What to Know: Mass Customization and Logistics

Abstract

I want purple laces with orange accents and a turtle shell toe. Better yet, orange laces with orange accents and a soft toe. Actually, let’s order a high top with blue laces instead of black. No longer are customers satisfied with purchasing a standard, cookie cutter product that was designed for everyone. Instead, customers want services and products that they can create and design to cater to their specific needs. But how do manufacturers manage this demand of customization and give every person the product they desire? This process is known as Mass Customization and if you are a person working in the manufacturing or logistics world, you need to know how Mass Customization is affecting your industry.

What is Mass Customization?

Mass customization is the delivery of wide-ranged market goods and services that are modified to each customer’s specific needs. Sometimes mass customization is called made-to-order or built-to-order. Mass customization aims to create individualized goods while still keeping production prices similar to those of mass produced goods. Mass customization grew in popularity in the late 20^th century and has now become common practice in the manufacturing industry; there is more than one way to customize in the modern age. Mass customization is often made possible when manufacturers wait until the very last moment before distinguishing a product for a specific customer. However, sometimes customization occurs at every stage of the production process. There are four unique approaches to mass customization in manufacturing:

1. Collaborative Customization: manufacturers work with individuals to create a product from the beginning of the manufacturing process to the end. The Custom Foot shoe company uses this model and it involves consultations, digital imagery of the customer’s foot, and measurements taken by hand rather than the usual practice of trying on different pair of shoes.
2. Adaptive Customization: the manufacturer offers one standard product to customers along with a few customizable options, examples include different colors or add-on features such as heated seats.
3. Cosmetic Customization: altering the packaging of a product differently to different groups of people. An example of this is a manufacturer putting a person’s name on the packaging.
4. Transparent Customization: providing customized products to individual customers without informing the customer that the product has been customized. This sort of customization is made possible when companies have the ability to monitor and analyze their customers’ needs without directly asking the customer.

While these types of customization are very different, the common denominator between all four of these types of customization is that an extra amount of effort, materials, and time is necessary to customize these products. What does this extra work entail and what are the benefits of mass customization that make this effort worthwhile?

The Customizable Double Edged Sword

Mass customization is an amazing advancement in the history of mass production and a challenge for manufacturers and logistics specialists alike. Below are examples of why mass customization is a gift and a curse:

There are 3 Main Advantages

1. Customized products are more attractive to consumers than uniform products.
2. As nothing is produced until an order is received, there are huge savings to be made by eradicating inventories of unsold goods and raw materials.
3. Customer relationships are strengthened through customization ability.

There are 5 Main Challenges

1. Maintaining a large amount and variety of stock can incur high warehousing costs.
2. Forecasting trends or spikes in sales is more difficult when manufacturers have to factor in customizability.
3. Customized products take longer to reach customers than mass produced goods.
4. While mass customization keeps manufacturing prices close to mass production, customized products still have a slightly higher cost.
5. Companies coming from a mass production background find it tough to change their organizational structure.

Most, if not all, of the benefits of mass customization go directly to the consumer rather than the manufacturer. The bottom line is that mass customization is a challenge that slows production, raises costs, makes predicting the market difficult, and poses a serious challenge for companies. However, in the new age of consumerism, a company must utilize mass customization if they want to stay relevant, and that isn’t possible without the proper logistics strategy.

The Role of Logistics in Mass Customization

Logistics is the glue that holds the entire mass customization system together and central to providing a competitive advantage. Mass customization programs cannot succeed if a company does not have efficient logistics operations and information systems. The logistics system must be flexible and fast because of the unpredictable nature of supply and demand that comes with customizable products. This is quite difficult especially when many parties are involved, including parts manufacturers, sub-assemblers, and master assemblers. Since customization slows the time between a customer ordering a product, and the product reaching them, a fast turnaround rate can separate some manufacturers from their competitors. Today's buyer wants customized products in enormous quantities, and they want them as quickly as they receive mass produced goods. Without efficient and effective logistics systems in place, the ability to customize alone will not retain a customer base and buyers will seek out a company that can deliver quickly.

There are many challenges to the logistics aspect of mass customization that have the risk of slowing down production. One challenge with customization is that supplies needed for production vary in demand. For example, if a shirt comes in stripes or plaid, there may be a period of time where more plaid fabric is needed over stripes. However, predicting this demand before products are ordered can be tricky and excess fabrics require storage, potentially increasing storage fees. Another challenge that emerges in mass customization is proper distribution. A process must exist so that once the products being manufactured begin their customization, the correct product can be identified and associated with the respective customer. If not properly done then the wrong product could be sent to a customer. This sort of mistake can jeopardize buyer relationships and risk future sales.

Since mass customization is still a relatively new development in the manufacturing world, there is little research on logistics strategies or solutions. In addition, there is also little known about how mass customization will affect the future of logistics or manufacturing systems. This lack of industry knowledge has caused many companies to struggle from the transition of mass production to mass customization. What is known is that mass customization demands speed, flexibility, and strict management.

The Mass Customized Future

With the demand of customizable goods increasing and advancements such as the 3D printer making customizing easier, it’s no surprise that the custom trend is here to stay. For new companies and especially start-ups, customization is no problem and is actually easier for them to do. Since start-up companies require low capital and low barriers for entry, mass customization is a simple process to adapt. Large and well established companies will have a harder time switching over to mass customization due to their rigid structure and overhead. Large companies are recognizing this and it may lead to increased acquisitions of smaller companies. The good news is that because mass customization encourages product design, computer programming, and web coding, a younger demographic will be drawn to the manufacturing industry.

Summary

Mass customization is a clever advancement to the manufacturing world, but it is an advancement that comes with a learning curve. Customizable products increase consumer relationships and customer satisfaction. However, mass customization is hard on manufactures and proves challenging to logistics systems. Without a logistical system that adapts to sudden change and aims to move products quickly, a manufacturer can lose out to companies that can. All in all, mass customization is not a trend, it is the new standard for manufacturing.