The document discusses mass customization, which allows companies to offer individually tailored products to customers without maintaining finished good inventory. Mass customization involves three pillars: eliciting customer information, process flexibility, and logistics. It integrates customers during product design and specifications. While it increases costs like transaction costs and costs of variety, companies can realize benefits like increased customer satisfaction, loyalty, and profits through strategies like modular fabrication and IT systems. However, mass customization requires highly flexible manufacturing and strong direct customer logistics and information systems. It also may not work if customers are unwilling to pay more for customization.

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2. CONTENTS INTRODUCTION MASS CUSTOMIZATION & CUSTOMER INTEGRATION MASS CUSTOMIZATION & VALUE CREATION LIMITS OF MASS CUSTOMIZATION

3. INTRODUCTION Mass customization a chance to integrate the customer in the value creation process Is a capability recognized by a few companies to offer individually tailored products No finished good inventory Entails richer information flow and increased process flexibility Three pillars of mass customization : elicitation , process flexibility, logistics

4. MASS CUSTOMIZATION & CUSTOMER INTEGRATION Customer is integrated during co-design, configuration and product specifications Complete customer integration an ideal scene for an organization arises because of: Postponing some activities till order is placed More precise information about the demand Ability to increase loyalty by directly interacting with each customer.

5. MASS CUSTOMIZATION & VALUE CREATION Influencing Factors: Buyers Needs and Desires Willingness to pay price premium Customer Interaction and Integration Additional Costs: Cost of variety in manufacturing Transaction Costs Costs Counterbalance Through: Modular Fabrication FMS Stable Processes IT Systems Economies of Customer Integration Total costs and profitability of mass customization Profit Increased Loyalty and share of wallet

6. LIMITS OF MASS CUSTOMIZATION Requires Highly Flexible Manufacturing Systems Requires an Elaborate System for Eliciting Customer Information Requires Strong Direct to Customer Logistics System People Not Willing to Pay to Have Everything Customized

7. BENEFITS OF MASS CUSTOMIZATION Increased Customer Satisfaction Reduced cash flow variability Reduced cost of capital Increased brand equity Reduced price sensitivity Increased chances to cross sell and up-sell Increased Customer Loyalty Increased Share of Wallet Increased Purchases Better Word of Mouth Publicity Reduced Promotion Costs Ease of Launching New Products.

8. EXAMPLES COMPANY PRODUCT MARKETS CREO FASHION SHOES WORLD WIDE CMAX FASHION SHOES USA DELL COMPUTERS PCs WORLDWIDE DOLZER MEN’s FORMAL WEAR GERMANY IC3D JEANS USA LANDS END KHAKI’S USA miADIDAS SHOES WORLDWIDE NIKEID SHOES WORLDWIDE TIMBUK2 BAGS AND LUGGAGE USA