MASS CUSTOMIZATION, the Proactive Management of Variety

By Dr. David M. Anderson, P.E., CMC
Build-to-Order Consulting, which offers Consulting and Seminars on Mass Customization
www.build-to-order-consulting.com home page

Excerpts from the Book: Build-to-Order & Mass Customization

Copyright © 2014 by David M. Anderson

    Mass Customization is the new paradigm that replaces mass production, which is no longer suitable for todayís turbulent markets, growing product variety, and opportunities for e-commerce.  Mass customization proactively manages product variety in the environment of rapidly evolving markets and products, many niche markets, and individually customized products sold through stores or over the internet.1

    Mass customizers can customize products quickly for individual customers or for niche markets at better than mass production efficiency and speed. Using the same principles, mass customizers can Build-to-Order both customized products and standard products without forecasts, inventory, or purchasing delays.

   These practical methodologies are taught through Dr. Anderson's in-house seminars and implemented through his leading-edge consulting.

The M.C. Spectrum

    There is a whole spectrum of ways that Mass Customization methodologies can benefit companies. At the most visible end of the spectrum, companies can mass customize products for individual customers. The most well know category of individual customization relates to products that people wear (clothing, shoes, glasses) as well as bicycles and pagers.

    Further along the spectrum is niche market customization. For instance, a company that makes telephones has only a few customers (telephone companies) who want several dozen models in many colors all with specific phone company logos. Exporters have to deal with many niche market products, usually a different set of products for each country exported; and even if the differences seem minor, the sheer variety of SKUs (stock keeping units) can have significant cost and flexibility implications. Almost all companies could benefit from expansion into niche markets if they could do it efficiently.

    At the other end of the spectrum are companies that have tremendous varieties of "standard" products, for instance, industrial suppliers of valves, switches, instruments, electrical enclosures, or any company with a catalog over a half an inch thick. As with product customization, there is a great contrast between how mass producers and mass customizers manufacture a variety of standard products. The mass-producer has the dilemma of trying to keep large enough inventories to sell a wide variety of products from stock or alternatively using the slow, reactive process of ordering parts and building products in very small batches after receipt of orders.

    The mass-customizer can use flow manufacturing and CNC programmable machine tools to quickly and efficiently make different products in a "batch size of one" -- either customized products or any standard product from a large catalog.

The Need for Speed

    Mass customized goods compete with standard goods which may be available right now at stores or dealers. The biggest appeals of mass customization are being able to (1) provide customized goods, (2) quickly resupply stores with standard products that have just been sold with built-to-order replacements, and (3), for industrial suppliers, to be able to respond on-demand to assemblersí pull signals, which may be part of the spontaneous supply chain for the first two cases. For all of these speed is imperative to minimize mass customizationís biggest vulnerability: waiting.

    In order to deliver products fast, mass customizers need flow manufacturing to make products fast in small quantities and a spontaneous supply chain which can assure spontaneous availability of materials and make parts on-demand.

Mass Customization Depends on Flow Manufacturing

    The trend to smaller batches, approaching one, is what is pushing savvy manufacturers toward flow manufacturing. Mass Customization relies on flow manufacturing to provide the batch-size-of-one capability. Whether manufacturing a wide variety of standard products or individually customized products, mass customizers depend on several elements of flow manufacturing to enable them to build products economically in any order quantity, even as low as one.

Setup and its elimination. Being able to build in a batch (or lot) size of one depends on the elimination of setup, for instance, to get parts, change dies and fixtures, download programs, find instructions, or any kind of manual measurement, adjustment, or positioning of parts or fixtures. Mass producers are forced to make products in batches to spread setup costs among as many products as possible. If setup can be eliminated, then products could be made to-order as orders came in. This is the essence of Spontaneous Build-to-Order. Setup elimination is also an essential prerequisite for mass customization since every product could be different.

    Setup and batches can be eliminated by (1) distributing parts at all the points of use to eliminate the kitting, or the batching of parts, (2) eliminating tooling setup with versatile tool plates or tooling that can be changed very quickly, (3) consolidating inflexible parts into very versatile standard parts, for instance, for castings, plastic parts, stampings, extrusions, and bare printed circuit boards, (4) using CNC machine tools to programmably make a wide variety of parts from standard shapes of raw material, and (5) eliminating all setup from manual assembly, such as finding and understanding work instructions by displaying instruction on monitors that instantly and clearly show what is to be done at that workstation to any product being worked on.2

Spontaneous Supply Chains

    In order to build products on-demand, mass customizers must be able to build parts on-demand from materials that are always available. This will require a spontaneous supply chain. The first steps in supply chain management must be supply chain simplification.

