Mass Customisation for Business Sustainability

Mass Customization for Business Sustainability

25th March 2017Institut Teknologi Sepuluh Nopember (ITS) Surabaya, Indonesia

Researchers: Heoy Shin Loo, Boon Cheong Chew, Yu Xin Ou YangFaculty of Technology Management & Technopreneurship

Universiti Teknikal Malaysia Melaka (UTeM)

Mass Production vs Mass CustomizationParameters Mass Production Mass Customisation

Goal Deliver standardised goods/services with low price.

Deliver varied goods/service to fulfil specific customer groups with different wants/needs.Try to offer a lower unit cost.

Economics Economies of scale Economies of scope with customer integration.

Focus Efficiency through large volume production, stability and control

Variety through personalisation, flexibility and responsiveness

Key Features

Stable demand, low cost, consistent quality

Fragmented demand, mid-high cost, specific quality

Customer Involvement

Passive Active

Modified from Thakur et al. Mass Customization.

Mass Production vs Mass Customization

Source: Imaterialise.com

Involvement of CAD/CAM in mass customization

CAD (Computer-aided Design)• Application of computers

graphics software to aid or enhance the product design from conceptualization to documentation.

CAM (Computer-aided Manufacturing)• The effective use computer

technology in manufacturing planning and control.

Source: Technology Review of Mass Customization (Ramani, 2004)

Imagine if…

Authorship (year published)

Definition

Davis, S. M. (1987) The same large number of customers can be reached as in mass markets of the industrial economy, and simultaneously they can be treated individually as in the customized markets of pre‐industrial economies.

Pine (1993) Providing tremendous variety, and individual customization, at prices comparable to standard goods and services.

Broekhuizen and Alsem (2002)

Its ability to provide superior customer value through customization on a mass scale.

Mula et al. (2004) The customers can select, order and receive a specially configured product (with hundred of options of the product) to satisfy their specific requirements.

Haug, A., Ladeby, K. and Edwards, K. (2009)

To offer customers customized products (goods and services) at prices close to the ones of mass production.

Flavio and Giovani (2011)

One of the key enabling principles as people improve production effectiveness to meet the ever changing demands on large scale commercial product.

Literature of mass customization

The paradigm shift to mass customization caused by three forces: 1) Market demand

A prosperous society and diversifying demographic characteristics demand products/services that are conformed to specific needs.

2) Market competition Exploring of the product variety to standout from differentiation and positioning marketing strategy.

3) Technological revolutionsEmergence of new technologies helps in decreasing the time and enhance flexibility of production to suit customer needs.

Factors of mass customization

Mass customization platforms make the third wave of mass customization:

First wave:Driven by the early pioneers (early 1990s), motivated by the opportunities of new flexible manufacturing technology. Second wave:Came with the internet economy (around 1998-2002), broader development of online configurators that made mass customization happening in larger scale.Third wave:Encourage the entrepreneurs to start up a dedicated mass customization business at lower-mid cost, able to create niche markets.

Mass customization platforms

Process for mass customizationSteps involve to start the mass customizing of the offer by companies:1) Identify space where customer needs diverge the most

Begins with figuring out the desires differ (market) and determine the most useful features to customize.

2) Achieve levels of mass production reliabilityEnsure the mass customization does not disrupt upon supply chain operations, development of robust process design (to restructure existing organizational and value-chain resources).

3) Minimize complexity and offer sets of optionsToo many choices cause overwhelming during selection, implement a system that provide a series of choices based on personal information that provided by the customers, recommendations based on past purchases.

Source: Three Steps for mass Customization (Blackman, S., 2004)

Features of mass customization• Customer– value creation by defining,

configuring, matching or modifying an individual solution.

• Co-design – performed in an act of company-to-customer interaction and cooperation.

Customer co-design

• Increment of utility of a good.• The assortment of customer’s preferences

will increase directly proportional with the gain in utility.

The needs of each

individual customers

Features of mass customization

• Solution space: the pre-existing capability and degrees of freedom built into a given manufacturer’s production system.

Stable solution space

• Customers willing to pay a premium price: reflect the increment of utility gain from a product that better fits their needs than standard products.

