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Can Manufacturers Keep up with Mass Customization?

09-28-2018 10:14 AM CET | Business, Economy, Finances, Banking & Insurance

Press release from: Formaspace

Open Office Design

Open Office Design

We take a look at how leading-edge manufacturing companies are profiting from increased sales and customer loyalty thanks to sophisticated order management systems, responsive supply chains, and flexible production techniques that allow their consumers to order highly customized products direct from the factory.

In today's world of wide-ranging consumer choice, it's hard to wrap your head around the fact that between 1914 and 1926 Ford Motor Company painted each and every one of the nearly 14 million Model T Fords rolling off its massive moving assembly lines in the same color: black. In an era when Henry couldn't make cars fast enough to keep up with demand, he would decide what was best for his customers. And because black paint cost the least and lasted the longest, black is what his customers got.

"Any customer can have a car painted any color that he wants so long as it is black."

— Henry Ford, Remarking About the Future of Ford Model T Cars, in 1909

Compared with 100 years ago, customers today have much, much higher expectations.

And why not? We live in a world where we can order a taxi, dinner, and a movie online using the smartphone in our pocket. Because online shopping offers such an exceptionally wide range of purchasing choices available at the tap of a finger, it's elevating consumer expectations across the board.

Undoubtedly, the next logical step in this consumer evolution is the mainstream acceptance of mass product customization. Indeed, an increasing number of consumers are showing a preference for products that can be personalized or customized, either to meet their unique needs or set them apart from the crowd (or a combination of the two).

Yet as attractive as the idea of implementing mass customization may sound, the resulting financial and organizational impact on most manufacturing companies is quite daunting. Mass customization puts huge pressure on product manufacturing companies to find ways to up their game in nearly every aspect of their operations, from introducing new customer sales processes and implementing responsive supply chains to crafting flexible yet cost-effective custom manufacturing processes.

Many of today's original equipment manufacturers (OEMs) are taking a hard look at custom manufacturing techniques to evaluate their potential for increasing overall profits by expanding their brand offerings into new adjacent and niche markets.

Recent research from business consultancy Deloitte offers some insight into the potential upside of mass customization initiatives.

According to Deloitte:

• More than 50% of consumers indicated interest in purchasing custom products or services.
• Nearly half of consumers said they would wait longer for delivery of a personalized product or service.
• A majority of consumers would be willing to pay more for custom products or services.
• Consumers expressed an interest in being actively involved in the process of ordering custom products.

Deloitte contends that one-size-fits-all manufacturers that avoid introducing product personalization are at risk of losing both revenue and customer loyalty in the long term.

But at what cost? Deloitte research consultants freely admit that the implementation cost for mainstream suppliers of high-volume products and services could outweigh the incremental sales increase.

In other words, mass customization could be a money loser. The challenge is to find the right number and type of customization choices while maintaining profitability.

In light of this, let's take a look at the range of possible customization options.

Back in 1997, James Gilmore and Joseph Pine wrote a very influential paper published in the Harvard Business Review, called "The Four Faces of Mass Customization." At the time, Gilmore and Pine set forth four different customization classifications:

The Four Faces of Mass Customization

Collaborative Customization

• Manufacturers and consumers work together to design and create custom products
• Today, this approach is often referred to as "Bespoke" customization
• Bespoke example: Formaspace furniture that is completely custom made to the customer's exact specification

Adaptive Customization

• A self-serve model where consumers can customize products to their liking during the order process or later in the field
• Today, this approach is often referred to as "Mass Customization"
• Mass customization example: Formaspace standard office products, which can be customized during the order process using our 3D Configurator as well as modified and accessorized in the field

Cosmetic Customization

• Manufacturers present the products in unique ways through differentiated packaging and sales channels
• Cosmetic customization examples: monogrammed clothing or repackaged goods sold through monthly subscription sales, such as BarkBox and BirchBox

Transparent Customization

• Manufacturers create personalized product offerings based on their observations of individual customer needs
• Today, this approach is often referred to as "Mass Personalization"
• Mass personalization example: Websites that track your interests and use a suggestion engine to present you with custom shopping recommendations

Let's look at more case studies to see how mass customization works in practice.

Read more ...

Formaspace advances the spirit of discovery and creation through the design and manufacture of custom business furniture. Our furniture marries form to function with flexible solutions for clients in the laboratory, industrial, and office environments.

Formaspace serves over 80% of the Fortune 500, as well as universities, governments, small businesses, and individuals.

1100 E. Howard Lane, Suite 400 Austin, TX 78753

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