Product customisation is increasingly popular with consumers, putting pressure on businesses to produce goods tailored to a mass audience – which is where mass customisation comes into play.
So what is mass customisation, what are its benefits and challenges, and who is using this production model? We answer these questions, and give you examples of how it works in practice.
What is mass customisation?
Mass customisation does what it says on the tin. It’s a manufacturing process for customising goods at scale while keeping unit costs low – a middle ground between standardisation and personalisation.
Mass customisation is also known as:
Increasingly popular in the retail goods sector – but also used in the automotive, software and finance sectors – mass customisation allows customers to purchase a product that is more ‘them’. This is usually achieved through some kind of personalisation toolkit found at the company’s front-end – i.e. their eCommerce platform.
Those manufacturers who can customise their goods have an advantage over competitors who are only able to produce generic goods. But it’s not without its challenges, and it doesn’t work for every manufacturer, which we’ll get to later in this article.
How does mass customisation work?
Mass customisation can generally only be achieved by a company that works smarter, not harder. Flexibility here is key – anyone looking to get into mass customisation must be able to rapidly and efficiently produce goods without necessarily knowing exactly what those goods will look like in advance.
This makes mix-and-match modular components quite popular among mass customisers. A modular approach means a company can standardise the components it buys or produces. By putting these components together in a customer-led way to achieve customisation, a business can achieve cost-efficient mass-manufacturing. In other words, each component is not customised, but the final product is.
The end product may not be truly ‘custom’, in that it was produced in an almost LEGO-like fashion with pre-made pieces. But it will feel to the customer that it’s theirs because it’s built to their specs. Those specs can be constrained and guided through the use of front-end customisation toolkits, which offer multi-choice options for each customisable part of a product – like colour, fabric and size.
The examples we give of mass customisation below will help you see what this looks like in action.
What about mass customisation in software?
Mass customisation in software is becoming more convenient thanks to the rise of cloud-based SaaS as a business model. With no on-premise hardware required for most new apps, and their services billed mainly on a user-by-user or module-by-module basis, companies can just ‘switch on’ or ‘switch off’ the services that they desire.
- Learn more: Cloud-based software – the way to go!
How does mass customisation work in financial services?
The financial services sector is also taking mass customisation in its stride, with automated tools enabling the delivery of highly tailored products in spaces like lending and investment.
Front-end apps gather important data on customers, such as risk tolerance, budget, time frame, investment style and more. Then back-end systems pair tailored financial products and services to the customer based on those metrics. Human intervention is only required in certain circumstances, making it very efficient to scale.
Additive manufacturing (3D printing) in mass customisation
Some companies are also turning to additive manufacturing – aka 3D printing – to cut some of the costs of switching to mass customisation.
Without 3D printing, certain types of customisation would be challenging, since it would require expensive tooling changes or the maintenance of multiple pieces of equipment.
But with 3D printing, a customer’s unique design can be transferred straight to the machine and be produced precisely to spec. Whether their shape is simple or complex, the process is the same, and products can be changed right down to the last minute before without the need to retool or make a new mould.
That said, 3D printing can be imperfect and isn’t as scalable as other manufacturing types. This has led to some companies using it more for rapid prototyping than for the mass production of low-cost goods.
Why is mass customisation trending?
The entire manufacturing sector is seeing a shift towards personalisation. In fact, it’s not just manufacturing – nearly every industry is being pushed towards a customer-centric service. 86% of customers say customisation appeals to them, and 62% say they would pay more for a customised product.
Consumer electronics is one of the major sectors driving this push. The survey above found that people – particularly millennials – are upgrading their devices more frequently than before due to a perception that their devices become outdated quickly. And as they purchase these upgrades, they want to tailor the device to better fit their needs – by choosing their processor, storage capacity, screen size and the appearance of the item, and more.
Companies that can’t keep up may fall behind
Customers want personalisation. As manufacturers in some sectors – like consumer electronics and fashion – provide this service, customers expect it more in other areas.