Supply Chain Simplification. The simplification steps for supply chain management are standardization, Automatic resupply techniques, and rationalization of the product line to eliminate or outsource the unusual, low-volume products that contribute to part variety way out of proportion to their profit generation ability. The goal of supply chain simplification is to drastically reduce the variety of parts and raw materials to the point where these materials can be procured spontaneously by automatic and pull-based resupply techniques. Reducing the part and material variety will also shrink the vendor base, further simplifying the supply chain.

Standardization. Most products are designed around too many different parts and materials for mass customization. Ironically, a rampant proliferation of parts is quite unnecessary, but occurs simply because standardization is not emphasized. Part and material variety can be easily reduced with standardization techniques by one or two orders of magnitude!3 

Automatic, spontaneous resupply. A key part of the spontaneous supply chain is automatic resupply techniques such as kanban, "min-max," or breadtruck (free-stock). The simplest version of kanban uses two bins for each part. After parts are depleted from the first bin, it goes back to its source to be filled, and could be made in a batch mode if the combination of setup time, run time, and delivery time is short enough to return the new bin of parts before the other bin runs out. Min-max is a similar concept usually applied to stacks of raw material like sheet metal; when the "min" level is reached, this triggers the resupply of enough material to reach the "max" level. Breadtruck or free-stock makes small inexpensive parts like fasteners freely available at all points of use; these are resupplied automatically by a supplier who simply keeps the bins full and bills the company monthly. This is much more efficient than issuing expensive purchase orders for parts that may cost pennies. Parts that qualify can be made in batches as long as the response time and bin (or delivery) size is adequate.

Spontaneous build-to-order of parts. For parts that do not qualify for kanban, suppliers or in-house sources would need to implement spontaneous BTO so that they could actually build on-demand to the pull signals from assembly. Spontaneous BTO of parts may require the development of vendor-partner relationships for suppliers to establish the ability to build parts in any quantity on-demand.

Designing products for Mass Customization

    For fast and easy production, mass customization products should be designed for manufacturability.4  A key element of DFM is designing for lean production, build-to-order, and mass customization.  Products should be developed in synergistic product families and be designed around aggressively standardized parts and materials, designed for no setup, and designed for CNC programmable machine tools.

How Products are Customized

    There are three ways to customize products: modular, adjustable, and dimensional customization.5

Modular Customization. Modules are "building blocks." Usually modules are literally building blocks that can customize a product by assembling various combinations of modules. Examples of modules would include many components in automobiles: engines, transmissions, audio equipment, tire/wheel options, etc. In electronics, modules would include processor boards, power supplies, plug-in integrated circuits, daughter-boards, and disk drives. In software, code could be written in modules (objects) that can be combined into various combinations.

Adjustable Customization. Adjustments are a reversible way to customize a product, such as mechanical or electrical adjustments. Adjustments could be infinitely variable. Discrete adjustments, or configurations, would represent few choices, such as those provided by electronic switches, jumpers, cables, or discrete software controlled configurations. These adjustments and configurations make the product customizable by the factory, by dealers, or by customer. Software can be customized by user-defined settings or by table driven programming in which the software is specifically written to accommodate variables that can be customized by entering customer data into a table. The result is customized software that does not does not have to be debugged.6

Dimensional Customization. Dimensional customization involves a permanent cutting-to-fit, mixing, or tailoring. Dimensional customization could be infinite or have a selection of discrete choices. Examples of infinite dimensional customization would include the tailoring of clothing, drilling holes in bowling balls, grinding eyeglasses, mixing of paints or chemicals, machining metal parts, and the cutting of sheet metal, wire, or tubing. Examples of discrete dimensional customization would be hole punching, and soldering selected electronic components onto a printed circuit board. Dimensionally customized parts can be made automatically on CNC equipment running program instructions that are generated on demand from data that originates in parametric CAD (see discussion below).

How Mass Customization Works

    The following examples were created to show mass customization principles for electronic products (Figure 1) and fabricated parts or products (Figure 2). The author creates perspective illustrations, like these, for each mass customization client because they show, on one page, the flow of materials and information through easily recognizable machinery. Further, three-dimensional drawings showing the actual equipment are more meaningful than two-dimensional block representations to a broad audience. These can be drawn in 3D CAD solid model software. In the following discussions, bold words refer to labels on the illustration.

