CYO 2011 blog post re-posted from www.cookiesncode.com
Mass Customization relies heavily on the key idea of being able to produce customer-specific goods at or close to mass production price. Looking at the value chain of most products, one aspect strikes the eye at first glance: major-league cost drivers logistics and production. Basic understanding of production theory is that it is generally cheaper to produce a good in large batches than in small quantities. Obviously, the traditional approach cannot be the one of choice for a Mass Customization company. Or can it? Building an artefact, individually designed by a customer (applying the general limitations of MC to “individual design”), does not necessarily mean to give up on the large standardized batch you got used to. After all, the working space of your configurator is basically just that: a number of standard components that you offer your customer to put together according to his or her wishes. Likewise you can certainly produce these components in the most cost efficient way possible.
The art lies within clever postponement. Given that you hardly know which exact product variation you want to produce until your customer comes around telling you, one has to anticipate from past experiences which components will likely be needed and in which quantity. Once you get the order from your client you simply go and assemble your pre-produced factors in accordance to the individual customer’s design. The opportunities to save money from large batch production on the one hand and maximum flexibility to adapt on the other creates a key advantage over competitors.
Just like in the famous example of Italian apparel manufacturer Benetton: In the lengthy process of producing fashion the traditional approach has always been to first dye the yarn, then knit it to a product and sell it. Unfortunately, the knitting process is by far the most time-intense factor in the production process, and time matters. Especially in the fashion industry where customer’s choice and “trends” change in no time at all. Benetton chose a revolutionary way to overcome the risk of outdated product varieties by simply reversing the production process: the garment was tailored first and dyed just shortly before delivery. That way customer demands could be better investigated and fitting products be produced. You can learn more about how to do mass customization from thought leaders in the field from both business and academic worlds at Create Your Own, the first major business symposium on Mass Customization in Europe.
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