22 BSuspipnly Cess Fhaoin Vcusisibility
FROM MASS CUSTOMIZATION
TO MASS CONFUSION
Razat Gaurav explains why the growing trend towards mass
customization heightens the challenges for logistics and
transportation professionals.
C
ustomers today have — and expect Recently, my neighbour told me a story
— infinite choice. Empowered by the that perfectly illustrates this point. He pur-
Internet, they have the ability to shop chased a computer from a company that
globally for better value and increased configures custom machines in the factory.
variety. They want niche market products, The computer firm clearly was doing an
but demand mass-market prices. They admirable job of managing materials
want goods designed to meet their own inventory to have enough components on
specifications, but do not want to wait hand to fulfil orders while not overstocking
for delivery. Mass customization has and expending unnecessary money. The
emerged in direct response to this trend. right hand of inventory management and
It presents an opportunity for companies assembly was doing its job.
to offer more customer choice, while The left hand of shipping, however, was
maintaining economies of scale. Yet, behind the curve. My neighbour explained
it also places almost unprecedented that his computer was assembled to his
demands on logistics departments. specifications, boxed and forwarded to
Mass customization refers to the ability shipping as each component — the tower,
to meet the needs of individual customers monitor, computer stand and speakers etc.
— and yet do so with near production line — became available. The shipping depart-
efficiency. Supply chains have to be per- ment, however, was evidently unaware of
fectly integrated to ensure that a variety of the number of components required to fulfil
products and components can be sourced, the full order. As a result, his computer was
customized, packaged and shipped at the delivered in eight separate boxes on eight
greatest possible speed and the lowest separate days, requiring multiple trips to the
possible cost. Recognizing this, pioneers of local post office to collect them and causing
mass customization have concentrated on a huge inconvenience. The ironic aspect of
setting up perfectly streamlined inventory Calculating the Cost this scenario was that he ordered the com-
management and production processes. puter partly because of a “free shipping”
However, many have overlooked the impli- of Confusion special offer. Shipping might have cost him
cations for logistics. This is a huge mistake. nothing, but it certainly cost the company.
With the introduction of greater customiza- Far too often, mass customization exposes My neighbour’s experience is just one
tion, transportation departments have to be gaps in the supply chain between order small example of how companies can
prepared to receive an almost infinite range management on one side and logistics lose hundreds of millions of pounds each
of slightly different products and combina- management on the other. Challenges oc- year through inefficient logistics. And the
tions of products corresponding to unique cur because the logistics department does cost of confusion doesn’t stop here. If
customer orders. When logistics processes not know what goods constitute an order companies fail to meet delivery expecta-
are not fully optimized and synchronized and therefore cannot accurately assess how tions, customer satisfaction decreases
to take account of this variety, inefficien- to optimally deliver that order. Simply put, and repeat orders dry up.
cies multiply — and mass customization the right hand doesn’t know what the left
becomes mass confusion. hand is doing.
Supply Chain Europe June 2007
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