Mass customization refers to a way of working, which the target is to create exactly the product the customer wants, and at the same time benefit from economies of scale. Examples of mass-customized products include sports shoes decorated according to customer wishes, a laptop computer assembled according to customer’s configuration or a paint bucket exactly of the color the customer wants.
From customer’s point of view the benefit of Mass Customization is a large product selection, where one can most likely find a suitable product. The price is most likely lower, and the delivery time shorter than those of a fully tailored product (however, the delivery time is likely to be longer than from make-to-stock production). For the producer of the product and the whole supply chain benefits include of course higher appeal in the eyes of the customer which hopefully increases the demand, combined to a supply chain where especially upstream one can benefit from high volumes utilizing the efficiency of mass production. In other words, mass customization aims at both high volume and high variation. This has traditionally been considered as an impossible area for a production process.
A common way to achieve Mass Customization is Assemble to order (ATO) -production of a modular product. Modular product means product architecture, where the whole product consists of modules with standard interfaces. Modular products have different options for at least some products, and different module combinations yield to products with different features. A laptop computer is an example of a modular product: different hard disk drives, memory chips or keyboards of different languages can be assembled with same mechanics. Thus with a limited amount of different modules one can create a high amount of end products. In a way the modular product hides the complexity of a product. A modular product may be difficult to develop, but it offers a clear advantage for the supply chain as an enabler of Mass Customization: large amounts of different alternatives can be offered for the customer, but the production of individual modules can be organized benefitting from high volumes and economies of scale.
There are also other possibilities for Mass Customization than modular product and assembly to order. One way is postponement (a.k.a. delayed differentiation). According to the postponement principle, the differentiation related to different product variants should be done as late in the supply chain as possible. Thus it is possible to benefit from economies of scale thanks to few variants upstream in the supply chain. When the product is differentiated, the amount per variant decreases, and when this differentiation is done as late as possible, it enables efficient operations. An example of postponement is producing base color paint and toning it in the shop according to customer wish. Postponement can be also for example adding language variants to a basic product with software or packaging at a late stage in the supply chain.
Mass Customization is usually considered to be customer specific. However, the principle of postponement can be useful also in make to stock -production. In Central Europe, a chocolate producer hit the headlines since their Santa Claus and Easter Bunny chocolates had the same piece of chocolate inside, only difference being the wrapping. This could also be an example of postponement: the precise production volumes do not have to be decided far in advance, because the changeover from Christmas chocolate into Easter chocolate happens simply by changing the wrapping used.
Mass Customization requires different capabilities from the supply chain than pure mass production. The sales interface has to be able to deal with individually customized products. The whole IT system has to be configured to manage the customer order individually up to the point where variation is created. Often also materials and part of the production are managed based on the customer order, and so is the transportation and the delivery itself. Often the biggest challenge is not producing individual products, but tuning the whole supply chain to support this customer-specificity.