Production Planning & Control,Vol. 15, No. 4, June 2004, 347–351Special issue editorial: the what, why and howof mass cust...
348                                                      I. P. McCarthywith improvements in the cost and speed of collecti...
The what, why and how of mass customization                                       349website that allows them to design a ...
350                                                  I. P. McCarthy   Salvador, Rungtusanatham and Forza seek to inte-    ...
The what, why and how of mass customization                                           351HUFFMAN, C., and KAHN, B. E., 199...
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The what, why and how of mass customization


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This paper introduces the aim, scope and content of this special issue on mass customization. It begins by providing a background review of mass customization, which revolves around two questions: what is mass customization, and why mass customize? By focusing on these, the paper presents definitions and explanations of the different approaches to mass customization, and describes the potential reasons for and benefits of mass customization. In addition to setting the scene for the special issue, this introductory review asserts that there is a relative dearth of research on how to design and operate a manufacturing system capable of mass customizing. This is a system design or configuration issue, which involves determining the most appropriate or viable design for the available range of multiple and interdependent design variables. However, despite the strong interest in configurational research in the business and operations strategy area, there are few works that develop and propose models for understanding how to mass customize.

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The what, why and how of mass customization

  1. 1. Production Planning & Control,Vol. 15, No. 4, June 2004, 347–351Special issue editorial: the what, why and howof mass customization IAN P. MCCARTHYAbstract. This paper introduces the aim, scope and content of accompanying increase in variety and uncertainty,this special issue on mass customization. It begins by providing without affecting lead-time, cost or quality. Thisa background review of mass customization, which revolvesaround two questions: what is mass customization, and why problem is compounded by the fact that the massmass customize? By focusing on these, the paper presents defini- customization opportunity can require very differ-tions and explanations of the different approaches to mass cus- ent approaches, depending on factors such as thetomization, and describes the potential reasons for and benefits type of market served, the product complexity andof mass customization. In addition to setting the scene for value, and the level of customization offered. Thethe special issue, this introductory review asserts that there is arelative dearth of research on how to design and operate main topics of the Special Issue focus on the need toa manufacturing system capable of mass customizing. This is a understand the different strategies, configurationssystem design or configuration issue, which involves determin- and practices of manufacturing systems that enableing the most appropriate or viable design for the available range mass customization.of multiple and interdependent design variables. However,despite the strong interest in configurational research in the This problem of how to implement and operate newbusiness and operations strategy area, there are few works manufacturing strategies is a recurring and importantthat develop and propose models for understanding how to theme in operations management. Skinner (1996) con-mass customize. ducted a seminal review of the theory and practices asso- ciated with new manufacturing strategies and concluded that of all the challenges facing manufacturing compa-1. Introduction nies, the task of successfully implementing new manufac- turing strategies is greatest. The problem is not about In crafting the call for papers, I wrote: understanding what constitutes the strategy, but deter- Mass customization is a strategy that seeks to mining how to design and transform an organizational exploit the need for greater product variety and system from its current form (configuration) into one individualisation in markets. However, the chal- capable of achieving its new goals. This is certainly the lenge for managers is to design and operate case for mass customization, because even though the integrated systems that can accommodate the opportunity to mass customize has significantly increased Author: IAN P. MCCARTHY, SFU Business, Simon Fraser University, 515 West Hastings Street, Vancouver, BC V6B 5K3, Canada. IAN MCCARTHY is the Canada Research Chair of Management of Technology in the Faculty of Business Administration at SFU. His research focuses on understanding and designing competitive and sustainable organizational forms using systems methods, classification tools and evolutionary concepts. This involves technology and operation management issues such as: managing opera- tional complexity, mass customization, modelling decision-making in new product development, and classifying drug discovery strategies. Dr McCarthy is a qualified chartered engineer, a member of the EPSRC College (a UK research council) and a director of the Complexity Society. Previously he was on faculty at the University of Warwick and the University of Sheffield, and held management positions at Philips Electronics, British Alcan and Footprint Tools. Production Planning & Control ISSN 0953–7287 print/ISSN 1366–5871 online # 2004 Taylor & Francis Ltd DOI: 10.1080/0953728042000238854
