Mass customisation is not just another fad dreamt up by management consultants. For companies operating in turbulent and unpredictable markets, its adoption at the heart of the manufacturing process could well be a must, says Greg Lock, global general manager for IBM manufacturing industries.
Lock’s comments appear in a report* published under the Tomorrow’s Best Practice initiative – a partnership between the Foundation for Manufacturing and Industry, the Department of Trade and Industry, and IBM.
Companies involved in the study included BICC, British Aerospace, Fiat, GKN Automotive, Glynwed, LucasVarity Aerospace, Unilever and Vauxhall.
The main thrust of the report is that mass customisation is not an add-on to the traditional mass production, build-to-stock operation; it is a way of meeting changing market demand for specials, not made to stock, in a cost-effective way.
Mass production allows low costs through economies of scale, but in mass customisation, comparable costs are achieved with economies of scope. The application of a single process produces an infinite variety of products meeting customers’ demands for shorter lead-times at a price they are prepared to pay.
Mass customisation should result in `building to order’ rather than `building to plan’. The benefits of this can be clearly seen by looking at IBM’s PC manufacturing plant in Greenock: IBM estimates that the building to plan scheme removed a finished goods inventory which at one time was as high as $200m.
The basic prerequisite for moving to mass customisation – apart from market demand – is the existence of lean production. This process uses just-in-time techniques, short set-up times on equipment and small work in progress inventories to create the climate for building to order, not to stock, says the report.
Successful implementation also entails sophistication in logistics and supply chain management, beyond what is required in a mass production environment.
There are four methods for mass customisation. The most popular – used by 80% of those surveyed – is core mass customisation or mass customisation in the factory. The products are customised on a mass basis by using modular designs, and fast, flexible, and modular production processes so that individual products are delivered directly to the customer.
For example, Raleigh Industries’ special products division introduced mass customisation to its top mountain bike range in 1995, using 69 of the Raleigh specialist Dyna-Tech dealers. Customers configure bikes from `core’ items, such as the frame material and size: options range from type of front forks and wheel specifications through to `cosmetics’ such as colour and graphics. Over 15,000 combinations are available.
Modular production, splitting the process of manufacturing into discrete modules, allows the common product elements to be manufactured and assembled and the customised elements to be postponed to as late as possible in the production process.
Gazcom, UK-based supplier of living flame gas fires, uses this approach. It makes common heating `engines’, but it offers multiple options in sizes, frames, front styles, control systems, gas type and flues to give more than 5,000 varieties.
The other main methods for mass customisation are post-product customisation, in which standard products are manufactured and customised with unique services around the common core, such as customised software solutions; mass retail customisation in which products made on a mass basis are customised at point of sale or delivery; and self-customising products options, which allow the customer to personalise the product at the point of receipt or in use.
The benefits of successful implementation are attractive: increased market share, quicker response times, increased profitability and reduced manufacturing costs. However, it is not suitable for all manufacturers. The changeover costs can be very high and some companies have experienced substantial barriers to achieving mass customisation.
First, some factories have not been flexible enough. The report says this implies the implementation of lean production has not been achieved by a large proportion of the survey. Another problem is that the products prove too expensive following customisation. Third was the lack of adequate information systems; and fourth, managers may not have the right skills and attitudes to handle the changes properly.
Suppliers are also often unable to rise to the challenge. Mass customisation is no quick solution, says the report, and it also warns that unlimited choice would probably be going too far.
* Making It For You – Personally, Mass Customisation in Manufacturing. Foundation for Manufacturing and Industry, tel: 0171-823 5360.