In today’s tough, recession-weary markets, manufacturers are increasingly being forced to react and respond to the growing individualization of demand. In order to compete, manufacturers must adopt strategies that embrace a closer reaction to their customers’ needs while also being mindful of the increasing competitive pressures that dictate that costs must continue to decrease. The reality today is consumers are dictating play; they want what they want and at a price they are want to pay.
Mass customization is a new paradigm that encompasses the technologies and systems needed to deliver products that meet individual customers’ needs with near mass production efficiency. In order to accomplish this, companies must adopt a flexible, demand-oriented strategy to provide a range of custom options. Efficiency is a key strategy as mass customization is as much a business practice as it is a technology practice.
To be successful at mass customization, companies must harness technologies that revamp their speed, flexibility, and efficiency at minimum expense. Combined with organizational changes to focus on the unique needs of various customer segments, these technologies help companies affordably deliver customized versions of their products to profitable niche markets. They must also drive down the costs associated with addressing smaller markets by creating greater economies of scale at smaller volumes along the supply chain.
Implementing mass customization demands new processes and services—new capabilities that are not in place in most organizations. Although introducing a level of customizability into any product typically increases costs, made-to-order products can actually reduce waste by basing production costs upon actual demand. Design and tooling costs have also decreased in recent years, making it more practical to produce smaller product batches or prototypes.
To succeed, companies must design products that create enough customer value to justify any additional customization expenses. Manufacturers also must develop modular components that can be combined late in the manufacturing and delivery process to create a wider variety of configurable end products. On the manufacturing side, flexibility is key. Manufacturing systems need to be modified to produce families of products while at the same time minimizing setup and changeover times.
Lesson One: Customers Rule
Flexibility in manufacturing processes and open communication with customers are two critical components of effective mass customization. In fact, maintaining close contact with customers to gauge their needs and receive feedback about a customized product is crucial in the mass customization process, and can also assist with innovation and new product development. There’s no doubt that customers will play at key role in any company’s effort to mass-customize products.
In fact, many innovative products originated in the customer’s domain—including many success stories in mass customization offerings that are a result of an innovative customer becoming an entrepreneur. To succeed at mass customization, manufacturers need to reach out to their customers to obtain input and feedback in order to optimize a company’s innovation process. Internal corporate processes must be changed so customers can become integral partners in the process.
Most successful mass customizers today are companies that have started with on-demand business models, rather than traditional manufacturers that are experimenting with shifting from mass production to mass customization. Traditional manufacturers must focus on finding a successful business model for their size and scale, and look at efficiencies as their efforts grow.
Guiding customers through customization
Companies currently implementing mass customization must provide their customers with guidance through the creation process. A recent survey conducted by MIT of 500 mass customization companies revealed that nearly two-thirds of the surveyed companies didn’t provide users with any guidance through the creation process. Effectively that means that nearly 66% of mass customizers are providing customized products without providing any expertise, such as color matches, compatibility checks, or guided recommendations.
Ideally, manufacturers offering customizable products should provide customers with a product configurator that presents them with many choices while also providing guidance and assistance. During the customization process, also referred to as co-creation, a manufacturer must be able to offer expertise and make suggestions during the selection process just as a sales person would do in person or over the phone. In some cases this means removing options.
Let’s look at Dell Computer for an example of this. We talked last month about the company’s successful online, build-to-order PC and server programs. When customers sit down to order a customized computer, the Dell web site allows them to choose from a list of compatible video cards, as well as a few up-sell options. The reality is that there are literally hundreds of video card options, but Dell only shows the appropriate matches for each specific base product. Omitting options simplifies the process and eliminates any possible incompatibility issues, though the customers still feel they are creating a product fully customized for them.