  2. 2. 348 I. P. McCarthywith improvements in the cost and speed of collecting . The ability to forecast and understand marketand processing information using the internet, one of opportunities is increased from the improved andthe key challenges inhibiting the adoption of mass custom- frequent communication with customers.ization practices, is the limited number of studies that With the business case for mass customization gainingexplicate how to design and operate manufacturing acceptance, Pine (1993) was one of the first to consider thesystems accordingly. This issue of strategic implementa- operational implications of mass customization for manu-tion (i.e. How to realize the desired configuration?) is facturers. He stressed that mass customization shouldcrucial for understanding how to translate manufactur- strive to deliver a personalized product without incurringing strategy into operational reality. It is a system design a cost penalty. This view has been endorsed by others (e.g.problem that involves searching a space of strategic con- ˚ Beaty 1995, Ahlstrom and Westbrook 1999, Tu et al. ¨figurations, whose elements are different combinations of 2001) who argue that mass customization should providemanufacturing capabilities (McCarthy 2004). Thus, theconfiguration perspective is consistent with the ‘how’ numerous customer prescribed product variations, butquestion, as it helps frame and develop models that pro- with little or no lead-time or cost penalty. Based on thisduce both synchronic (categorical or associative) and ideal notion, the following definition captures the essencediachronic rules (predictive or effective) on how to design of mass customization for manufacturing firms:and change systems. The capability to manufacture a relatively high volume of product options for a relatively large2. The what and why and how market (or collection of niche markets) that demands customization, without tradeoffs in cost, The term ‘mass customization’ was first coined by delivery and quality.Davis (1987) in his book Future Perfect, in which he The last part of the definition refers to the commondescribed a trend where companies sought to micro- operational difficulty of avoiding or minimizing any formsegment markets and offer unique products and services of tradeoff (Corbett and Vanwassenhove 1993, Mapesto customers. It is a strategy that involves producing et al. 1997, McCarthy 2004). This means that manu-goods and services for a relatively large market, while satis- facturing firms seeking to mass customize will face twofying the specific needs of individual customers using an challenges. First, the ability to design a system capable ofenvelope of product and cost options. It is also important collecting and processing highly varied and uncertainto note that the word ‘mass’ both implies and defines that product information; and, second, the ability to trans-a relatively high volume of products is produced for a form and assemble materials to produce a correspondingmass market. This definition would therefore exclude ˚ range of product variety (Ahlstrom and Westbrook 1999, ¨those firms that produce relatively low volumes of Salvador et al. 2001, Tu et al. 2001, Duray 2002).bespoke products. The emphasis on material transformation and assem- To understand whether a company should adopt a bly in the second challenge is not simply to make themass customization strategy has been tackled by a num- problem manufacturing relevant, but to stress the uniqueber of researchers (e.g. Kotler 1989, Pine 1993, Agrawal difficulties faced by manufacturers wishing to mass cus-et al. 2001, Berman 2002). The general conclusion is tomize, as opposed to service firms wishing to mass cus-that the case for mass customization revolves around tomize. For instance, Wind and Rangaswamy (2001) usethe following competitive factors: the terms mass customerization and mass customization . Customers and their expectations have shifted from to distinguish between the customized offerings created a broad base of uniformity and sameness to a net- by service firms and manufacturing firms respectively. work of niche and heterogeneous market require- Mass customerization and mass customization both aim ments. to provide customized offerings, but with mass customi- . Fashions and customer preferences shift literally zation the task is to personalize and manufacture a overnight, and product life cycles have become physical product and with mass customerization the per- significantly shorter. sonalization process focuses on a service in terms of infor- . Assemble to order and the construction of product mation and marketing. To illustrate this point, Wind and families are strategies that offer options and differ- Rangaswamy (2001) present the case of, entiation, whilst maintaining performance in terms which tried to transform the nursery industry. The tradi- of cost, quality and delivery. tional nursery model involves serving customers who visit . Understanding and satisfying specific customer a store location and select from about 200–300 plants expectations enables a company to achieve a better and, in most cases, they then have to transport the plants strategic fit with customers’ long-term needs. back to their homes. With, customers visit a
  3. 3. The what, why and how of mass customization 349website that allows them to design a garden (e.g. are the basis for achieving one or more strategic prioritiesJapanese style or English style) subject to local soil and (e.g. mass customization).climate conditions and using an inventory of over 16,000 To summarize the current status, researchers haveplants and other related products. The customer creates identified and discussed some of the configurationthe product design and defines the resulting bill of elements needed to support mass customization (e.g.materials. The point of this example is that flexibility, postponement, information technology anddid not own or operate any stores and it did not own decoupling points). Yet, others (e.g. Kotha 1996,or operate any manufacturing or growing facilities. It Feitzinger and Lee 1997, Silveira et al. 2001) point outfocused solely on capturing the needs of