Mass customization versus mass production

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Magazine Article, Source : The Manufacturer US
Zone : World class manufacturing

In a field of mass manufacturers, custom manufacturers stand out, finds Alan Earls

The “have it your way, right away” approach of mass customization flies in the face of everything manufacturers have learned since the dawn of industrialization. It sounds like a return to craft production, for example, when every blunderbuss rifle was made by hand and had no interchangeable parts.

Mass customization is not as nutty as it might sound, nor will it displace traditional mass production. Instead, say its boosters, it leverages the capabilities of advanced industrial production to better serve niche markets or individual customers in cases where individualized product adds value and helps turn a profit.

According to Joseph Pine II, with Strategic Horizons LLP, a leading exponent of the practice, mass customization is “the mass production of individualized customized goods and services.” In other words, he says, you give everyone exactly what they want and at a price they are willing to pay. Thus, you meet the imperative of “mass” and are still able to provide customized everything.

“It’s all about efficiently serving customers uniquely,” he says, and is as much a business practice as a technology practice. It must be a situation in which there is demand for customization and in which customers find value. Indeed, according to Pine, the practice is more readily found in industrial markets than in consumer markets.

There are two keys to mass customization, according to Pine. One is digitization, because “anything you can digitize you can customize.” Once it is understood in these terms, you can change it if you wish. The other key is modularization. “That’s the way you can efficiently produce exactly what someone wants. It’s like the concept of Lego bricks, which are nothing more than modules with a linking system for snapping them together,” says Pine.

The term “mass customization” was coined by Stanley Davis in his 1987 book Future Perfect and took a major rise to prominence with Pine’s own 1992 book, Mass Customization: The New Frontier in Business Competition.

Now, 20 years after Davis’ insights, Pine says mass customization has become increasingly mainstream and some companies in most industries have adopted it.

Lutron Electronics (Coopersburg, PA), one of Pine’s long-time clients, is a case in point. The company designs and manufactures lighting controls and lighting control systems for both residential and commercial applications. Lutron founder Joel Spira launched the company with his invention of the first solid-state electronic dimmer in 1961. But after several years of growth, the giants of the industry began to invade his territory, armed with the economies of scale that have made traditional mass production so compelling. Faced with that challenge, Spira revamped the product line in ways that would eventually lead to mass customization.

Initially, Lutron simply bracketed the competition with low-end and high-end products, leaving the middle to the giants. That experience taught Lutron that specialization, meeting diverse customer needs, and constantly innovating were the keys to survival and growth. Lutron took things a step further when it developed the Nova slide dimmer, which eventually spawned more than 300 variants. The key was maintaining many common elements in each product—in essence, modularization.

At that point, Lutron may have been pioneering but didn’t yet realize it. Enter Michael J. Piore at MIT’s Sloan School, with the term “flexible specialization.” Piore posited that continual change and innovation would confer advantages. In other words, rather than concentrate on economy of scale, winners could learn to adapt to changing market needs, changing tastes, and changing technologies.

Then, according to Spira, Pine, a graduate student of Piore’s, began working with Lutron to further refine their practices. Over the years the collaboration has been fruitful, with the company breaking new ground with products such as wireless lighting controls.

Today, more than 40 years after Spira’s first technical breakthrough, the company is still devoted to controlling lighting and other devices, including a wide variety of light dimmers, whole-home and whole-building dimming systems, controllable window treatments, and color-matched accessories including wall plates, receptacles, and fan controls, totaling some 11,000 products in all, for a global market.

A similar experience competing with industry giants also led a Canadian company toward mass customization, explains Brian Conlin, vice president of Three H Manufacturing Ltd. (New Liskead, ON). Founded in the 1970s to produce high-end residential furniture, the company hit a rough spot in the recession of the late 1980s. That experience led to a change in focus to various kinds of specialized office furnishings—but with a difference.

“When we started into this market in 1993, we had no special edge, but mass customization has provided that edge,” explains Conlin. “The biggest thing for us is the ability to control mass customization from the onset of a quotation to producing a sketch or drawing, and that even means pricing things accurately,” says Conlin. “So it takes a great deal of computer savvy and parametric programming.”

In fact, contrary to most trends, Three H built its own information technology system from the ground up to embody its specific way of doing business—and to help it keep its competitive edge. It is set up to “know” the design limitations of each type of product so that each customized end product is just as reliable, and profitable, as the next.

Conlin says at this point his design database has between 50,000 and 60,000 items. The system also watches over production activities and helps ensure on-time delivery. And compared to most furniture manufacturers, Three H can practically turn on a dime. “Our speed ranges from about three to six weeks from order to delivery, and our sweet spot is at four weeks,” says Conlin.

“With mass customization you have to have a huge amount of flexibility built into your operation—in fact, we are no longer set up to do the same task over and over,” says Conlin. Similarly, he says a great deal of management effort goes into making sure that a balanced mix of products is always moving through the plant. “We could never handle a 10,000-unit order from a company like Wal-Mart because it would jeopardize our ability to serve our customer base,” Conlin adds.

To be sure, not all products can be mass customized or produced as efficiently as with mass production. But in some cases mass customization actually lowers costs. In cases like Dell computers, for example, where the volatility of an industry is so great, “You can’t produce in advance what a customer wants, but you can forecast on a component level and keep inventory in the form of components rather than finished goods,” says Pine. Furthermore, you can get right into production with new products without having to work through inventory.

In short, mass customization won’t replace the world’s assembly lines, but companies like Lutron and Three H are proving that it will change what a lot of them look like.