Operations Notes – Mass Customization


Notes from core MBA Operations class, these focused on mass customization.
Subject: Operations

Mass production: producing products to prediction (“inside-out”)
Custom production: no production happens before an order is received; production as a response (“outside-in”)

Things to Expect from Mass Customization

  • short product life cycles
  • short product development cycles
  • flexible production and low cost of variety
  • low overhead and inventories
  • high utilization of and investment in worker skills
  • supplier interdependence
  • quick response to changing customer desires
  • affordable, high-quality, customized products

Benefits to a Firm

  • less FGI
  • can charge a premium
  • source of competitive advantage
  • more satisfied customers
  • enhanced market research
  • spill-over to other areas of the business

Benefits to a Customer

  • fits your needs more closely
  • prestige from being unique
  • better satisfaction
  • more utility
  • lower search costs

Disadvantages to a Firm

  • customization takes more work
  • price premium
  • higher parts inventory
  • supply chain mgmt critical
  • possibly higher investment needed

Disadvantages to a Customer

  • has to wait longer
  • price premium
  • less returnable

Managing Complexity of Custom Production

  • re-design the process to lower lead time
  • decide where customization is needed
  • focus on flexibility
  • focus on change-over issues


  • understand where customer desires variety/choice
  • design process to do this customization as late as possible
  • keep the rest of the process highly automated

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