Mass Customization

Mass customization is the production and distribution of customized goods and services on a mass basis. In the Harvard Business Review article ‘Making Mass Customization Work’, the authors Pine, Victor and Boynton point out the failures, qualities, and implementation of mass customization in the manufacturing and service organizations. The article began with the details of failure of this concept at Toyota. A reason for failure was that Toyota could not distinguish between mass customization and continuous improvement. The attempt for mass customization compromised the product quality when it was implemented in the form of an extension of continuous improvement. At the same time, continuous improvement is a pre-requisite for mass customization as it helps the company to achieve higher product quality, improved employee skills, and lower cost of production.  Once the company reaches the peak of continuous improvement, the organizational structure and management thinking should be changed in order for mass customization to be implemented effectively.

Mass customization is not suitable for all markets or products. The companies that have markets with changing customer needs and technological advances will be right for the mass customization of their products. The Dell experience is a prime example of its benefits. The market for computers is very large and each customer segment has unique requirements. We can choose from a variety of components with each selection priced individually. Dell utilized mass customization as well as the advances in internet and e-commerce technology to directly reach out to their customers and won the market. It was truly amazing.

In order for the mass customization to work, the production operation processes should be converted into modules. These process modules are then coordinated through a linkage system that is instantaneous, costless, seamless, and frictionless. I believe that in order for this process module to work effectively, a company should support a modular product design with standardized components. This will result in reducing the total cost of production, a high quality product and a satisfied customer. At a leading insurance company where I work as a consultant, continuous improvement is part of the organizational culture. That explains the fact that it continues to be the number one Auto insurer in USA for more than half a century. It has not yet announced a mass customization initiative where the insurance products are tailored for each customer separately. But, a new multi-year initiative has just started resulting in a drastic change in the operations and systems departments with the purpose of improving the customer experience. Even though it can be considered as a continuous improvement strategy, in the long run I believe it will pave the way for mass customization as the technology is being improved, the organizational structure is being modified, and the operational processes are being reviewed in order to better serve the customers.

In order for a company to be ready for mass customization, the following need to be done. First of all, the company should have processes in place for continuous integration. It needs to perfect the art of quality in its products and in every interaction with the stakeholders. Then the company should determine whether its industry and product is suitable for mass customization. It should ask the question whether it really needs to achieve such a customization without a heavy toll in production cost to stay viable. The company should be ready to accomplish low production costs through economies of scope rather than scale. Economies of scope are realized by the application of a single process to produce a greater variety of products and services more cheaply and more quickly.  Finally, it should decide whether it is ready to change the organizational structure to better service the customers. It should not forget to communicate its intentions with all the stakeholders and get their confidence. Once the company has all these items taken care of, it can make the executive decision to go for mass customization.

References

Pine, B. J., Bart, V., & Boynton, A.C. (1993). Making mass customization work. Harvard Business Review, 71(5), 108-118.

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