MASS CUSTOMIZATION:MASS CUSTOMIZATION AND E-COMMERCE

5. MASS CUSTOMIZATION AND E-COMMERCE

The Internet is becoming a pervasive communication infrastructure connecting a growing number of users in corporations and institutions worldwide and hence providing immense business opportunities for manufacturing enterprises. The Internet has shown its capability to connect customers, suppliers, producers, logistics providers, and almost every stage in the manufacturing value chain. Leading companies have already started to reengineer their key processes, such as new product development and fulfillment, to best utilize the high speed and low cost of the Internet. Impressive results have been reported with significant reduction in lead time, customer value enhancements, and customer satisfaction improvement. Some even predict that a new industrial revolution has already quietly started, geared towards e-commerce-enabled mass customization (Economist 2000; Helander and Jiao 2000).

In essence, mass customization attempts to bring customers and company capabilities closer to- gether. With the Internet, customers and providers in different stages of production can be connected at multiple levels of the Web. How this new capability will be utilized is still at a very early stage. For examples, customers can be better informed about important features and the related costs and limitations. Customers can then make educated choices in a better way. In the meantime, through these interactions the company will then be able to acquire information about customers’ needs and preferences and can consequently build up its capabilities in response to these needs. Therefore, e-commerce will be a major driving force and an important enabler for shaping the future of mass customization.

Rapid communication over the Internet will revolutionize not only trade but also all the business functions. A paradigm of electronic design and commerce (eDC) can be envisioned as shown in Figure 14. Further expanded to the entire enterprise, it is often referred to as electronic enterprise (eEnterprise). Three pillars support eDC or eEnterprise: the integrated product life cycle, mass cus- tomization, and the supply chain.

The integrated product life cycle incorporates elements that are essential to companies, including marketing / sales, design, manufacturing, assembly, and logistics. Using the Internet, some of these activities may be handed over to the supply chain. There may also be other companies similar to the regular supply chain that supplies services. These constitute business-to-service functions.

With the communication and interactivity brought by the Internet, the physical locations of com- panies may no longer be important. The common business model with a core company that engages in design, manufacturing, and logistics will become less common. Manufacturing, as well as design and logistics, may, for example, be conducted by outside service companies. As a result, in view of the supply chain and service companies, the core of business-to-business e-commerce is flourishing.

Figure 14 also illustrates a systems approach to manufacturing. It is a dynamic system with feedback. For each new product or customized design, one must go around the loop. The purpose is to obtain information from marketing and other sources to estimate customer needs. The product life cycle is therefore illustrated by one full circle around the system.

The company can sell products to distributors and / or directly to customers through business-to- customer e-commerce. In some cases, products may be designed by the customer himself or herself. This is related to mass customization. Customer needs are then captured directly through the custom- ers’ preferences—the customers understand what they want and can submit their preferred design electronically. A well-known example is Dell Computers, where customers can select the elements that constitute a computer according to their own preferences.

Usually information about customer needs may be delivered by sales and marketing. Typically, they rely on analyses of customer feedback and predictions for the future. These remain important sources of information for new product development. From this kind of information, the company may redesign existing products or decide to develop a new one. The design effort has to take place concurrently, with many experts involved representing various areas of expertise and parties that collaborate through the system. The supply chain companies may also participate if necessary.

For manufacturing the product, parts and / or other services may be bought from the supply chain and delivered just-in-time to manufacturing facilities. These constitute typical business-to-business e-commerce.

Some important technical issues associated with eDC include human–computer interaction and usability (Helander and Khalid 2001), the customer decision-making process over the Internet (So et al. 1999), product line planning and electronic catalog, and Web-based collaborative design modeling and design support.

6. SUMMARY

Mass customization aims at better serving customers with products and services that are closer to their needs and building products upon economy of scale leading to mass production efficiency. To this end, an orchestrated effort in the entire product life cycle, from design to recycle, is necessary. The challenge lies in how to leverage product families and how to achieve synergy among different functional capabilities in the value chain. This may lead to significant impact on the organizational structure of company in terms of new methods, education, division of labor in marketing, sales, design, and manufacturing. The technological roadmap of mass customization can also lead to re- definition of job, methodology, and investment strategies as witnessed in current practice. For in- stance, the sales department will be able to position itself to sell its capabilities instead of a group of point products.

As a new frontier of business competition and production paradigm, mass customization has emerged as a critical issue. Mass customization can best be realized by grounding up, instead of by directly synthesizing, existing thrusts of advanced manufacturing technologies, such as JIT, flexible, lean and agile manufacturing, and many others. Obviously, much needs to be done. This chapter provides materials for stimulating an open discussion on further exploration of mass customization techniques.