Kelly Thomas , Group Vice President, Global Accounts at JDA discusses a movement that was focused around manufacturing; and a thesis that said that the days of mass production were over and that the new world would operate with lot sizes of one while at the same time achieving the leverage advantages of mass production.
Twenty years ago, Joseph Pine published a book titled Mass Customisation. This was followed by a Harvard Business Review article, similar McKinsey articles, and various related movements, including agile manufacturing, which was promoted and promulgated by such individuals as Rick Dove and institutions such as the Iacocca Institute at Lehigh University.
While there is still significant work to be done, much of what was promoted in mass customisation has today been achieved –flexible and agile manufacturing, lean, with smaller lot sizes. Of course there are exceptions to this scattered throughout the emerging economies – for example, the huge Foxconn campuses that assemble personal computers and mobile devices harken back to earlier days of American manufacturing.
The concepts of mass customisation are now spreading to all areas of the end-to-end value chain and are being driven by the consumer and the ubiquity of mobile devices and the internet of things. The inexorable trend is towards supply chains of one – your own personalised supply chain enabled by advanced information technologies tied together through mobile devices and the cloud. Each time a consumer conducts a business transaction, there is a unique and personal supply chain that dynamically configures itself to satisfy that demand in the most profitable way. It does this through order orchestration, end-to-end visibility of inventory, distribution, production and labour capacity, and advanced embedded policies and decision rules. Of course, there are still considerable physical, material, and human assets involved in all of this across the extended value chain. Thus, the setting up and planning of these assets using advanced technologies is as critical as ever.
In today’s retail world, the big box supercentre is the equivalent of yesteryear’s 2 million square feet mass production facility. While these supercenters will surely continue (and provide price benefits to consumers and societies alike), omni-channel and the internet are unbundling them in the same way Apple’s iTunes store unbundled music’s erstwhile 12 track album. The name of the game today is to provide consumers lot sizes of one delivered when and where they want them at the same price and cost as the mass produced and mass retailed equivalent. The only way to achieve this is through the adoption of advanced supply chain information technologies.
Furthermore, these technologies have to engage two large business process areas: planning and execution. Physical assets, people, stores, distribution centres, and factories must be planned to ensure optimal placement of inventory and capacity at the moment of truth when a consumer wants it. Likewise, the process of fulfilling a customer order must be able to look across the value chain and immediately and intelligently pick the optimal fulfilment location. Fulfilment must then be executed in alignment with the customer’s price and time needs as well as the enterprise’s revenue and profit motives. Planning, in the form of production, distribution, and channel-based assortments, and fulfilment execution in the form of dynamically routing inventory to the point of consumption, are two inextricably intertwined parts of the value equation. Achieving tomorrow’s profitable supply chain of one cannot be done with one or the other; only with both. Superior fulfilment cannot make up for poor planning; nor can superior planning make up for poor fulfilment.