Adequate price

Source: Overcoming the challenges of implementing mass customization (Piller, F. and Walcher, D. , 2004)

Challenges of mass customizationThere have seven challenges for customization: 1) Marketing focus Traditional marketers lack the appropriate knowledge and tools

required by a mass customizer. When urged to add more variety to the product lines: unimaginatively

rely on product differentiation criteria that successful in the past or mimic differentiating attributes introduced by competitors.

2) Design cultureMass production: product development focus on design uniqueness or

minimizing the variable cost. Mass customisation: product development focus on design that share

parts and processes as part of solution space.

Challenges of mass customization3) Accounting procedures Have trouble determining the precise cost implications of expanding

the product offerings and fail to appreciate the advantages of parts standardization.

4) Investment criteriaDominant investment logic for a mass producer is the quest for

economics of scale: is rigid fixed assets not suitable to fit with mass customisation. (falls into daily consume products)

5) Value-chain Constraints Reconfiguring a value chain that was originally conceived for volume

production can present number of problems: external structural constrains within suppliers and distribution channels poses significant obstacles.

Challenges of mass customization

6) Maintaining quality Employees must be empowered and specialised to do whatever it

takes to ensure a top-notch product. 7) Time and price pressures

Customer love the idea of a customised product but might not willing to pay more, while customised products has to be waited longer.

8) Adaptable supply networks Require constant communication to ensure that every node in the

network is aware of changes in demand or any event that could affect operations time.

Source: Overcoming the challenges of implementing mass customization (Piller, F. and Walcher, D. , 2004)

Strategies to overcome mass customization

Design thinkingEnsure the product can be assembled easily to customer specifications.

Product configuration

Allow the customers or the teams to decide what to include in the product.

ForecastingForecast each option individually; facilitate the process for next/future demands.

Source: Biggest challenges of mass customization and tips for addressing these challenges (Mouw, R. 2016)

(Approach) Strategies for mass customization

Adaptive

Transparent Collaborative

Cosmetic

No Change

Representation

Change

Prod

uct Ch

ange

No

Cha

nge

There have four strategies for customization: 1) Collaborative

Identify the precise offering that fulfils the needs of customers and make customised products.

Appropriate for business whose customers cannot easily articulate what they want and grow frustrated when there have plenty of selection. Ex: Glasses/Sunglasses

2) AdaptiveThe product is designed based on customisation with offer one standard

where the user can alter themselves.Appropriate for business whose customers request the product to

display in different ways and existing technology require for customisation. Ex: Light

Strategies for mass customization

3) CosmeticProducts and services that provided to the individual customer are

unique without letting them know explicitly that have been customised to them.

Appropriate when customers’ specific needs are expectable or can easily be determined. Ex: shoes, T-Shirt.

4) TransparentPresent a standard product differently to various customers.Appropriate when customers use a product the same way and differ

only in how they want it present.

Strategies for mass customization

Source: The Four Faces of Mass Customization (Gilmore, J. H. And Pine B. J. , 1997)

Advantages of mass customization

1)Allow customers to engage more intensively to create customized products of what they desired.

2)Customers are often more pleased with the finished products. 3)Companies can forge strong relationships with customers.4)Reduce scrap quantity and storage costs.5)By analysing consumer requirements, can detect certain trends and

gain competitive advantages.6)Eliminate wastes.

Limitation of mass customization

1)Requires highly flexible production technology – expensive and time-consuming to set up the system.

2)Mass customization with mass production (quantity and cost) is difficult to achieve.

3)Maintaining high variety of stock can incur high warehouse costs. 4)Requires a strong direct to customer logistics system.

Three reasons that the late followers will do well in their field: 1) Strong growth opportunities in every market: 

The market still have enough space and welcome all the late comer to join the field as the custom products are located few tenth of percent of the overall category.

2) Market education: Late comers always can build on the generated market education since the previous pioneers have spend a lot in educating the market and promote the availability of the custom products.

3) “Best of Breed” solutions:Besides combining the design elements of pioneers, late comers also involve in customization sites in other categories.

