Author: IAN P. MCCARTHY, SFU Business, Simon Fraser University, 515 West Hastings ... IAN MCCARTHY is the Canada Research Chair of Management of ...
Production Planning & Control, Vol. 15, No. 4, June 2004, 347–351
Special issue editorial: the what, why and how of mass customization IAN P. MCCARTHY
Abstract. This paper introduces the aim, scope and content of this special issue on mass customization. It begins by providing a background review of mass customization, which revolves around two questions: what is mass customization, and why mass customize? By focusing on these, the paper presents definitions and explanations of the different approaches to mass customization, and describes the potential reasons for and benefits of mass customization. In addition to setting the scene for the special issue, this introductory review asserts that there is a relative dearth of research on how to design and operate a manufacturing system capable of mass customizing. This is a system design or configuration issue, which involves determining the most appropriate or viable design for the available range of multiple and interdependent design variables. However, despite the strong interest in configurational research in the business and operations strategy area, there are few works that develop and propose models for understanding how to mass customize.
1. Introduction In crafting the call for papers, I wrote: Mass customization is a strategy that seeks to exploit the need for greater product variety and individualisation in markets. However, the challenge for managers is to design and operate integrated systems that can accommodate the
accompanying increase in variety and uncertainty, without affecting lead-time, cost or quality. This problem is compounded by the fact that the mass customization opportunity can require very different approaches, depending on factors such as the type of market served, the product complexity and value, and the level of customization offered. The main topics of the Special Issue focus on the need to understand the different strategies, configurations and practices of manufacturing systems that enable mass customization. This problem of how to implement and operate new manufacturing strategies is a recurring and important theme in operations management. Skinner (1996) conducted a seminal review of the theory and practices associated with new manufacturing strategies and concluded that of all the challenges facing manufacturing companies, the task of successfully implementing new manufacturing strategies is greatest. The problem is not about understanding what constitutes the strategy, but determining how to design and transform an organizational system from its current form (configuration) into one capable of achieving its new goals. This is certainly the case for mass customization, because even though the opportunity to mass customize has significantly increased
Author: IAN P. MCCARTHY, SFU Business, Simon Fraser University, 515 West Hastings Street, Vancouver, BC V6B 5K3, Canada. IAN MCCARTHY is the Canada Research Chair of Management of Technology in the Faculty of Business Administration at SFU. His research focuses on understanding and designing competitive and sustainable organizational forms using systems methods, classification tools and evolutionary concepts. This involves technology and operation management issues such as: managing operational complexity, mass customization, modelling decision-making in new product development, and classifying drug discovery strategies. Dr McCarthy is a qualified chartered engineer, a member of the EPSRC College (a UK research council) and a director of the Complexity Society. Previously he was on faculty at the University of Warwick and the University of Sheffield, and held management positions at Philips Electronics, British Alcan and Footprint Tools. Production Planning & Control ISSN 0953–7287 print/ISSN 1366–5871 online # 2004 Taylor & Francis Ltd http://www.tandf.co.uk/journals DOI: 10.1080/0953728042000238854
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with improvements in the cost and speed of collecting and processing information using the internet, one of the key challenges inhibiting the adoption of mass customization practices, is the limited number of studies that explicate how to design and operate manufacturing systems accordingly. This issue of strategic implementation (i.e. How to realize the desired configuration?) is crucial for understanding how to translate manufacturing strategy into operational reality. It is a system design problem that involves searching a space of strategic configurations, whose elements are different combinations of manufacturing capabilities (McCarthy 2004). Thus, the configuration perspective is consistent with the ‘how’ question, as it helps frame and develop models that produce both synchronic (categorical or associative) and diachronic rules (predictive or effective) on how to design and change systems. 2. The what and why and how The term ‘mass customization’ was first coined by Davis (1987) in his book Future Perfect, in which he described a trend where companies sought to microsegment markets and offer unique products and services to customers. It is a strategy that involves producing goods and services for a relatively large market, while satisfying the specific needs of individual customers using an envelope of product and cost options. It is also important to note that the word ‘mass’ both implies and defines that a relatively high volume of products is produced for a mass market. This definition would therefore exclude those firms that produce relatively low volumes of bespoke products. To understand whether a company should adopt a mass customization strategy has been tackled by a number of researchers (e.g. Kotler 1989, Pine 1993, Agrawal et al. 2001, Berman 2002). The general conclusion is that the case for mass customization revolves around the following competitive factors: . Customers and their expectations have shifted from a broad base of uniformity and sameness to a network of niche and heterogeneous market requirements. . Fashions and customer preferences shift literally overnight, and product life cycles have become significantly shorter. . Assemble to order and the construction of product families are strategies that offer options and differentiation, whilst maintaining performance in terms of cost, quality and delivery. . Understanding and satisfying specific customer expectations enables a company to achieve a better strategic fit with customers’ long-term needs.
