What exactly does a mass-customization system consist of? How does it differ from traditional mass production?
Commodities from grain to gasoline are typically manufactured under mass-production systems. The great virtue of mass production is economy of scale. Production facilities are typically expensive and inflexible, but variable production costs are low. Also, after production, the finished product is stocked in inventory, which serves to meet customer demands.
Mass-production systems can be adapted to make several different varieties of a product. Items from automobiles to toothpaste are manufactured in that way. In addition to deciding whether and when to buy, a customer selects one of the variants. The production facility must be somewhat flexible — enough to switch between variants with few delays and at a low cost, thereby retaining economies of scale.
The basic structure of mass customization is similar to that of mass production with variety, but there are important differences. Instead of selecting one variety of a product, each customer provides unique information so that the product can be tailored to his or her requirements. The production process must be very flexible in order to meet those requirements. There is no finished-goods inventory —there can’t be if the product is really customized. The lack of inventory has advantages (low carrying costs) and disadvantages (customers have to wait). It also involves a delivery capability that reaches directly... To read the complete article, login or sign-up using the form below.
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