Home » Supply Chain » Customization and the Supply Chain

Customization and the Supply Chain

July 19, 2011

supplu-chain

Trevor Miles asserts that supply chain portfolio complexity is increasing “due to mass customization and shortening product life cycles.” [“Visibility, the antidote to supply chain opacity,” The 21st Century Supply Chain, 2 May 2011]. Analysts at McKinsey and Company claim, “Executives expect that the most powerful effects on their companies will be increased innovation, greater consumer awareness and knowledge, and increased product and service customization.” [“Five forces reshaping the global economy: McKinsey Global Survey results,” McKinsey Quarterly, May 2010]. Researchers from Supply Chain Digest‘s research organization, Chief Supply Chain Officer (CSCO) Insights, insist that “‘build to stock’ will ultimately give way to ‘build or customize to demand'” in most industry sectors [“Building Sense and Respond Supply Chain Networks,” by Editorial Staff, Supply Chain Digest, 17 June 2010]. J. P. Gownder, vice president and research director at Forrester Research, writes:

“Although mass customized products aren’t yet widespread –- aside from in long-standing categories like eyeglasses — interest in customizable products is mounting. More than 35% of U.S. online consumers are already interested in customizing product features or in purchasing build-to-order products that use their specifications, according to a recent study conducted by my company. The opportunities are much greater than this initial data suggests. Psychologists have determined that an ‘I Designed It Myself Effect’ exists in mass customization, where buyers feel a sense of accomplishment from their co-design efforts. Buyers gain additional value from the certainty that features will be exactly what they want. And they can express themselves with public goods (such as clothing, cars, jewelry, or even PCs) that reflect their unique design. Ultimately, these psychological benefits translate into a higher willingness to pay into loyal, repeat-purchasing customers.” [“Why Large-Scale Product Customization Is Finally Viable for Business,” Mashable, 13 April 2011]

For consumers, those predictions may sound like a dream. For many supply chain professionals, they sound like a nightmare. Before continuing with Gownder’s discussion about mass customization, I want to discuss an extreme case of product customization as it relates to the fashion industry. Stephanie Rosenbloom reports, “Do-it-yourself Web sites are making it easy for fashion buffs to design and order custom outfits: all you need is an Internet connection and a credit card.” [“The Designer: You. The Maker: Who?New York Times, 11 May 2011] Rosenbloom says that these sites are perfect for “would-be couturiers who long to design their own wardrobes but can’t sketch or sew are in luck.” Although we are all familiar with the customized business model used by PC manufacturers, their degree of customization pales in comparison to having to make clothing that perfectly fits a customer. Rosenbloom reports that some sites don’t offer that much customization. For example, she visited a site that offers customized bras. The site allowed her to order a bra with different designs and colors for each cup, but didn’t allow her to customize the bra with different lace, ribbon, or strap color.” She called the site, “Imperfect.” As imperfect as the site is, Rosenbloom concludes:

“The site provides an important service. It sells different cup sizes for the same bra, a welcome option for women whose breasts are not symmetrical (the cups snap together in the front of the bra). Customers can select from sizes 34B to 40D as well as ‘just about’ sizes. And at $7.70 a bra (regularly $10) — less than the price of a small cheese pizza at my neighborhood Domino’s — the site may be perfect for those who want their money in their pocket, not their bra.”

Unfortunately for Rosenbloom, when her customized “polka dot” bra arrived it looked like something a clown or someone advertising for Baskin-Robbins would wear. Additionally, “it was too small. Turns out the site’s fine print says the bras are designed for a ‘junior frame.'” In the end, she writes, she ended up with “a costly sling shot.” Undeterred, Rosenbloom soldiered on to buy some customized skinny jeans. She writes:

“After perusing Web sites, [I settled on a site that] offered that jean style and appeared to have more features, like patches and zippers. … Hurdle No. 1: the site’s design. It’s cluttered and lacks 360-degree images and models, which are key to the success of sites like Zappos and Net-a-Porter. Navigating [the site] was at times more exasperating than trying on jeans. This is a problem with many design-your-own clothing sites, but it’s glaring when customers are evaluating denim style, weight and wash. Discerning the difference between ‘posh’ and ‘body hugger’ denims was like trying to tell the Olsen twins apart. … Hurdle No. 2: taking measurements. This, of course, is critical. But the site needs clearer instructions. A colleague and I had to go over them several times, and as veteran online shoppers, we’re not unfamiliar with measuring tape. We spent hours scrutinizing the site and measuring my waist, thighs, hips, knees, inner and outer leg, and more. I’ve had less invasive doctor’s appointments.”

