September 1996 € Volume 6 € Number 9

Can You Make Mass
Customization Work?

By Tom Wallace

Mmass customization sounds like an oxymoron-a contradiction in terms. If something is to be mass produced, how can it effectively be customized? If it's a custom product, how can you mass produce it economically?

These questions demonstrate "trade-off thinking," the classic example of which is the quality versus cost trade-off. Remember the conventional wisdom on quality and cost? As you increase quality, costs go up. Conventional thinking in manufacturing strategy said "be careful-too much quality can raise costs and take you out of your market niche."

Today we know better. But most people didn't know it just a few years ago, and not knowing it got many companies into big trouble. They were led into this trap by the conventional wisdom, which identified a trade-off where, in fact, there was none.


Everything old is new again
Becky Duryea, one of our superb group of doctoral candidates in the business school at Ohio State, is writing her dissertation on mass customization. She pointed out that it's new but it's not new. Think about companies like Wendy's, Lenscrafters, and both Hallmark and American Greeting Cards; you can buy customized products from them-out of an array of standard options-at the retail store.

Dell Computer is a good example of mass customization by a manufacturer. You call 'em up, order exactly the configuration you want, and a few days later the finished product arrives at your door. Automobiles may seem another example of manufacturing mass customization, but they come up short on the timing issue. It takes quite a long while to special order a car and take delivery.

My friends at the OPW division of Dover produce an enormous variety of gasoline nozzles, ship them very quickly, have no finished goods inventory, and their costs today are lower, in constant dollars, than when the product was make-to-stock. This is what mass customization is all about. (For more on OPW's successes, please see this column for October 1995: World-class Order Fulfillment-Part I).


The how-tos
How do these companies do it? How do they become mass customizers and reap the benefits? Answer: with a whole lot of hard work from many people throughout the company. Major changes are required in how the product is marketed and sold, and how customer intelligence is gathered and analyzed. Most or all of the following are typically involved:

Eliminating trade-offs
If this sounds a lot like Just-in-Time, total quality and manufacturing resource planning, that's no surprise. These sets of tools, used individually, can help a company a lot. Using them together, intelligently, makes it possible for the individual manufacturing firm to do things it could never do before. Extraordinary things like eliminating trade-offs.

Here's the issue for mass customization: Will the quality/cost story repeat itself? Will the trade-off bugaboo strike again? Will many companies get blindsided by more nimble, flexible competitors who can produce customized products at speeds, volumes and costs approximating or bettering mass-produced standard products? I believe that many of the winning companies over the next 10 years will be those who successfully eliminate the trade-off between high product variety and low cost.

So now for the strategic issue: Should your company pursue mass customization? For many companies, the answer may be: "No we don't need it; it will not provide us with meaningful competitive advantage in the marketplace."

But then again-in your industry, with your customer base, with the unique usages for your product-it may make a big difference with your customers. If so, and if you don't do it, then one of your competitors will. That means you play "catch-up," and that you will probably lose in the long run.
Do yourselves a favor: Take a hard, focused look at mass customization. Learn about it; talk to your customers about it; see what your competitors are doing. And then make an informed decision.


Tom Wallace is an independent consultant based in Cincinnati. He is the author of Customer Driven Strategy: Winning Through Operational Excellence (1992) and editor/author of The Instant Access Guide to World Class Manufacturing (1994). Tom is co-director and a Distinguished Fellow of the Ohio State University's Center for Excellence in Manufacturing Management.

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