Is Crowdsourcing the magic bullet to adopt Mass Customization?
The customer wants to buy customized products.The seller wants to sell from existing inventory.The classic dilemma exists even today. But in this internet age where information is easy and choice is abundant, the tide is strongly in favor of the customer. Driven by demanding customers, increasing competition, and a recession weary economy, manufacturers of 21st century do not seem to have a choice than to move to customized offerings. The solution to this problem though, is not new. Mass customization or the business strategy of selling of customized products at a large scale by producing them at mass manufacturing costs, has been in the news for more than a couple of decades. As the demand is now met from build to order stock, this scenario leads to lower accumulation of unsold inventory. So what has led manufacturers to be slow on adopting this compelling proposition till now? In the coming sections we will touch upon some of the challenges and explore whether innovations like crowdsourcing and 3D printing may finally provide the impetus leading to extensive adoption of mass customization among manufacturers. While the last century was dedicated to mass manufacturing, will the current one be known for mass customization?
One of the main challenges in adopting this philosophy is the multifold increase in number of product variants. This presents challenges not just in designing flexible manufacturing units, re-usable product structures but also on the marketing side to promote this huge variety. While options may entice customers, it presents the risk of confusing him, if the variety is not presented appropriately. Mass customization can very quickly become mass confusion leading to failure of an otherwise customer centric approach. Choice is good but too when customers have to choose from too many attributes which they don't understand and value, it leads to frustration and can have an adverse impact on the buying decision. Take the case of mobile phones; there are so many models but few which are top selling.
One of the other big problems is that customers are not ready to wait long for customized products. While earlier a customer would be ready to wait for 60 days for a made to order car in Germany, this has now reduced to around 40 days. In an industry sector like automotive which is heavily dependent upon its suppliers for its manufacturing process, mass customization is not just about bringing a change within the company but also selecting the right set of supply chain partners. Apart from design flexibility, the increase in number of variants leads to operational burden too by increasing the complexity in accounting structures, inventory tracking and order processing.
The multitude of problems also has seen some pragmatic solutions. The recent advances in information technology have led to decrease in cost and increase in accuracy of handling transactional, accounting data and the ability to handle complex production schedules. Advanced manufacturing systems have enabled manufacturers to adopt lean manufacturing, design modular product structures to facilitate mass customization. Distributed manufacturing and assembly is another strategy being adopted.
The ability of not just to process information but to disseminate it seamlessly has led to real time integration with suppliers thus leading to a decrease in lead time of built-to-order assemblies. The advances in visualization technology have enabled creation of online configurators which enable customers to visualize their final configured product without the manufacturer having to build it or keep it in stock. The virtual building of the product from attributes engages the customer and takes care in reducing "mass confusion" to some extent. Another innovative practice which directly addresses the current problem of huge inventories (especially cars) is the Virtual build to order (VBTO). Online car configurators are able to search matches to selected configuration from existing inventory across retailers and factory systems, hence meeting the demand for customized products without actually manufacturing a new vehicle. You have recommendation engines incorporated within the configurators which suggest near matches to customer inputs hence assisting him or her to make a quick choice if he or she is not ready to wait.
All the above developments are great but only leading to incremental adoption of the mass customization philosophy. The reason is that it still does not substantially mitigate the risk of failure against the benefit. What if you discover that the variable attributes you introduce to your product or service are not the ones which the customers really value? By that time the manufacturer would have made substantial investment in redesigning manufacturing setup, driving change in organization, partners, marketing and IT systems. The sunk cost, capacity underutilization and inventory from lack of sales could lead to a shutdown. In this world of fast changing needs, market research based on historical data can hardly provide that kind of customer insight to guarantee success. This is where new innovations like "crowdsourcing" and "3D printing" can break the barrier.
Crowdsourcing or the practice of involving a large set of people especially over the internet with an intention to obtain ideas, opinions or services, allows manufacturers to involve the customer in the design stage itself. Advancement of web 2.0 technologies enables integration of visual software (3D) within collaboration platforms leading to a very interactive form of co-design between the prospective consumer and manufacturer. Advanced analytics software derives meaning out of unstructured comments from consumer and thus indicates key insights to manufacturer which otherwise would not have been possible via traditional means. With this manufacturers are reasonably sure about the key attributes of value, product variants before moving to a mass customization approach. They no longer follow suit what competitors are offering and have an opportunity to lead the game rather than catch up to it. Allowing people to participate creates a positive vibe for the brand too. Crowdsourcing also has a role to play post the manufacture of the product i.e. in the buying decision. For example a customer can build a virtual car using an online car configurator and post it on a crowdsourcing platform provided by the OEM. Based on recommendations, likes/dislikes from others he/she could make the buying decision.
Another innovation which is hugely helping the cause for mass customization is 3D printing. With the advent of cheap 3D printers small manufacturers can quickly move to prototyping to final product. Large manufacturers also benefit as they do not have to spend a whole lot of time and money in prototyping anymore. A good use case is in the automotive aftermarket. OEMs or savvy players from the un-organized sector can provide a platform where do it yourself customers can take the core-design of the accessories and parts and can customize it. Subsequently the customized designs could be 3D printed and delivered to the customer.
By now we have seen the challenges manufacturers face in adopting a mass customization approach. There seems no single method to success except that manufacturers have to treat mass customization as a business strategy rather than a manufacturing one. But with innovations like crowdsourcing and 3D printing addressing the fundamental risks which prevented the adoption, I believe we would see more companies opting the mass customization route profitably.
What do you think??