Advantages of late followers in mass customization

Source: The market for mass customization today: Result from the customization 500. (Piller, F. T. , 2012)

Case Study: Bentley

Company Overview• Is a British luxury automaker and subsidiary of German Volkswagen

AG.• Principal activity: design, manufacture, engineering and distribution

of luxury automobiles sold under Bentley morgue. • Founder: H.M. (Horace Millner) Bentley; W.O. (Walter Owen) Bentley• Founded: 18 January 1919; 98 years old• Headquarters: Crewe, England, United Kingdom• Besides involving in automobile industry, Bentley also produce a

series of special collection: golf, bags, luggage and accessories, fragrances, eyewear, handbag and pen.

VisionWe will become the world’s most successful luxury car company

Mission1) We are the definitive British luxury car company.2) We will develop, craft and sell the world’s most desirable

luxury cars. 3) We stand for powerful, exquisite, individual.

Car Collection (Latest)

Mulsanne Flying Spur Continental BentaygaIs a British handmade full-size luxury car produced by Bentley Motors Limited in the United Kingdom.

Is a four-door saloon variant of the Bentley Continental GT coupé. 

Is a Grand tourer produced by the British automaker Bentley Motors since 2003.

Is a British handmade four-, five- or seven-seat, five-door ultra-luxury SUV produced in 2015.

Production: 2010-present Production: 2005 - present Production: 2003 - present Production: 2015 - presentClass: Full-size luxury car (F)

Class: Full-size luxury car (F)

Class: Grand tourer (F) Class: Large luxury crossover SUV

Model: 1) Mulsanne Extended

Wheelbase2) Mulsannne Speed3) Mulsanne

Model: 1) Flying Spur W12 S2) Flying Spur W123) Flying Spur V8 S4) Flying Spur V8

Model: 1) Continental

Supersports2) Continental GT Speed3) Continental GT4) Continental GT V8

Model: 1) Bentayga2) Bentayga Onyx Edition3) Bentayga Diesel

Interview: Christophe Georges, President & CEO of Bentley

Motors Inc.

“Customers are looking for something special but they don’t always know what exactly that looks like.”

Just as you would not go to a Michelin starred restaurant and have the chef ask you what you would like to eat. Of course you want sophistication, but there needs to be direction and

translation of the vision of the client.

Bentley Mulliner• A division of the company with the sole purpose of customization with

unparalleled craftsmanship.• Galvanised the automotive world’s most dedicated craftspeople,

supported by the vast styling and engineering experience of Bentley. • Immerse the customer into a totally new environment, to understand

the needs and desires and translate into design and features. • Have a process that helping to have a better understanding on

customers in terms of taste, colour scheme, materials. • Throughout the process, there are generation of more ideas, and the

team support it by refining the vision into a product.

Limitless World of MullinerDARK TINT FLYING BA symbol of progression and performance: endow any chosen Bentley with a striking and contemporary aesthetic.

LED APPROACH LAMPSProject the iconic Bentley Wings, or for the ultimate expression of personalisation an image of your choice, onto the ground in front of you, creating a well-lit area on even the darkest nights.

HIDDEN DELIGHTSCatching a glimpse of a striking accent colour, which had been lovingly adorned into the cabin’s usually unseen areas.

Bentley Inspirator App• A new luxury commissioning experience: facial reactions shape and

guide a way to a recommended Bentley specification.• Billion of combinations are possible: from the vast selection of

exterior paint colours, wheels, leather hides and wood veneer. • Personal vision of extraordinary is defined based on the engagement

that captured by the device’s camera and bespoke Bentley is recommended.

Car Configuration (Bentley: Bentayga)Let’s check the suggestion from Bentley

Let’s create a own design for BentaygaCar Configuration (Bentley: Bentayga)

Boon Cheong ChewEmail: [email protected]: https://my.linkedin.com/in/bcchew My Primary Research Interests:(a) Renewable Energy

Development & Deployment(b) Clean Technologies Innovation

& Implementation(c) Green & Sustainability

Practices(d) Human Technology Innovation

& Introduction*Please google BCChew to follow my work

Heoy Shin LooEmail: [email protected]: https://my.linkedin.com/in/heoyshin-loo-71251a113My Primary Research Interests:(a)Green & Sustainability Practices(b)Technology Management(c)Design EngineeringYu Xin Ou YangEmail: [email protected] My Primary Research Interests:(a)Green & Sustainability Practices(b)Robotics & Automation Engineering *Please google Ou Yang Yu Xin to follow my work