individual cus- that this work can be too industry-specific or lackingtomers and then managing a supply chain to deliver the the theoretical robustness or empirical evidence to helpbill of materials for the garden designs. develop, implement or achieve them, regardless of the As the awareness and popularity of the mass customi- context of the firm.zation concept continued to grow, researchers began toexplore and classify the different approaches for masscustomizing. To understand these variations required 4. The special issue’s articlesknowledge about the factors that govern a mass customi-zation strategy. For example, researchers (e.g. Pine 1993) Together, the 11 articles that appear in this specialbelieved the degree of product variety offered by a com- issue make contributions that help address the ‘How’pany is a defining factor, while others (e.g. Huffman and question. This does not involve simply importing ideasKahn 1998, Ross 1996) contend that the stage and from existing areas of operations management and adapt-amount of customer involvement is a varying feature of ing them to suit the mass customization paradigm, butmass customization. With just these two factors, it is by using them to provide rich, theoretically-grounded descriptions of how manufacturing systems should beobvious that different firms in different industries will configured to achieve certain levels of mass customization.develop different approaches to mass customization, Mikkola and Skjøtt-Larsen’s article establishes aeach requiring a different organizational configuration. framework for examining how manufacturing systemsThe result is a plethora of conceptual models (many should be configured for mass customization in terms ofreferred to by the papers in this special issue) that identify postponement and modularization. They achieve this byand describe either the general strategic approach or one presenting a modularization characteristic curve, whichaspect of the approach (e.g. the degree of customer invol- illustrates the combined effect of component customiza-vement, the type of product modularity and the degree of tion, value inputs and supplier–buyer interdependence.product variety). From these simple but useful models it The intention is that the framework will help users betteris apparent that even though the essence of mass custo- understand how configurations should be designed bymization is relatively fixed, at an operational level it will analysing the relationships between mass customizationoften mean different things to different groups of firms and postponement in relation to modularization.because the following factors will vary for firms: Comstock, Johansen and Winroth examine the . the product volume/variety ratio; experience of a leading Swedish mobile telephone man- . the complexity and value of the product complexity; ufacturer’s experience of introducing a manufacturing . the point of customer involvement; system for the production of a customized, entry-level . the degree of customer involvement; mobile telephone. They use product, process and system . the type of product modularity offered; perspectives to examine the consequences and ability to . the nature of the customized offering and the mass customize when moving the customization order perceived value. point downstream in the value chain. They also critically evaluate the company’s status as a mass customizer. Despite the variety of strategies for mass customization, Tu, Vonderembse and Ragu-Nathan report a studyinterested individual firms will all ask the same question: that collected data from 303 US manufacturing do we implement a successful mass customization The study sought to gather and analyse empirical evi-strategy? Although all firms are unique and the specifics dence on how manufacturing managers design systemsof the answer are likely to vary from firm to firm, it is to cope with the environmental uncertainty and increas-possible to identify and aggregate the different, but ing product variety that goes with a mass customizationappropriate, technologies, practices and capabilities strategy. It examined the configurations that permit massinto a number of distinct manufacturing configurations customization in terms of re-engineering set-ups, preven-(Rakotobe-Joel et al. 2002) or ‘prescribed formats’ tive maintenance, cellular manufacturing and quality(Greenwood and Hinings 1996). These configurations assurance.
  4. 4. 350 I. P. McCarthy Salvador, Rungtusanatham and Forza seek to inte- until an order is placed, collecting more precise informa-grate the product design, marketing and operations man- tion about market demands and the ability to increaseagement aspects of mass customization by investigating loyalty by directly interacting with each customer. Thishow the extended enterprise should be configured when approach is intended to help manage the tradeoffdifferent degrees of customization are offered. They pre- between the benefits and costs of customer integration.sent a number of case studies of firms in different indus- Potter, Breite, Naim and Vanharanta use an approachtries. These illustrate the degrees of freedom customers that is central to the configuration perspective. Theyhave in specifying product features and how these affect develop and present a typology that helps define thethe configuration of the extended enterprise. Their find- anatomy of potential mass customization configurations.ings reveal two distinct configurations, each one suggest- The typology is applied to supply chains to show theing a similar structure between the product structure and capabilities and areas of change needed for mass custom-the configuration of the extended enterprise. izing. By using the typology, firms can benchmark their Coronado, Lyons, Kehoe and Coleman provide a case current configuration and identify a route to achievingstudy that describes the use of an internet-enabled pro- mass customization.duction information system to facilitate