    The process starts with a dialog with the customer in which customer queries are quickly answered. This rapid dialog is the only one (the only two-way arrows in Figure 1) in mass customization, as opposed to the traditional practice of many length inquires back and forth with Engineering, Procurement, and Manufacturing departments. Various "what if" scenarios can be explored instantly, complete with price and availability quotes, using configuration software (called "configurators"), which could be on a salespersonís laptop computer or on the company web-site.

    When the customer has optimized the configuration and approves the order, the order information is sent by modem input to the factory where it enters the order entry database, which accepts the information and converts it into various data packets that go (1) to on-line assembly instruction monitors, which tell workers how to assemble each product, and (2) to the parametric CAD/CAM work station. This is an automatic or semi-automatic computer that accepts customer order data into parametric CAD drawings, which are drawn with "floating" dimensions that accept the customerís data and then stretch all the part drawings, which also stretches the assembly drawings. Finally, this station automatically translates these drawings into CNC Programs for the CNC equipment.

Mass Customization for Electronic Systems

    The model illustrated in Figure 1 shows how to mass customize an electronic system,7 which could be any type of computer, instrument, communication device, audio/visual equipment, electronic game, small appliance, and so forth. Specifically, this example will be based on a small instrument that can be customized with unique software and many different combinations of meters, dials, cases, and various internal parts. However, the mass customization principles described here apply to all products.

    This model is structured to be very "do-able" in that it is does not depend on high levels of automation or high volume. The only programmable machine tools used are the most common in industry: circuit board assembly equipment and CNC (Computer Numerically Controlled) machining centers. The final assembly is manual, which was selected for this example because most companies may not have the volume or the budget for the equipment necessary for automated mass customization. Of course, all the principles demonstrated here can be applied to more automated operations. All products are built-to-order with automatic kanban part resupply.

    Figure 1 shows the overall flow of information and parts for the mass customization operations. Notice the variety of assembled products on the output cart. Customization comes from:

C Various combinations of different parts, automatically resupplied by kanban

C One of three cases, depending on the space requirements of the internal parts, also resupplied by a dual kanban system.

C A printed circuit board (PCB) assembly based on a single bare board that can be stuffed with different components for different customers. 

C Customized software loaded into a standard firmware chip and then inserted into circuit board.

C A custom machined front panel milled from one standard blank. Appropriate holes and slots are milled for various combinations of dials, meters, ports, switches and controls. The custom front panel is delivered on a simple conveyor belt from the CNC milling machine.

C Rapidly downloaded assembly instructions displayed on computer monitors based on information from the product database file server. The database is created/updated by the order entry process. Displayed instructions are changed whenever operators wand bar codes on the incoming circuit board.

 

Figure 1, Mass Customization for Electronics

 

Mass Customization for Fabricated Parts or Products

    The model illustrated in Figure 2 shows how to mass customize fabricated parts or products. Hoffman/Schroff has adopted this model to build a wide variety of standard and customized sheet metal electrical enclosures.8 In this illustration, solid lines show the flow of parts; dashed lines show the flow of information.

    The actual production starts when sheet metal from the standard sheet stack is fed into the laser cutter. Aggressive standardization of raw material is the key to minimizing material overhead, providing raw material on-demand, and building any product in any batch size in any order. A single standard raw material type would be ideal because "ordering" would be as simple as matching the tonnage in to the tonnage out and arranging a steady flow of materials. Multiple types of raw material might be alright from a procurement standpoint if the proportion of each type was fairly constant. More than one type would require either an automated multiple sheet feeder or a worker who loads which ever sheet is specified by on-line instructions. The cost savings in material overhead and less material handing (including avoiding multiple sheet feeders) should easily exceed any cut-off waste. And with experience, waste will go down as CNC programs get more efficient at nesting various shapes. Extra material can also be utilized as a source of supply for kanban parts, if they can be designed to use the same material.

    The laser cutter performs all the sheetmetal cutting including the outside shape and all holes, notches, and cut-outs. This may not seem the "fastest" time per hole or the most "efficient" cost per operation by mass production standards, but operating without setup changes or WIP inventory will probably result in the fastest factory throughput and lowest total cost. If hole quantity warrants, a programmable punch press could be used, as long as the number of tools in the tool changer is not exceeded by the hole variety for the entire family.

    The output of the laser cutter is a set of cut sheets for each product. Some will go through the CNC press brake for bending, and the rest may go to welding (in the case of Hoffman Engineering) or straight through to final assembly. Milled parts are made from a standard blank (ideally only one as shown) in the CNC mill (machining center) which machines out all variations provided for this product family. Similarly, the CNC lathe (or it could be a CNC screw-machine) makes all the turned parts for the family, ideally from a single size of bar stock.

