Customized Production: Definition, Categories, Benefits, Drawbacks
Let's Talk About Mass Customization
Mass customization is a crafty approach to altering stuff 'n' things according to our peculiar needs, and on a grand scale. For instance, in a production factory, a company tweaks and tweaks its products to meet customer demands using cutting-edge technology like flexible manufacturing. It ain't just about manufacturing; it's also relevant in marketing, call centers, and management.
Manufacturers typically whip up specific products and promotions, including ads. They also adapt products to fit the market trends, thereby achieving economies of scale through mass marketing or production.
You might be wondering, how do they do it? With magic? Hell no, they use flexible manufacturing technology, making it possible to balance two objectives: low cost and differentiation (product customization).
In the old school method, these two goals seemed like an impossible dance. The low cost required companies to produce standardized products, allowing them to save dough from economies of scale and mass production. Differentiation, on the other hand, emphasizes uniqueness, which is a pricey pain in the butt when trying to produce output at a low cost.
Mass customization lets a company roll with mass production techniques to create standard parts. But, for the final product, they tailor it to each customer group's preferences.
Mass Production vs. Mass Customization
Now, don't get mass customization confused with mass production. Under mass production, the focus is quantity. Companies churn out homogeneous and standardized output. So, there's no customization to meet variations in market demand. Mass production helps firms lower production costs through higher economies of scale.
On the flip side, mass customization involves striking a balance between differentiation and quantity. Companies don't just repeat the same old thing; they also customize their output to suit customer preferences. It's a fancy dance, but they can offer their unique wares at a premium price and still save cash thanks to economies of scale.
Types of Mass Customization
Due to technological advancements, companies can rapidly gather gobs of information about customers and make swift design tweaks. The technology also allows for greater design versatility and production flexibility.
Now, generally, the mass customization types can be categorized into four groups:
- Collaborative customization
- Adaptive customization
- Transparent customization
- Cosmetic customization
Collaborative customization
Here's how it works: companies chat up customers to figure out the best product for them. They then use this info to craft output that perfectly suits each individual customer's needs, like some custom-fit clothing companies.
This type of customization is common in online businesses, where customers can define their own product criteria and specifications.
Adaptive customization
In adaptive customization, companies manufacture standardized products but with a wee bit of flexibility. When a product is in customers' hands, they can customize it according to their whims, without interacting with the company.
Take a Lutron lamp, for example. Customers can program them to create various aesthetics, according to their personal tastes.
Transparent customization
Companies deliberately produce a one-of-a-kind product for each customer. Each product evolves to suit the unique needs of individual customers without requiring direct interaction with the company.
For example, Ritz-Carlton hotels developed databases to capture customer preferences without yapping to them. They use this info to tailor their services to each customer for their next visit.
Cosmetic customization
Companies manufacture standard products. However, to sell these products, they present them uniquely for each customer segment. For instance, a company might offer drinks in various packages: cans, big bottles, or small bottles.
Examples of Mass Customization
Mass customization has made waves in multiple industries. Here are some examples of companies employing mass customization:
- Dell in the computer industry
- The Brooks brothers in clothing
- Nike in the shoe industry
- Longchamp for handbag production
- Toyota in the auto industry
- Paris Miki, a Japanese eyewear retailer
- ChemStation for industrial soap products
- The Ritz-Carlton in the hotel industry
Why Go for Mass Customization?
Mass customization is a slick move to keep customers happy and establish a competitive edge. It offers several advantages for the company:
- Profitability Gains: Mass customization allows companies to find a sweet spot between quantity and differentiation. They can charge higher prices while still producing efficiently, thanks to higher economies of scale.
- Customer Satisfaction: Companies gather information about customer preferences and tastes, allowing them to tailor offers to suit individuals, leading to a highly satisfying customer experience.
- Minimized Excess Inventory: Companies can adopt just-in-time production, matching demand, production, and supply. This way, they know exactly when and how many new inputs to order. It also means they've got less unfinished goods to store, reducing overhead costs.
- Customer Retention: By allowing customers to be involved in the product-making process, companies build long-term relationships and retain customers.
- Increased Willingness to Pay: Customers get the opportunity to buy products they genuinely prefer, increasing their willingness to shell out extra bucks.
Pitfalls of Mass Customization
But, adopting mass customization ain't always a walk in the park. Here are some challenges:
- Complexity and Coordination Issues: To succeed at mass customization, a company needs better coordination and reliable suppliers and distributors that can support flexible production.
- Evolving Technology: Companies cannot rely on old tech to support this technique. They must continually invest in new technology to stay competitive, which is a risky business.
- Rising Costs: As complexity increases with more customers, so do the costs. Companies must address the various needs and preferences of different customers.
- Shifting Customer Preferences: Customers may no longer be willing to pay premiums. The more companies adopt mass customization, the more alternatives emerge for customers. They'll smartly choose the company offering the best deal.
In a nutshell, mass customization offers savvy companies a means of improving customer satisfaction, establishing a competitive advantage, and increasing profitability. But, it's not always smooth sailing due to higher production costs, complexity, inventory management challenges, and quality control issues.
Manufacturers can employ technology in business and finance sectors to achieve mass customization, creating products tailored to unique market trends and customer preferences. This strategy utilizes flexible manufacturing technology, allowing for the balance between low cost and product differentiation.
In the realm of technology, mass customization types can be classified into four categories: collaborative, adaptive, transparent, and cosmetic customization. These methods cater to various customer needs, ensuring satisfaction and fostering loyal customer relationships.
