The Lean Supply Chain

Mass Customization…A Lean and Agile Supply Chain Required

by Paul Myerson
Aug 29, 2014

When we think of becoming Lean, in many ways, the ultimate process strategy to accomplish this is what is known as “Mass Customization.” This refers to production in batch sizes of one to meet customer specific demand. Mass customization combines the low unit costs of mass production processes with the flexibility of individual customization.

Not too many manufacturers have reached this point yet, although some are headed in that direction (see “Mass customization - Combining elements of mass production with those of bespoke tailoring”).

Examples of the successful execution of mass customization include:

Levi Strauss, an early innovator using the concept in 1994 with its “Original Spin” jeans for women, which leveraged technology to measure customers in its stores and send their details electronically to its factory.

Dell Computers, whose customers design their personal computers online. After that, Dell assembles, tests and ships them as requested at the last minute before delivery (a good example of the use of the concept of “postponement”).

Ford Motor Company allows customers to build a vehicle from a palette of options online and BMW claims that no two of its new cars are identical.

As the concept of mass customization effectively postpones the task of differentiating a product for a specific customer until the latest possible point in the supply network, it can put a lot of stress on one’s supply chain. Thus the need for both your manufacturing and supply chain processes to be Lean and agile.

I write a lot on this blog and elsewhere about Lean supply chain, where there is an ongoing focus on the identification and elimination of waste from the customer’s view. To be successful, this requires efficiency as well as integration and collaboration with customers and suppliers.

However, in order to successfully execute a mass customization strategy, the supply chain needs to also be very agile; meaning that it must be designed to be flexible and fast when dealing with “unique” products with unpredictable demand.

So, not surprisingly, that’s where the idea of having a “hybrid” strategy comes into play. A hybrid supply chain strategy is a combination of lean and agile concepts, where a manufacturer operates with flexible production capacity that can meet surges in demand along with a postponement strategy, where products are partially assembled to a forecast and then completed to the actual order when and even where it arrives.

In the end, your supply chain strategy (and capabilities) must support your organization's overall strategy and typically, in today’s world, that means being lean and agile.

Discuss this Blog Entry 3

on Sep 2, 2014

Short supply chains can provide the required agility needed for mass customization. Reshoring to the U.S. shortens supply chains and positions manufacturing near customers which gives companies better flexibility and the agility needed for the mass customization concept.

By reshoring, companies can more easily respond to customers’ changing needs, eliminate higher shipping expenses, minimize supply chain disruptions and eliminate the larger 
production runs and inventories associated with long distance offshoring.

Reshoring also contributes to a lean and agile supply chain strategy because when manufacturing is moved next to engineering, companies can improve design, eliminate waste, improve quality and increase productivity, many times making the product more easily and at a lower cost.

When productivity is increased, it makes the product easier to reshore by reducing the U.S. Total Cost vs. offshore and boosting U.S. competitiveness.

In order to help companies decide objectively to reshore manufacturing back to the U.S. or offshore, the not-for-profit Reshoring Initiative’s free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring.

on May 13, 2015

As the only person with an issued patent in Mass Customization "System And Method For Mass Customizing Multi Component Articles" (Wolé M Fayemi: issued November 2001), with applicability to the automotive aftermarket AND the high end luxury goods brands (simultaneously), I think I am the most qualified to speak on practical implementation. No two BMWs being alike (or Fords for that matter) does not a mass customization scheme make because the product is not available at a reasonable cost to your average consumer. In order to realistically achieve this, one must focus on the supplier level (Tier 1 and 2) of the supply chain and couple that with the used car market and financing mechanism with a branding element (high end fashion retailing, marketing and distribution is one thought, the music industry is the other).

on May 13, 2015

The other, and most obvious difference from current automotive models is that they are not consumer centric, or demand driven manufacturing modalities. Having a customer choose options AFTER a manufacturer (both BMW and Ford in this case) has limited to combinations it will produce and place on dealer lots, does not truly reflect mass customization in theory. True, there are cost constraints on the developmental side with making every conceivable option available to a consumer, but it is both that collaborative model AND Financial engineering model, that all auto manufacturers (particularly domestic ones) could follow to catch up to BMW in the quiet reorganization which began in 2008 with the departure of Stefan Krause to Deutschebank, and the shifting of the company's formerly archaic business model for financing its product development with suppliers and investors.

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