    Many factories could use several CNC cut-off machines, which programmably cut off bars, coiled sheet, or the longest of a range of lengths. Usually, these are used for linear parts that are too simple to justify a expensive machine tool. Each time these are employed, they may reduce part variety from several to one. Used for several part families, they can significantly reduce material overhead costs and provide these parts efficiently on-demand without the need to forecast and order them. A semi-automatic version would use a programmable "stop" against which a worker would place the material prior to manual cut-off. In the manual version of this concept, a worker would cut the part on-demand according to the length displayed on a monitor. Hoffman Engineering has several of these for hinges and various brackets, one of which is fed from a reel, roll formed, and cut to length on-demand.

    The sub-assembly workstation allows mass customization by manual assembly of kanban supplied parts according to instructions displayed on the monitor. One standard fastener that is dispensed through the autofeed screwdriver accomplishes all fastening. Final assembly is also directed by a computer monitor which gives appropriate instructions for each product.

Figure 2, Mass Customization for Fabricated Products

    Many flow/lean/JIT improvements are just Manufacturing Department initiatives. But the payoff will come from a company-wide strategy that can use flow manufacturing to increase sales and profits.

    Mass customization can significantly lower total cost, especially when there is a high variety of products, by reducing the cost of inventory, obsolescence, discounting, distribution, setup, kitting, equipment utilization, floor space, material overhead, and information systems.

    Mass customizing products will greatly improve customer satisfaction by giving customers what they want when they want them, building and shipping products the same day, maximizing quality through the rapid feedback inherent in flow manufacturing, and building replacement parts to-order.

    Competitiveness and sales will improve greatly because of the above points and the ability to quickly adjust to changing market conditions, expand into niche markets, introduce new products faster, eliminate minimum order quantities, not miss any sales because of forecast errors or part shortages, and support electronic commerce, which encourages may small orders that are customized and built-to-order.

    Mass customization will improve the bottom line with broader product lines, unbeatable responsiveness, the absolute minimum total cost, the liberation of working capital, and potentially the ability to charge premium prices for this agility and customer satisfaction.

Dr. Anderson is a California-based consultant specializing in training and consulting on build-to-order, mass customization, lean/flow production, design for manufacturability, and cost reduction. He is the author of  "Build-to-Order & Mass Customization, The Ultimate Supply Chain Management and Lean Manufacturing Strategy for Low-Cost On-Demand Production without Forecasts or Inventory" (2008, 512 pages; CIM Press, 1-805-924-0200, www.build-to-order-consulting.com/books.htm) and "Design for Manufacturability & Concurrent Engineering; How to Design for Low Cost, Design in High Quality, Design for Lean Manufacture, and Design Quickly for Fast Production" (2008, 448 pages; CIM Press, 1-805-924-0200; www.design4manufacturability.com/books.htm).  He can be reached at (805) 924-0100 or anderson@build-to-order-consulting.com; web-site: www.build-to-order-consulting.com.

ENDNOTES/REFERENCES

1. David M. Anderson, "Build-to-Order & Mass Customization, the Ultimate Supply Chain and Lean Manufacturing Strategy for Low-Cost On-Demand Production without Forecasts or Inventory," (2008, 520 pages, CIM Press,1-805-924-0200; www.build-to-order-consulting.com/books.htm).

2. Ibid., Chapter 8, "On-Demand Lean Production."

3. Ibid., Chapter 4, "Part Standardization" and Chapter 5, "Material Standardization."

4. David M. Anderson, "Design for Manufacturability & Concurrent Engineering; How to Design for Low Cost, Design in High Quality, Design for Lean Manufacture, and Design Quickly for Fast Production," (2008, 520 pages, CIM Press, 1-805-924-0200, www.design4manufacturability.com/books.htm).

5. Anderson, Build-to-Order & Mass Customization, Chapter 9, "Mass Customization"

6. Douglas Abbott, "Mass Customization of Software," Agility & Global Competition, Vol. 2, No. 2, Spring 1998.

7. Anderson, Build-to-Order & Mass Customization, Chapter 8, "On-Demand Lean Production."

8. Chris L. Conway and Jerome M. Tiry, "Mass Customization Comes to Hoffman," Agility & Global Competition, Vol.2, No. 2, Spring 1998, p. 16.

[Mass Customization and Build-to-Order home page]   [Articles Directory]

[Mass Customization Consulting]   [Mass Customization seminars]  [Mass Customization books]