. The ability to forecast and understand market opportunities is increased from the improved and frequent communication with customers.
With the business case for mass customization gaining acceptance, Pine (1993) was one of the first to consider the operational implications of mass customization for manufacturers. He stressed that mass customization should strive to deliver a personalized product without incurring a cost penalty. This view has been endorsed by others (e.g. Beaty 1995, A˚hlstro¨m and Westbrook 1999, Tu et al. 2001) who argue that mass customization should provide numerous customer prescribed product variations, but with little or no lead-time or cost penalty. Based on this ideal notion, the following definition captures the essence of mass customization for manufacturing firms: 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. The last part of the definition refers to the common operational difficulty of avoiding or minimizing any form of tradeoff (Corbett and Vanwassenhove 1993, Mapes et al. 1997, McCarthy 2004). This means that manufacturing firms seeking to mass customize will face two challenges. First, the ability to design a system capable of collecting and processing highly varied and uncertain product information; and, second, the ability to transform and assemble materials to produce a corresponding range of product variety (A˚hlstro¨m and Westbrook 1999, Salvador et al. 2001, Tu et al. 2001, Duray 2002). The emphasis on material transformation and assembly in the second challenge is not simply to make the problem manufacturing relevant, but to stress the unique difficulties faced by manufacturers wishing to mass customize, as opposed to service firms wishing to mass customize. For instance, Wind and Rangaswamy (2001) use the terms mass customerization and mass customization to distinguish between the customized offerings created by service firms and manufacturing firms respectively. Mass customerization and mass customization both aim to provide customized offerings, but with mass customization the task is to personalize and manufacture a physical product and with mass customerization the personalization process focuses on a service in terms of information and marketing. To illustrate this point, Wind and Rangaswamy (2001) present the case of garden.com, which tried to transform the nursery industry. The traditional nursery model involves serving customers who visit a store location and select from about 200–300 plants and, in most cases, they then have to transport the plants back to their homes. With garden.com, customers visit a
The what, why and how of mass customization website that allows them to design a garden (e.g. Japanese style or English style) subject to local soil and climate conditions and using an inventory of over 16,000 plants and other related products. The customer creates the product design and defines the resulting bill of materials. The point of this example is that garden.com did not own or operate any stores and it did not own or operate any manufacturing or growing facilities. It focused solely on capturing the needs of individual customers and then managing a supply chain to deliver the bill of materials for the garden designs. As the awareness and popularity of the mass customization concept continued to grow, researchers began to explore and classify the different approaches for mass customizing. To understand these variations required knowledge about the factors that govern a mass customization strategy. For example, researchers (e.g. Pine 1993) believed the degree of product variety offered by a company is a defining factor, while others (e.g. Huffman and Kahn 1998, Ross 1996) contend that the stage and amount of customer involvement is a varying feature of mass customization. With just these two factors, it is obvious that different firms in different industries will develop different approaches to mass customization, each requiring a different organizational configuration. The result is a plethora of conceptual models (many referred to by the papers in this special issue) that identify and describe either the general strategic approach or one aspect of the approach (e.g. the degree of customer involvement, the type of product modularity and the degree of product variety). From these simple but useful models it is apparent that even though the essence of mass customization is relatively fixed, at an operational level it will often mean different things to different groups of firms because the following factors will vary for firms: . . . . . .
the product volume/variety ratio; the complexity and value of the product complexity; the point of customer involvement; the degree of customer involvement; the type of product modularity offered; the nature of the customized offering and the perceived value.