This increases the diversity of customer demand, as people realise that they can ask brands to match their style rather than the other way around. And software facilitates this too, with eCommerce shopping carts that have customisation toolkits built in. Automated inventory management platforms then help manufacturers organise and monitor their new, modular product ranges.
We’ve seen this process of customer-driven change before, with sustainable packaging going from niche to mainstream and B2B eCommerce mimicking B2C eCommerce, and we’ve seen it also in the rise of personalised email and content marketing.
The four types of mass customisation
There are four types of mass customisation that can be used to produce goods to customer specifications:
- Adaptive customisation: The manufacturer produces a product with personalisation built into its use, but the product itself is the same no matter who purchases it. With adaptive customisation, users personalise it when they take it home. For example, software that can be set up with different themes, and lightbulbs that can be adjusted for a particular mood.
- Cosmetic customisation: The manufacturer produces the same basic product, but the way the product is packaged or labelled changes based on the customer. For example, a manufacturer may produce the same food item for six different retailers but each receives its own branding, packaging size or label.
- Transparent customisation: The manufacturer produces a tailored product, but the customer may not realise it. Using product usage data, careful forecasts and/or knowledge of customer preferences, the manufacturer customises its product for the individual customer. The customer may never realise that what’s in their package is different to what’s in other people’s. Shampoo, conditioner and soaps are common examples.
- Collaborative customisation: The manufacturer works with the customer to produce a customised product that suits the user’s needs. This is what most people think of when they think of mass customisation. Customers that may not be able to articulate exactly what they want are shown a list of options and can choose their preferences from the drop-down menus provided.
Advantages and benefits of mass customisation
There are many advantages to mass customisation, including that it:
- Provides a unique offering: A tailored offering is inherently unique, and the customer gets exactly what they want. Competitors may not be able to offer the same thing, as it was the customer’s own choices that shaped their product.
- Improves customer loyalty: By continuously providing exactly what the customer wants, to their specs, you may see improvements in customer satisfaction and loyalty.
- Can result in better profits: Customer satisfaction is usually linked with an improved bottom line, and mass customisation manufacturers also find they are able to increase their prices – since they’re providing more value – without seeing a significant drop in demand.
Disadvantages and challenges of mass customisation
At the same time, mass customisation comes with its challenges, including:
- Increased complexity in handling stock, including returns: Each customised product comes with some uncertainty – you won’t know exactly what you’ll need to produce, but still need to hold the stock or parts to produce what customers want. This can make inventory management more difficult, especially if there are items coming back up the supply chain in the form of returns, which are then harder to resell.
- Forecasting demand is also not as simple: You can’t always predict how people’s preferences will change over time, making forecasting changes more complex. While you can still predict basic surges in demand (such as at Christmas time), it’s harder to predict what components will be in demand, or what people will expect next.
- Equipment costs may increase: Depending on where and how you customise the product, you may need to purchase a wider variety of machinery to produce your goods. This could increase equipment costs compared to a manufacturer producing generic goods.
Supply chain management for mass customisation manufacturers
One thing is consistent in various sources that discuss how to transition to mass customisation: your supply chain has to evolve too.
In order to produce at scale, a manufacturer generally aims to have a very lean supply chain – one that eliminates waste, cuts costs, and operates as efficiently as possible.
But in order to produce a tailored product the same manufacturer needs an agile supply chain –one that can quickly pivot, change and adapt to evolving customer needs.
Mass customisation, being a blend of the two, must therefore find the middle ground between lean and agile.
Using a ‘leagile’ supply chain for mass customisation
Some experts have coined the phrase ‘leagile’ to refer to the space between lean and agile. It’s where processes that can be made lean are made lean, and the rest stays flexible.
To implement a mass customisation system, these are some measures you might take, from a supply chain perspective:
- Find suppliers who produce high-quality goods every time, to cut down on the amount of time you need to spend inspecting their incoming components. This will allow for faster stock turnaround.
- Keep your network of suppliers flexible, so you can quickly adapt to changing conditions. You may also consider keeping that network on-shore, to avoid any difficulties due to international disruptions.
