants

Pine II (1992) described four types of mass customization:

• Collaborative customization - (also considered co-creation) 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. This is also being taken into deeper customization via 3D printing with companies like Shapeways.
• 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.

He suggested a business model, "the 8.5-figure-path", a process going from invention to mass production to continuous improvement to mass customization and back to invention.

References

• Tseng, M.M.; Jiao, J. (2001). Mass Customization, in: Handbook of Industrial Engineering, Technology and Operation Management (3rd ed.). New York, NY: Wiley. ISBN 0-471-33057-4. 
• Kaplan, A.M; Haenlein, M (2006). "Toward a parsimonious definition of traditional and electronic mass customization". Journal of product innovation management 23 (2). 
• McCarthy, I.P. (2004). "Special issue editorial: the what, why and how of mass customization". Production Planning & Control 25 (4). 
• Pine II, J. (1992). Mass Customization: The New Frontier in Business Competition. Boston, Mass.: Harvard Business School. ISBN 0-87584-946-6. 
• Noguchi, M.; Hernàndez-Velasco, C.R. (2005). "A 'mass custom design' approach to upgrading conventional housing development in Mexico". Habitat International 29 (2). 
• Duarte, J.P. (2001) "Customizing Mass Housing: a discursive grammar for Siza's houses at Malagueira", PhD Dissertation, Massachusetts Institute of Technology
• Chase, Richard B.; Jacobs, F. Robert; Aquilano, Nicholas J. (2006). Operations Management for Competitive Advantage (11th ed.). New York: McGraw-Hill/Irwin. 
• Blecker, T.; Abdelkafi, N.; Kreutler, G.; Kaluza, B.: Auction-based Variety Formation and Steering for Mass Customization, in: Electronic Markets, 14, 3, 2004, pp. 232-242.

• Coletti, P.; Aichner, T. (2011). Mass Customization: An Exploration of European Characteristics. Heidelberg, Germany: Springer. ISBN 978-3-642-18389-8. 

See also

• Custom-Fit
• Dell
• Mymuesli
• Manufacturing
• Personalization
• Personalized marketing
• Product differentiation
• Product management
• Rapid manufacturing
• Structure chart
• The Long Tail
• Variable Data Printing