Mass Customization

The smart factory paved the way for mass customization, which refers to using mass-production technology to quickly and cost-effectively assemble goods that are uniquely designed to fit the demands of individual customers. The goal is to provide customers with exactly what they want when they want it. A customer can order a Dell laptop with one of several hard drive capacities, processing chip speeds, and software packages, or a BMW automobile with the exact combination of features and components desired.

Mass customization has been applied to products as diverse as farm machinery, water heaters, clothing, computers, industrial detergents, and hearing aids. For hearing aids, customer data from local audiologists and other professionals who treat hearing loss, such as customer’s level of hearing loss and ear measurements, are fed into the customized mass production line. There have to be enough custom orders to keep an assembly line operating continuously; otherwise, the production would be more like a small-batch process. Invisalign uses mass customization production for its customized dental straighteners, and Tailored Fits uses mass customization to make custom orthotics for sports shoes and ski boots. Oshkosh Truck Company thrived during an industry-wide slump in sales by offering customized fire, cement, garbage, and military trucks. Firefighters often travel to the plant to watch their new vehicle take shape, sometimes bringing paint chips to customize the color of their fleet.

The awesome advantage of the smart factory is that products of different sizes, types, and customer requirements freely intermingle on the assembly line, enabling large factories to deliver a wide range of custom-made products at low mass production costs. Computerized machines can make instantaneous changes—such as putting a larger screw in a different location—without slowing the production line. A manufacturer can turn out an infinite variety of products in unlimited batch sizes, as illustrated in Figure X-1. In traditional manufacturing systems studied by Woodward, choices were limited to the diagonal. Small-batch allowed for high product flexibility and custom orders, but because of the “craftsmanship” involved in custom-making products, batch size was necessarily small. Mass production could have large batch size but offered limited product flexibility. Continuous process could produce a single standard product in unlimited quantities. The smart factory allows plants to break free of this diagonal and to increase both batch size and product flexibility at the same time. When taken to its ultimate level, the smart factory allows for mass customization, with each specific product tailored to customer specification. This high-level use of smart systems has been referred to a computer-aided craftsmanship.

Organizations are large, diverse, and fragmented; they perform many activities simultaneously, pursue multiple goals, and generate many outcomes, some intended and some unintended. Managers determine indicators to measure in order to gauge the effectiveness of their organizations.

Illustration of organization's core transformation process Figure X-1. Credit — Slideplayer Opens in new window

An organization’s core technology is the work process that is directly related to the organization’s mission, such as teaching in a high school, medical services in a health clinic, or manufacturing at American Axle & Manufacturing (AAM) Opens in new window.

AT AAM, Opens in new window the core technology AAM, the core technology begins with raw materials (e.g., steel, aluminum, and composite metals).

Employees take action on the raw material to make a change in it (e.g., they cut and forge metals and assemble parts), thus transforming the raw materials into the output of the organization (e.g., axles, drive shafts, crankshafts, and transmission parts).

For a service organization like UPS, the core technology includes the production equipment (e.g., sorting machines, package handling equipment, trucks, and airplanes) and procedures for delivering packages and overnight mail. In addition, as at companies like UPS and AAM, computers and digital information technology have revolutionized work processes in both manufacturing and service organizations.

Figure X-1 features an example of core technology for a manufacturing plant. Note how the core technology consists of raw material inputs, a transformation work process (e.g., milling, inspection, assembly) that changes and adds value to the raw material and produces the ultimate product or service output that is sold to consumers in the environment.

In today’s large, complex organizations, core work processes vary widely and sometimes can be hard to pinpoint.

A core technology can be partly understood by examining the raw materials flowing into the organization, the variability of work activities, the degree to which the production process is mechanized, the extent to which one task depends on another in the workflow, or the number of new product or service outputs.

Organizations Opens in new window are also made up of many departments, each of which may use a different work process (technology) to provide a good or service within the organization.

A noncore technology is a department work process that is important to the organization but is not directly related to its primary mission.

Thus, R&D transforms ideas into new products, and marketing transforms inventory into sales, each using a somewhat different work process. The output of the HR department is people to work in the organization, and accounting produces accurate statements about the organization’s financial condition.

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    Research data for this work have been adapted from the manual:
  1. Organization Theory and Design By Richard L. Daft