Despite the variety of strategies for mass customization, interested individual firms will all ask the same question: how do we implement a successful mass customization strategy? Although all firms are unique and the specifics of the answer are likely to vary from firm to firm, it is possible to identify and aggregate the different, but appropriate, technologies, practices and capabilities into a number of distinct manufacturing configurations (Rakotobe-Joel et al. 2002) or ‘prescribed formats’ (Greenwood and Hinings 1996). These configurations
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are the basis for achieving one or more strategic priorities (e.g. mass customization). To summarize the current status, researchers have identified and discussed some of the configuration elements needed to support mass customization (e.g. flexibility, postponement, information technology and decoupling points). Yet, others (e.g. Kotha 1996, Feitzinger and Lee 1997, Silveira et al. 2001) point out that this work can be too industry-specific or lacking the theoretical robustness or empirical evidence to help develop, implement or achieve them, regardless of the context of the firm.
4. The special issue’s articles Together, the 11 articles that appear in this special issue make contributions that help address the ‘How’ question. This does not involve simply importing ideas from existing areas of operations management and adapting them to suit the mass customization paradigm, but by using them to provide rich, theoretically-grounded descriptions of how manufacturing systems should be configured to achieve certain levels of mass customization. Mikkola and Skjøtt-Larsen’s article establishes a framework for examining how manufacturing systems should be configured for mass customization in terms of postponement and modularization. They achieve this by presenting a modularization characteristic curve, which illustrates the combined effect of component customization, value inputs and supplier–buyer interdependence. The intention is that the framework will help users better understand how configurations should be designed by analysing the relationships between mass customization and postponement in relation to modularization. Comstock, Johansen and Winroth examine the experience of a leading Swedish mobile telephone manufacturer’s experience of introducing a manufacturing system for the production of a customized, entry-level mobile telephone. They use product, process and system perspectives to examine the consequences and ability to mass customize when moving the customization order point downstream in the value chain. They also critically evaluate the company’s status as a mass customizer. Tu, Vonderembse and Ragu-Nathan report a study that collected data from 303 US manufacturing firms. The study sought to gather and analyse empirical evidence on how manufacturing managers design systems to cope with the environmental uncertainty and increasing product variety that goes with a mass customization strategy. It examined the configurations that permit mass customization in terms of re-engineering set-ups, preventive maintenance, cellular manufacturing and quality assurance.
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Salvador, Rungtusanatham and Forza seek to integrate the product design, marketing and operations management aspects of mass customization by investigating how the extended enterprise should be configured when different degrees of customization are offered. They present a number of case studies of firms in different industries. These illustrate the degrees of freedom customers have in specifying product features and how these affect the configuration of the extended enterprise. Their findings reveal two distinct configurations, each one suggesting a similar structure between the product structure and the configuration of the extended enterprise. Coronado, Lyons, Kehoe and Coleman provide a case study that describes the use of an internet-enabled production information system to facilitate information sharing across a build-to-order system. The system consists of three tiers of a high-volume, high-variety supply chain. The paper reports that improved levels of information transparency will lead to better co-ordination and synchronization of schedules, which in turn can result in significant reductions in raw materials and component stock across the supply chain. Duray advocates the merits and utility of using classifications to understand and design configurations. She then explores the effects of modularity and customer involvement on production planning. The study uses data which have been gathered from a survey of US manufacturing plants. The findings lead to conclusions that the type of modularity employed will significantly affect all aspects of the production planning system studied. Whereas the point of customer involvement in the value-chain production influences only one of the aspects of the production planning system. Yassine, Kim, Roemer and Holweg examine the effectiveness of customized product design in achieving a mass customization strategy and the role that information technology plays in facilitating this approach to customization. They propose and test a conceptual model to show how information technology can enable partnering firms to communicate, collaborate and achieve effective knowledge sharing and creation. The model is tested using data from Korean automotive first-tier suppliers. Rudberg and Wikner adapt the traditional customer order decoupling point (CODP) typology to show how engineering resources (for product design) can be integrated with the production system (for product manufacture) to accommodate and successfully implement a mass customization strategy. They argue that this typology will help managers better understand how to design configurations according to the specifics and features of the mass customization environment they intend to serve. Piller, Moeslein and Stotko assert that customer integration is achieved by designing systems that have economies of integration based on postponing some activities
until an order is placed, collecting more precise information about market demands and the ability to increase loyalty by directly interacting with each customer. This approach is intended to help manage the tradeoff between the benefits and costs of customer integration. Potter, Breite, Naim and Vanharanta use an approach that is central to the configuration perspective. They develop and present a typology that helps define the anatomy of potential mass customization configurations. The typology is applied to supply chains to show the capabilities and areas of change needed for mass customizing. By using the typology, firms can benchmark their current configuration and identify a route to achieving mass customization. Finally, the paper by Squire, Readman, Brown and Bessant provides a needed and valuable reminder of the question: does mass customization really hold the key to customer value? They argue that mass customization could augment customer perceived value, but that this would occur only for certain customers, in certain markets, at certain times. Thus, before adopting and implementing a configuration for mass customizing it is essential that firms recognise whether their customers (existing and potential) would really value customization of their products. They present a tool that aims to address this question.