- Invest in supply chain visibility and management software so you can monitor your supply chain and partners in real time.
- Invest in good inventory management software to control your incoming and outgoing goods, as well as requests from customers, so you have a clear view of what you need based on what they want. You must be able to forecast demand as accurately as possible.
- Have clear guidelines on what is and is not customisable. Can standardised components come pre-assembled based on your forecasts, to be quickly finalised when an order arrives?
5 examples of mass customisation
1. Skyn Iceland
Skyn Iceland, a health and beauty company, uses a type of transparent customisation to allow its customers to do a self-consultation using an automated skincare system. Customers are asked a few questions about their skin and what they want to achieve, and the system then suggests which products from Skyn’s expansive roster are suitable for their individual skin type.
Fashion is an industry where customisation has been commonplace for a while – with options like size and style – but modern technology is making it easier for clothing manufacturers to tailor their products to each customer.
PolarFleece is one example. With its customisation tool, users can select from an array of detailing options for the company’s Andover or Shearling pullovers. The base product remains the same, making this a type of cosmetic customisation with a collaborative process: customers choose the body and sleeve colour, button material, detailing colours and, of course, size.
AURA is a small personalised hair care provider in New Zealand, providing custom shampoo formulas for its customers. Like Skyn, customers are taken through a quiz to determine their needs – from hair type and scalp sensitivity to their goals and what fragrance they want in their shampoo.
This quiz then puts together a series of products which have been customised to the user, right down to their name being on the bottle. AURA mixes together the right ingredients for the customer and ships their products in sustainable packaging.
4. Normal 3D Printed Earphones
Normal uses 3D printing to create custom-fitted earphones for its customers. Customers can send in a photo of their ear, and the company is able to use that to create a pair of earbuds that should fit the mould of their ear perfectly – increasing comfort and reducing sound leakage.
To ensure audio quality, Normal uses standardised audio components and cables. In this way Normal only needs to custom-make part of their product, rather than the entire item.
5. The frozen yoghurt trend
Remember when frozen yoghurt started to get big? The most common business model in this trend – letting customers build their own frozen yoghurt cup – is a good example of simple adaptive manufacturing at the retail end.
When customers enter one of these stores, they select a size of cup, pour their own frozen yoghurt, then choose the toppings they want – paying an amount usually based on weight. From a business standpoint, the owners don’t need to prepare any food beyond ensuring that all the machines and toppings are refilled. Customers then make their own product.
How can SMEs take advantage of the mass customisation trend?
That gives you some idea of how businesses – including small businesses – are able to utilise modern customer-facing toolkits and ‘leagile’ supply chain principles to offer personalisation to customers.
The examples we’ve used of mass customisation may not directly apply to your needs – so here we give some more general tips to follow to determine how you might be able to make the switch:
- Talk to your customers: Perform the necessary customer and industry research to find out if mass customisation is even on the horizon for your sector. Find out if it’s what customers want, or if it might be what they want in the near future.
- Choose a customisation type: Consider which of the four types of mass customisation is most relevant to the needs of your customers, and which is also practical for your business to adopt.
- Think modularly: Focus on writing pre-made sub-Bills of Materials that will allow you to standardise and preassemble components where you can, and quickly customise the rest. You’ll need full visibility over all margins, as some parts are going to cost more than others and this may be inconsistent across products if they are being heavily customised.
- Invest in visibility: You need clear, real-time visibility into your supply chain and inventory to ensure you always have what you need, when you need it. That means looking into software for processes such as supply chain management and inventory management.
- Hone your forecasting: You’ll also need to ensure your forecasting capabilities keep up with your plan to customise – meaning you’ll need to know when demand will surge or drop, and what customisations will look like at those times. This may be difficult at first, without historic data to go by.
- Talk to your suppliers: Your business and your upstream suppliers are a team. You need to know that they can provide the quality you need, and that you have enough flexibility built into your supply chain to meet potentially changing needs downstream. Manage costs by going lean where you can go lean, and stay agile everywhere else.