Mass customization, in marketing, manufacturing, call centres and management, is the use of flexible computer-aided manufacturing systems to produce custom output. Those systems combine the low unit costs of mass production processes with the flexibility of individual customization.
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Mass customization is the new frontier in business for both manufacturing and service industries. At its core is a tremendous increase in variety and customization without a corresponding increase in costs. At its limit, it is the mass production of individually customized goods and services. At its best, it provides strategic advantage and economic value.
Mass customization is the method of "effectively postponing the task of differentiating a product for a specific customer until the latest possible point in the supply network." Kamis, Koufaris and Stern (2008) conducted experiments to test the impacts of mass customization when postponed to the stage of retail, online shopping. They found that users perceive greater usefulness and enjoyment with a mass customization interface vs. a more typical shopping interface, particularly in a task of moderate complexity. From collaborative engineering perspective, mass customization can be viewed as collaborative efforts between customers and manufacturers, who have different sets of priorities and need to jointly search for solutions that best match customers’ individual specific needs with manufacturers’ customization capabilities.
The concept of mass customization is attributed to Stan Davis in Future Perfect and was defined by Tseng & Jiao (2001, p. 685) as "producing goods and services to meet individual customer's needs with near mass production efficiency". Kaplan & Haenlein (2006) concurred, calling it "a strategy that creates value by some form of company-customer interaction at the fabrication and assembly stage of the operations level to create customized products with production cost and monetary price similar to those of mass-produced products". Similarly, McCarthy (2004, p. 348) highlight that mass customization involves balancing operational drivers by defining it as "the capability to manufacture a relatively high volume of product options for a relatively large market (or collection of niche markets) that demands customization, without tradeoffs in cost, delivery and quality".
Implementation
Many implementations of mass customization are operational today, such as software-based product configurators that make it possible to add and/or change functionalities of a core product or to build fully custom enclosures from scratch. This degree of mass customization, however, has only seen limited adoption. If an enterprise's marketing department offers individual products (atomic market fragmentation) it doesn't often mean that a product is produced individually, but rather that similar variants of the same mass-produced item are available.
Companies that have succeeded with mass-customization business models tend to supply purely electronic products. However, these are not true "mass customizers" in the original sense, since they do not offer an alternative to mass production of material goods.
Variants
Pine II (1992) described four types of mass customization:
He suggested a business model, "the 8.5-figure-path", a process going from invention to mass production to continuous improvement to mass customization and back to invention.