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Mass Customization

Prepared for Infotech Applications in Marketing Group, University of Delaware, 31 October 2005
Donal Reddington, Editor, MadeForOne.com

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
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31 October 2005

Mass Customization How It Evolved (1)

Middle Ages Craft Production


Master Craftsmen and Apprentices One off products, high labour content, expensive Movement of people off land to towns and cities Sub-division of work loss of traditional skills
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18th Century Industrial Revolution

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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
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Mass Production to Mass Customization (1)

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
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Mass Production to Mass Customization (2)


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
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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.
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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
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Types of Mass Customization (2)

3. Cosmetic Customization:

Product is unique in appearance only Customers chosen text or image on T-shirts, mouse mats, baseball caps, mugs etc. Also called Personalization
Producer provides customized product without consumer being necessarily being aware that it has been customized Can be used when consumers needs are predictable or can be easily deduced, and when customers do not want their requirements repeated. Example- repeat orders for customized clothing, chemicals
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4. Transparent Customization:

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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)


product is not made until order is received (Book: Build to Order and Mass Customization David M. Anderson)

Build-to-order approach

Minimum order quantity of one

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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
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What Mass Customization Isnt

Massive Product Variety Customer has Choice but not Control;

E.g. Personalize your cellphone with any of our 2000 skins Example: Well known snowboard maker customer can specify exact requirements online but boards are handmade Use of knowledge about customer to personalize marketing of standard products. Data gathered from loyalty schemes, etc. Your design on a T-shirt, minimum order 100

Advanced ordering system linked to craft production;

Personalization or mass customization of Marketing:

Customized products with minimum quantities

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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

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Examples of Mass Customization

Clothing and Footwear


NikeID, MiAdidas, Otabo Shoes, Vans Bivolino (shirts), U-Jeans, Lands End, Target, Tommy Hilfiger Clothing and footwear very suited to MC due to each person being unique in size and shape Nautilus (treadmills) Kingspan insulated roof and wall panels, made to order for size, colour, insulation type
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Sports Equipment

Industrial equipment, construction

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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
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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)
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Future Developments

MC to be Mainstream by 2009

Prediction by William Halal, management professor at George Washington University


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

Growth of Online Factories

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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
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

Development of Digital Fabrication

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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!
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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
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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 OnDemand Production without Forecasts or Inventory, CIM Press, ISBN 1-878072-30-7
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