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Differentiation of Products

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  1. Differentiation of Products And The Mass Customisation

  2. Traditional business model Built-to-replenish Monopolize Built-to-forecast Business always try not to customise if they have a choice

  3. "In the clothing industry, about half of all products are sold at a huge discount or shredded because they were manufactured in a size or color that nobody wanted," David Anderson, management consultant for Cost & Customization Consulting

  4. Motivation • Customer relationship building, to win over the one-size-fit-all, low price products • Experience Economy, to make buying an creative, enjoyable experience • Optimisation of marginal utility

  5. Customisation

  6. Customisation VS small-batch production • eg. Swatch, Benetton, Book-on-demand • Mass-customisation features • Built-to-order (BTO) • Customers have to wait • One-of-a-kind

  7. Customisation VS personalisation • Is engraving names on ball-pen mass-customisation? • Mass-customizing an objects usually affect its function

  8. Customisation VS modularisation • Is IKEA cabinets and LEGO mass-customisation? • Post-production customisation • Design as variants • One-of-a-kind • Enhanced buying experience

  9. Customisation VS Custom-made • Is cupboard from street-corner shop mass-customisation? • Predefined design variant • (On-line) variant building interface • Operator intervention free manufacturing, or • Reduce operator intervention by process standardisation • Near mass-production speed

  10. In the electronics industry alone, sales of custom-manufactured goods will grow from $60 billion in 1998 to $150 billion in 2003, according to Technology Forecasters Inc. • For manufacturers in most industries, AMR's Burkett said, customization isn't "a question of if, but when."

  11. Mass Customisation

  12. Mass-customisation Customisation Interface User input (Optional) Variational Product Structure Advanced Logistics Flexible Manufacturing

  13. Major application • It reduces material stock and dead-stock • Personal computers (Dell) • It makes a more manageable product-line • Heavy machineries • Automobile (Ford) • New buying experience • Apparel • Toys

  14. Mega Tech approach • Agile production • Flexible Manufacturing Cell (FMS) • High-speed machining • Robots

  15. Process improvement approach • Product Data Management (PDM) • Enterprise Resources Planning (ERP) • eg. DELL

  16. My Twinn • Customers send in pictures of the child • Choose from • 7 skin tones ranging from porcelain to black brown • 15 hair and eyebrow colors • 4 eyelash colors • 26 eye colors

  17. Customer configure the colour and scent of lip gloss using a console interface Machine whip up a batch of custom gloss on the fly www.designinteract.com/features/ IMX Mixing Station

  18. NIKE id • Web customers select the color and size of the footwear they want to buy • Place a message of up to eight characters on the back • The Web-based configuration system transmits the design to manufacturing systems at Nike factories in Asia, where the shoes are made • The shoes are sent directly to the consumer in two to three weeks.

  19. Small batch approach • Layered Manufacturing • Rapid Tooling

  20. Chaos stir-up by mass customisation • I want this radius increase by 5mm, make all necessary change to make it look as good as before • The motor is changed from Brand A to Brand B, change all necessary parts so that the product still work, and remind sales department that the product is now cheaper by $0.5 • Tell me how much more time is need if the customer increase the order from 100,000 to 1,000,000 and what price should I charge, NOW

  21. Comment by NIKE id • The service works through an amalgamation of homegrown and off- the-shelf software that includes online customer relationship management tools, a Web-based configurator and software that translates the dynamic HTML data into a format that can be processed by the legacy manufacturing systems operated by Nike's manufacturing partners in Korea and Taiwan. • "The configuration tools and other systems out there are pretty robust, but they don't typically operate at this level of detail," said Allen, who declined to reveal the software vendors involved in the project. "There was a lot of integration work."

  22. Product data chain

  23. Drawbacks to aware • Users not always know how to articulate what they want (NikeID has to check for bad IDs) • Too many options will: • Make the configuration process time consuming • Complicate the consumer interface • Make error checking on spec. changes difficult • Very demanding on logistics • Maintenance headache