information shar- Finally, the paper by Squire, Readman, Brown anding across a build-to-order system. The system consists of Bessant provides a needed and valuable reminder of thethree tiers of a high-volume, high-variety supply chain. question: does mass customization really hold the keyThe paper reports that improved levels of information to customer value? They argue that mass customizationtransparency will lead to better co-ordination and syn- could augment customer perceived value, but that thischronization of schedules, which in turn can result in would occur only for certain customers, in certain mar-significant reductions in raw materials and component kets, at certain times. Thus, before adopting and imple-stock across the supply chain. menting a configuration for mass customizing it is Duray advocates the merits and utility of using classi- essential that firms recognise whether their customersfications to understand and design configurations. She (existing and potential) would really value customizationthen explores the effects of modularity and customer of their products. They present a tool that aims to addressinvolvement on production planning. The study uses this which have been gathered from a survey of USmanufacturing plants. The findings lead to conclusionsthat the type of modularity employed will significantlyaffect all aspects of the production planning system stud- Referencesied. Whereas the point of customer involvement in thevalue-chain production influences only one of the aspects AGRAWAL, M., KUMARESH, T. V., and MERCER, G. A., 2001,of the production planning system. The false promise of mass customization. McKinsey Quarterly, Yassine, Kim, Roemer and Holweg examine the effec- 38(3), 62–71. ˚ AHLSTROM, P., and WESTBROOK, R., 1999, Implications of ¨tiveness of customized product design in achieving a mass mass customization for operations management: an explora-customization strategy and the role that information tory survey. International Journal of Operations and Productiontechnology plays in facilitating this approach to customi- Management, 19(3), 262–274.zation. They propose and test a conceptual model to BEATY, R. T., 1995, Mass customization. Manufacturing Engineer,show how information technology can enable partnering 75(5), 217–220.firms to communicate, collaborate and achieve effective BERMAN, B., 2002, Should your firm adopt a mass customiza- tion strategy? Business Horizons, July–August, pp. 51–60.knowledge sharing and creation. The model is tested CORBETT, C., and VANWASSENHOVE, L., 1993, Trade-offs —using data from Korean automotive first-tier suppliers. what trade-offs? Competence and competitiveness in man- Rudberg and Wikner adapt the traditional customer ufacturing strategy. California Management Review, 35(4),order decoupling point (CODP) typology to show how 107– resources (for product design) can be inte- DAVIS, S. M., 1987, Future Perfect (Reading MA: Addison- Wesley).grated with the production system (for product manufac- DURAY, R., 2002, Mass customization origins: mass or customture) to accommodate and successfully implement a mass manufacturing? International Journal of Operations and Productioncustomization strategy. They argue that this typology Management, 22(3), 314–329.will help managers better understand how to design FEITZINGER, E., and LEE, H. L., 1997, Mass customizationconfigurations according to the specifics and features of at Hewlett-Packard: the power of postponement. Harvardthe mass customization environment they intend to serve. Business Review, January–February, pp. 116–121. GREENWOOD, R., and HININGS, C. R., 1996, Under- Piller, Moeslein and Stotko assert that customer inte- standing radical change bringing together the old andgration is achieved by designing systems that have econo- new institutionalism. Academy of Management Review, 21(4),mies of integration based on postponing some activities 1022–1054.
  5. 5. The what, why and how of mass customization 351HUFFMAN, C., and KAHN, B. E., 1998, Variety for sale: mass management. Computational and Mathematical Organization customization or mass confusion? Journal of Retailing, 74(4), Theory, 8(4), 337–364. 491–513. ROSS, A., 1996, Selling uniqueness. Manufacturing Engineering,KOTHA, S., 1996, From mass production to mass customization: December, pp. 260–263. the case of the National Industrial Bicycle Company of SALVADOR, F., FORZA, C., and RUNGTUSANATHAM, M., 2001, Japan. European Management Journal, 14(5), 442–450. Operations configurations for mass customization. ProceedingsKOTLER, P., 1989, From mass marketing to mass customization. of the European Operations Management Association, 8th Planning Review, September–October, pp. 11–47. International Annual Conference, Bath, pp. 754–764.MAPES, J., NEW, C., and SZWEJCZEWSKI, M., 1997, SILVEIRA, G. D., BORENSTEIN, D., and FOGLIATTO, F. S., 2001. Performance trade-offs in manufacturing plants. International Mass customization: lterature review and research directions. Journal of Operations and Production Management, 17(9–10), International Journal of Production Economics, 72(1), 1–13. 1020–1033. SKINNER, W., 1996, Manufacturing strategy on the ‘S’ curve.MCCARTHY, I. P., 2004, Manufacturing strategy – understand- Journal of Production Operations Management, 5(1), 3–14. ing the fitness landscape. International Journal of Operations and TU, Q., VONDEREMBSE, M. A., and RAGU-NATHAN, T. S., Production Management, 24(2), 124–150. 2001, The impact of time-based manufacturing practicesPINE, B. J. I., 1993, Mass Customization: The New Frontier in on mass customization and value to customer. Journal of Business Competition (Boston, MA: Harvard Business School Operations Management, 19, 201–217. Press). WIND, J., and RAMASWAMY, A., 2001, Customerization: theRAKOTOBE-JOEL, T., MCCARTHY, I. P., and TRANFIELD, D., next revolution in mass customization. Journal of Interactive 2002, A structural and evolutionary approach to change Marketing, 15(1), 13–32.