This article is about mass customization. There are several different ways in which goods and services can be produced. The typical production methods in the modern business include:
- Job production.
- Batch production.
- Mass production (flow production).
- Mass customization.
- Cell production.
What is mass customization?
Mass customization means producing large quantities of products with slight variations to each product which is modified to satisfy individual customers’ requirements at mass-production cost levels. Combines low unit costs with flexibility to meet customers’ individual requirements. The process uses the latest technology of flexible computer-aided production systems with multi-skilled labor forces using production lines. The business is able to move away from the mass-marketing approach with high output of identical products to sell a range of varied products to various market segments through differentiated marketing.
Main product features: Mass produced goods with slight variations to each product. Flow production of a range of products with many standardized components but customized differences too. The market goods are modified so to satisfy a specific customer’s needs and wants.
Suitability: Businesses selling large number of quality complex products that can be customized according to customer specifications allowing for making choices. Customers have high requirements and are willing to pay a premium for high-value products that is fashion-forward and will allow them to express their individuality.
Examples of products: Nike custom shoes, Ford custom cars, Apple custom computers, IKEA custom kitchen cabinets, Coca-Cola personalized soda cans, Domino’s Pizza custom pizzas.
Level of demand: There will be variability of demand, but mainly large volume of products will be customized according to customers’ requirements.
Essential requirements: Involves combining latest technology with multi-skilled flexible workforce. Often computer-controlled to allow for variations in the product made of many components.
Set-up time: Similar as in mass production as it takes time to prepare the production line to produce a new product or product variant. Tasks will include changing tooling, adjusting machine settings and loading materials.
Cost per unit: Similar but higher unit cost than cost per unit in traditional mass production.
Capital (machinery): Similar as in mass production (flow production), specialized capital equipment is used, mainly large numbers of flexible machines designed for customization. Mass customization is highly capital-intensive and automated with the use of robotics which costs great deal of money.
Labor (workers): Skilled and highly-skilled workers in mass customization play a critical role in the production process. They must be knowledgeable and experienced with the use of advanced machinery to ensure that products meet customer’s specifications.
Production time: Mass customization production will typically take longer than traditional mass production (flow production).
Stock: Managing inventory is challenging due to both the variability of demand as well as the need to stock a wide variety of raw materials and components. Additionally, there will be high amount of finished goods requiring storage.
Quantity produced: Large number of goods for different market segments are produced in a continuous flow.
Quality: Emphasis on high quality to ensure that products meet or exceed customer expectations, even if products are customized.
Advantages of mass customization:
- Increased customer satisfaction. Mass customization allows customers to get exactly what they want, which leads to increased satisfaction. This can lead to increased customer loyalty and repeat business.
- Higher profit margins. Customized products add more value, so they can often be sold at a premium, which leads to higher profit margins. Possibilities of economies of scale will keep production costs low at mass-production cost levels.
- Improved brand reputation. Mass customization can help companies to build a reputation for being innovative and customer-focused. This can attract new customers and improve the company’s overall brand image. Workers will also experience higher job satisfaction because of producing branded customized products facing high market demand.
- Reduced inventory costs. Mass customization can help to reduce inventory costs by allowing companies to produce products only when they are ordered. This can also help to reduce the risk of obsolescence.
- Increased flexibility. Mass customization allows companies to be more flexible in their production processes. It is often easy and quick to switch from producing one type of product to another. So, businesses can target different market segments with modified products.
Disadvantages of mass customization:
- Increased complexity. Mass customization can be more complex to implement than traditional mass production. This is because it requires companies to have more flexible production processes and to be able to manage a wider variety of product options. Expensive product redesign may be needed on regular basis to allow key components to be switched to allow variety.
- Increased costs. Mass customization can be more expensive than traditional mass production. This is because it requires more customization and more flexible production processes. Overheads will be higher because of the need for expensive flexible equipment and machinery.
- Longer lead times. Mass customization can lead to longer lead times. This is because it takes more time to produce customized products.
- Increased difficulty in forecasting demand. Mass customization can make it more difficult to forecast demand. This is because it is more difficult to predict what customers will want.
- Increased risk of errors. Mass customization can lead to an increased risk of errors. This is because there are more opportunities for errors to occur in the production process.
Case Study 1: Dell can make customized computers to suit specific needs in a matter of hours by changing just a few of the key components and keeping the rest the same.
Case Study 2: Apple is able to both mass produce most famous iPhones and iPads as well as manufacture limited editions of luxury golden iPhones. The business can both achieve economies of scale from the mass-produced products and at the same time it can satisfy the demand for customized products.
Case Study 3: BMW Mini is produced according to the exact number of orders for customers can customize their cars from BMW’s predetermined options list. The customers get a personalized car with the added benefit of lower production costs from the use of mass production processes.
TIP: In mass customization where the systems are flexible, it is possible to rework customized products that are sub-standard as production of those items is continuous for a period of time.