References AGRAWAL, M., KUMARESH, T. V., and MERCER, G. A., 2001, The false promise of mass customization. McKinsey Quarterly, 38(3), 62–71. A˚HLSTRO¨M, P., and WESTBROOK, R., 1999, Implications of mass customization for operations management: an exploratory survey. International Journal of Operations and Production Management, 19(3), 262–274. BEATY, R. T., 1995, Mass customization. Manufacturing Engineer, 75(5), 217–220. BERMAN, B., 2002, Should your firm adopt a mass customization strategy? Business Horizons, July–August, pp. 51–60. CORBETT, C., and VANWASSENHOVE, L., 1993, Trade-offs — what trade-offs? Competence and competitiveness in manufacturing strategy. California Management Review, 35(4), 107–122. DAVIS, S. M., 1987, Future Perfect (Reading MA: AddisonWesley). DURAY, R., 2002, Mass customization origins: mass or custom manufacturing? International Journal of Operations and Production Management, 22(3), 314–329. FEITZINGER, E., and LEE, H. L., 1997, Mass customization at Hewlett-Packard: the power of postponement. Harvard Business Review, January–February, pp. 116–121. GREENWOOD, R., and HININGS, C. R., 1996, Understanding radical change bringing together the old and new institutionalism. Academy of Management Review, 21(4), 1022–1054.
The what, why and how of mass customization HUFFMAN, C., and KAHN, B. E., 1998, Variety for sale: mass customization or mass confusion? Journal of Retailing, 74(4), 491–513. KOTHA, S., 1996, From mass production to mass customization: the case of the National Industrial Bicycle Company of Japan. European Management Journal, 14(5), 442–450. KOTLER, P., 1989, From mass marketing to mass customization. Planning Review, September–October, pp. 11–47. MAPES, J., NEW, C., and SZWEJCZEWSKI, M., 1997, Performance trade-offs in manufacturing plants. International Journal of Operations and Production Management, 17(9–10), 1020–1033. MCCARTHY, I. P., 2004, Manufacturing strategy – understanding the fitness landscape. International Journal of Operations and Production Management, 24(2), 124–150. PINE, B. J. I., 1993, Mass Customization: The New Frontier in Business Competition (Boston, MA: Harvard Business School Press). RAKOTOBE-JOEL, T., MCCARTHY, I. P., and TRANFIELD, D., 2002, A structural and evolutionary approach to change
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management. Computational and Mathematical Organization Theory, 8(4), 337–364. ROSS, A., 1996, Selling uniqueness. Manufacturing Engineering, December, pp. 260–263. SALVADOR, F., FORZA, C., and RUNGTUSANATHAM, M., 2001, Operations configurations for mass customization. Proceedings of the European Operations Management Association, 8th International Annual Conference, Bath, pp. 754–764. SILVEIRA, G. D., BORENSTEIN, D., and FOGLIATTO, F. S., 2001. Mass customization: lterature review and research directions. International Journal of Production Economics, 72(1), 1–13. SKINNER, W., 1996, Manufacturing strategy on the ‘S’ curve. Journal of Production Operations Management, 5(1), 3–14. TU, Q., VONDEREMBSE, M. A., and RAGU-NATHAN, T. S., 2001, The impact of time-based manufacturing practices on mass customization and value to customer. Journal of Operations Management, 19, 201–217. WIND, J., and RAMASWAMY, A., 2001, Customerization: the next revolution in mass customization. Journal of Interactive Marketing, 15(1), 13–32.
