Mass customization, strategy and information technology
Mass Customization is a new production style. This style combines the low price of the product, brought by the mass production and fully customized products for the customers. This new style requires necessary changes in overall strategy, company structure, processes, company information system and customer care. Information system plays main role in Mass Customization, controls diverse customer's orders, adjusts production process and delivery channels. New strategies have to take place to fulfill expectation of the customers in very diverse market segments, sometimes in markets of one customer. Current economy has become very unstable and company with long tradition do not have to be able compete in new turbulent markets. Very often small companies, which are able to react fast for the customer demand, gain market share against traditional industry players. Ability to satisfy customers and gain market share become key strategy for many companies. Implementing new information technologies enables companies to move to the new age - age of Mass Customization. 1. Changes in global markets During last years global and local markets had changes dramatically. Companies who did not change their strategies, organization structure and internal processes have disappeared from the market. Big companies lost the market share in competition with small companies, who were able to deliver product to the customers in desired time, quality and price. Flexible companies, who are able to target the needs of the customers, become valuable players in the market. New start-up companies, corporations advantage of forming new organization structure, processes and products to satisfy customers. Customers become very determine and we can say that "customers do not want choice; they want what they want" (1). Change in behavior of customers has changes as well markets. Roles of business, which were formed during last years since beginning of mass production, did not work properly. Mass production attitude to produce huge amount of same good in a small price did not satisfy the needs of customers. Homogenous markets of customers had been divided into small markers, in same cases into markets of ones. Only companies who were flexible to react for the market demand were able maintain the market share. The evolution of computer products during 1990 created effective working environment to manage huge amount of production data and give the opportunity to work with information. Our society made a step forward to the digital economy (3). In digital economy, information in its form becomes digital and could move and process in speed of light. The new economy is also a knowledge economy based on human know how. 2. Mass Customization Mass Customization relates to the ability to provide individual designed products and services to every customer. Mass Customization was recognized as strategy by increasing number of companies. The concept of Mass Customization was presented in the late 1980s and could be seen as a natural evolution from the age of mass production. Mass Customization is a good strategy for the company, which want to satisfy needs of individual customers. Thanks to the Mass Customization, company could gain a market share and attract customers with specific needs. Companies, who have implemented strategy of Mass Customization could produce even small amount of good in prices which are only a little bit higher than prices of product produced in huge amount without any customization. These companies now have a competitive advantage, because they are have very flexible reaction for the changes in the markets and could adjust their supply. Mass customized products are produced in small amount with competitive price comparing with product produced in huge quantity as you can see on the figure 1. Figure 1: Economic implication of mass production (6) We could recognize different levels of Mass Customization which starts at level of standardization and finish in level of customization of entire production process. In literature are mentioned different frameworks of Mass Customization. Combination of this frameworks leads to the eight generic level of Mass Customization (2). Figure 2 presents levels of Mass Customization and the current state of Mass Customization in e-business. E-business provides certain level of Mass Customization, which is mostly based on standardization, usage and addition work and service. Mass Customization is an added value at e-business. Figure 2: Levels of Mass Customization 3. Information technology as a enabler of Mass Customization During last years information systems gain importance, and now you could not find a company which could manage without them. In age of Mass Customization company has to store and process information about every component, its configuration and the customer. Information technology allow customer to enter the design phase of product and enter the product requirement. According to this requirement entire production process is adjusted to process order in most efficient way. Ability to manage information becomes one of the corporate advantages. Companies are implementing information systems to provide better service to the customers. DW, OLAP, DSS, MIS, EIS, etc. are the abbreviations of information systems, which support the company processes. Companies implements Data Warehouse (DW) to store huge about of data, which are static and provides company information about the past results. DW provides several views for provided data, which are server with a decent respond times. On-Line Analytical Processing (OLAP) converts static data to strategic information. OLAP provides analysis of stored data in DW. Decision Support Systems are applications which provide opportunity to model specific not only manufacturing situations. DSS combines company data stored in DW with mathematical models to provide answers for specific questions. Management Information System (MIS) provides middle management with a necessary data for decisions in real time. MIS is customized for needs of group special users and allows managers to plan, coordinate, manage and control. Executive Information System (EIS) as well is MIS provide a view to the company information. Level of aggregation is higher and the main user of EIS is top management of company. We could find much more types of Information System which are presented in modern companies. In these companies they represent the heart of the company, which powers up entire company processes and productivity. Information technology allows the necessary level of information which is needed in age of Mass Customization. In Mass Customization company allows customers to take an active part at the design phase of the product, during the production and delivery. Customers on the Internet join the Information system of the company and enter the necessary requirements for their product. Later customer could track the status of their product and influence the delivery channels as it is shown in figure 3. Without the current level of Information systems following interaction would not be possible and there would not be environment for implementing of mass production. Interaction between the company and customer is always 1:1 and gives the company detailed overview about customer's needs. Figure 3: Interaction between customer and company in Mass Customization 4. Strategy for Mass Customization Companies who manufacture their good in mass production are faced problems to satisfy needs of their customers in turbulent times. For the industries with turbulent market situation is a proper strategic move to the new frontier in business competition and shift to Mass Customization. There are three basic was to do this: incrementally over time, more quickly over the business transformation or by creating new company. For many companies, the shift from Mass Customization begins slowly and incrementally. Company slowly transform current processes and provides more variety and customization of products - even in higher costs. Company slowly improves processes and gain experience with Mass Customization manufacturing, which secure their place on the market.
There are many companies, for which the incremental change would be too late. Companies are faced turbulent market situation or its competitors are on their way to Mass Customization. Companies have to move quickly the products, services, processes and entire organization to support the ideas of Mass Customization. Products and services have to be re-customized and entire organization transformed. Third category of the companies moving to Mass Customization is new company providing variety and customization in price at mass production prices. This company applies modern information and telecommunication technology to drive down costs while increasing customization. The shift to the Mass Customization is a company evolution, which could be quick or could take several years. Mass Customization should be incorporated in company strategy and provide competitive advantage for success on the market. Summary This paper mentioned a new term in business - Mass Customization. Mass Customization is a company strategy, which allows the company to provide individually designed products and services in price of mass produced products and services. This strategy requires certain level of Information technology to support all processes and allow customers to take active part during the all product faces. Companies could implement different level of Mass Customization from standardization to the customization production processes to satisfy needs of their customers. Mass Customization allows company to compete on the marker during the turbulent market situation, because provide ability of fast reaction to the customer needs. Mass Customization is an evolution step to satisfy needs of the customer as was mass production at the beginning 1900s. Bibliography About the Author Petr Matulík (Czech Rep./Switzerland) was received bachelor and master degree in Management and Marketing on Tomas Bata University in Zlín. In current time he attends external PhD program of same university. Petr also received bachelor degree in Informatics on Palacky University Olomouc. Since 1999 Petr has worked abroad to gain more diverse experience. During that time he was working in field of computer science and project management in USA, Germany and Switzerland. Petr is interested in implementation of diverse information systems to modern companies. At present Petr Matulík works as IT Specialist, at the Accenture AG, Switzerland. 01.12.2004 - Petr Matulik - Read by: 3670 readers.
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