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