Rosenbloom points out that measurements are important because “there are no returns unless the measurements of the jeans you receive differ from those you submitted.” After adding the desired appointments to her skinny jeans, she “clicked a button to place the order” and “was promptly informed that my credit card was charged $3,462. A hot wave of panic surged through me along with words like ‘idiot’ and ‘you’re fired.’ Moments later I realized it was 3,462 Indian rupees, about $77 (including shipping).” Clearly, Rosenbloom’s skinny jeans were going to be handsewn in India. Having placed the order, Rosenbloom still had another hurdle to face. She continues:

“Hurdle No. 3: more measurements! Five days later, I received an e-mail from Make Your Own Jeans asking me to reconfirm the outer leg length and, if possible, to provide the inseam measurement, too. I wanted to scream. My more rational self, however, was impressed that the company checked to make sure I wanted cropped jeans. I sent a note back and received a near instantaneous reply. Points for customer service.”

Once again, however, when “the jeans arrived from Mumbai.,” Rosenbloom was disappointed. She explains:

“They looked quite nice from the waist to the thighs. But below the knees? Picture a denim Ace bandage. I ordered skinny jeans. I received jeggings. The denim is thin, so the pocket lining showed through. Colleagues added that they were turned off by the MetroCard-size label sewn onto the rear. The company offers back pocket designs meant to resemble that of ‘name’ brands, but that label is a dead giveaway that you are, in fact, not wearing designer jeans.”

You have to give Rosenbloom credit, however. Having gone 0 for 2, she nevertheless moved down her torso to her feet and decided to order some shoes. She again perused a number of sites and settled on one “which has made heels for Ginnifer Goodwin and Emily Deschanel.” She continues:

“This site, too, was frustrating to use, though a recent redesign has made it much cleaner. I created a pair of black leather heels with silver studs. Then I waited. [The company’s] production time is six to eight weeks, an eternity in fashion. When I ordered the pumps it was winter. It’s 70 degrees as I write this. I want studded closed-toe shoes like I want earmuffs.”

Rosenbloom points out a challenge with extreme customization that consumers are probably not going to accept easily — delayed gratification. Having been disappointed twice previously, how did Rosenbloom do this time? I’ll let her tell you:

“More than five weeks after placing my shoe order, I received an e-mail saying it had shipped, along with a photograph of the pumps, as if they were a wart hog I had adopted from the World Wildlife Fund. A box arrived the next day from Hong Kong. I eagerly sliced it open. Yikes. A wart hog would have been cuter. Turns out, I created a punk-meets-granny-style pump with a round toe. … My error, I’ll admit. That said, the leather wasn’t supple, and the shoes were snug despite a request for a roomy toe box. More significantly, they cost $277. That’s about halfway to a pair of Christian Louboutins. Happily, the site offers refunds for most unworn shoes within 30 days if the fit isn’t right, or if the shoes didn’t turn out as you expected and the company can’t fix them.”

So what does Rosenbloom conclude from her 0 for 3 customization experience? She writes:

“Overall, design-your-own clothing sites are best for specific needs — like, say, you want a size 11 sequined fuchsia sandal because you’re a tall bridesmaid, or RuPaul. But if you’re looking for quality and convenience, you’re better off shopping at a retailer and then taking your purchases to a cobbler or tailor for adjustments. It may seem like a blast to make your own wardrobe on the Web, but it can also be a lot of work — and money. The results are not necessarily perfect. And if they aren’t, there’s no one to blame but yourself. In other words, you reap what you don’t sew.”

Large manufacturers really aren’t equipped for the level of customization described by Rosenbloom. So it makes you wonder exactly to what level of customization the analysts I quoted at the beginning of this post are referring. My suspicion is that PC manufacturers have it about right. They produce standard “boxes” and insert interchangeable components to meet a customer’s desires. Returning to J. P. Gownder’s claims that mass customization is a viable business model, he writes:

“Mass customization — where customers can tailor a product’s appearance, features or content to their own specifications -– has been the ‘next big thing’ for a long time. As far back as 1970, the futurist Alvin Toffler predicted its emergence. Customization expert Joseph Pine published his seminal book in 1992, and the 2000 book Markets of One suggested that customization would change the fundamental structure of the American economy. Yet for years, mass customization largely failed to take off. Worse yet, big brands have tried and failed with customized offerings. Levi Strauss offered customized jeans from 1993 to 2003 but failed to offer the kinds of choices to consumers -– like color -– that would have made the offering successful. Dell, once the most prominent practitioner of mass customization, flamed out spectacularly, saying that the model had become too complex and costly to continue. But today, mass customization is enjoying a renaissance among big brands such as Kraft, Hallmark, M&Ms, Wrigley and the longest-running success, Nike. And a number of pure-play international startups selling products such as chocolate, jeans, mosaic tile, jewelry and cereal, are showing the value of mass customization to consumers and product strategists alike. We’re entering a new era in which mass customization will lead a number of consumer product categories, creating value for buyers and sellers alike.”

Gownder believes that there are “three trends that will promote mass customized product offerings.” Those trends are:

 

  • “Today’s supply chain technologies enable more efficient production. Supply chain software promotes an efficient flow between customers’ co-design efforts and fulfillment on the production side, as Archetype Solutions demonstrates.
  •  “Today’s customer-facing technologies are cheaper and easier to deploy than ever. The price (and time requirement) for developing customer-facing configurators has dropped significantly in the past few years. It’s a fraction of the cost even compared to a few years ago (think $50,000, down from $1 million). And new uses –- like embedding configurators within Facebook — make configurators more accessible (and more social).
  •  “Tomorrow’s customer-facing technologies will be revolutionary. Technologies allowing customers to design their own products will become richer and more plentiful. For example, Microsoft’s Xbox Kinect shows the pathway toward the ultra-configurator: A device that will measure the contours of your body (or home) and allow gestural configuration. A tug on your augmented reality sleeve will lengthen it; pulling on a lapel will widen it. This super-configurator will be used for immersive design experiences across a wide variety of products.”

 

You can imagine how much easier Rosenbloom’s experience might have been if a Kinect-like gadget she had in her home could have precisely measured body and forwarded that data to the manufacturers. It wouldn’t have changed the other challenges she faced, but it would have made the fitting process much easier. Gownder doesn’t believe that manufacturers, even in an age of customization, will be able to sit back and wait to see what the customer wants. He argues that they must be proactive. He concludes:

“Practitioners of mass customization must learn who their buyers are as individuals, forecast the feature combinations that will resonate with them and — eventually — predict what new features these customers will want.”

Nikhil Balkudi, an Infosys consultant, writes, “Every marketer dreams of a manufacturing facility that is without any constraint. If marketing people had their way, they will expect all the products available ‘On Demand’ whenever customer places order.” [“What Products Should Be Campaign Manufactured?” Supply Chain Management, 3 June 2011] Although many analysts believe that demand driven supply chains will define the future, product customization increases the challenges that manufacturers must face to make that goal a reality. As Balkudi writes, “Every manufacturing facility in the world, howsoever sophisticated it may be, has some constraints. Hence not all products can be made manufactured ‘On Demand’.” It will be interesting to see where the limits of profitable customization really are. Because customization remains a relatively unexplored frontier, its boundaries have yet to be tested.

Related Posts:

Full Logo

Thanks!

One of our team members will reach out shortly and we will help make your business brilliant!