An outline for Management through mass customization.
* Mass customization has proved to be an efficient tool in management of organizations.
* The organizations must master the art of moving information and goods in a fast manner, through the supply, distribution, and manufacture and assembly chain.
* The automated systems make the manufacturing of the products simple and fast.
* Every organization should realize that mass customization is an operational strategy.
* The organizations must incorporate a dynamic system loop.
* Hewlett Packard incorporates value proposition which helps it to identify the needs and expectations of customers which have not been met.
Mass customization is not a new issue. Its utilization can be traced back to 1970. The idea of mass customization was brought up by Alvin Toffler and the concept of Mass customization coined in 1987. Organizations have found out that the satisfaction of customers plays the most important role in the success of the organization. Therefore, their needs must be at the centre of organizations` efforts. Production and manufacturing of high quality goods and services at a lower cost plays a significant role in the organization. Through doing this the organization gains competitive advantage over the other competitors.
As proposed by Pine (1993), we are on the threshold of “the experience economy where organizations orchestrate memorable events for their customers”. The organizations must master the art of moving information and goods in a fast manner, through the supply, distribution, and manufacture and assembly chain. Logical aspects and physical events must be conducted in a swift, efficient and accurate way. There is a new operational strategy that is focused on inducing the speed in make to order production system. However, competition must between mass customized goods and standard goods must be maintained.
The operations of corporations are being transformed from mass production to mass customization. Low costs were attributed to mass production, but uniformity was not one of the results of mass production. Mass customization brought uniformity. Customers come into direct contact with the organization and make customers specify the specifications of the products that they require from the organization. In mass customization, organizations don`t really know what the customer may ask next. Therefore, it is the duty of companies to be ready and prepared to meet any request that may follow (Pine, 1993).
The automated systems make the manufacturing of the products simple and fast. The manufacturing process must be more efficient and more flexible to ensure quick response to customers` requirements. Internet has made mass customization a highway to organizations` success. For example, Computer multinational company called Dell allowed their customers to assemble personal computers online. Customers requested PCs, and Dell placed the PCs components on the internet. Automobiles Company, Ford, allows its customers to assemble the vehicles online, where they have placed a palette on the web. Apparently, these two companies have defined the lines along which they allow their customers to individualize their purchases. However, the organizations that mass customize must determine the needs of their customers first.
According to Pine (1993), the organizations must incorporate a dynamic system loop. He illustrates two secondary reinforcing loops which include product technology and process technology. The frequency of production must be at an increasing rate in order to generate a many goods and services. Companies that mass customize never know what customers will request next.
There have been various methods in which a company can use to mass customize their products and services. These ways include Customization of services around good standards products, creation of customizable goods, provision of point of delivery customization, Provision of quick response throughout the delivery chain, and modularization of components to customize goods. There is even a future possibility of mass customization becoming popular to the point of phasing out more profitable production and sales.
In mass customization two principles must work hand in hand Lean manufacturing principle and synchronous manufacturing principles must be combined with the principles of agility without leaving out the advantage provided by three production strategies. We can differentiate between mass customization and lean manufacturing. Lean manufacturing thrives well in a repetitive manufacturing environment. Its order characteristics are of high volume. However, synchronous manufacturing principles dwell on low volume production. Mass customization incorporates lean principle, with the addition of velocity and flexibility in the production process. The operation will be most successful in environments where there is a competitive advantage for a larger degree of customized and specialized orders.
In direct opposition is the traditional manufacturing approach which is characterized by use of high inventory, high economic order quantities and high capacity utilization. Traditional approaches use a taboo, whereas mass customization utilizes excess capacity. Traditional approaches also utilize mass production, whereas mass customization utilizes make-to-order production process. Production in mass customization requires high volumes of capital so as to maintain flexibility in production.
The major challenges that are faced by many organizations is the lack of agile supply chain which is required for mass customization is to function optimally. Successful supply chain works well in an organization with great network capabilities. Good network ensures that there is speed and flexibility to accomplish the activities of manufacturing goods. The faster the materials, decisions and information flows through the company, the faster the response to customers` needs. Another challenge is limited financial capability which makes the organization not to acquire highly flexible equipments and machines.
Every organization should realize that mass customization is an operational strategy, which, with proper implementation can present a new dimension to competition. Without speed and flexibility, mass customization will not achieve its desired goal. Companies should seek technical expertise, which will have to provide direction and leadership to the management. These experts equip the management with the knowledge that they need to meet future challenges. The organization should master the art of incorporating the outlook of products and the processes of making those goods.
This is an era where companies are struggling to stay in business. World economy has been going through a crisis since 2008, and the crisis might become worse than any other crisis that has faced the economy. Currently, Hewlett Packard is one of the world leading manufacturers of IT products. HP has a wide range of products, which include PCs, printers, networking facilities, storage devices and network servers. In 2008, HP had revenue of $118.4 billion and $8,329 million. Among the fortune 500 companies, HP is ranked 14[th]. (Birger, 2009).
HP logistics design has improved the transport efficiency dramatically. This has reduced the cost of energy, making these resources to be channeled to more computer aided manufacturing processes, and to their distribution being optimized. Relationship between the shipping companies and Hewlett Packard, allows them to offer economical prices. HP continues to develop and install its own database to improve its mass customization process. This improvement has led to increase in profit margin from 4 percent in 2005 to 8.4 percent to 10 percent in 2008.
Procurement of materials uses advanced technology such as E-payments, E-quoting, and E-invoicing. HP has a product portfolio with a target of meeting its customers` needs and expectations in an efficient and fast way. The portfolio enables the company to manufacture customized products at relatively low prices. Customer value management is also another aspect that the management of Hewlett Packard utilizes to establish the expectations of different customers. The categories of Customer value management include asset, performance, cost, time, information and risk management. All these categories are incorporated together in order to maximize customer satisfaction (HP, 2006).
Hewlett Packard incorporates value proposition which helps it to identify the needs and expectations of customers which have not been met (Walter & Rainbird, 2007). HP has mastered the art of shortening lead times, increasing variety and reduction of costs. This is achieved through effective value delivery which is cost effective and meets diverse customers` needs. HP has also introduced different products and services to the market. HP`s all-inclusive portfolio assists the organization in matching the goods in a right, correct manner. The client worth can be addressed in enhanced value and consistency, quicker delivery through open cycles, better flexibility, and stepwise venture opportunity etc (Karandikar & Nidamarthi, 2007).
Since 1938, Hewlett Packard has continually built advanced computers. HP is one of the leading computer manufacturers. The Hewlett-Packard Company has a unique way of confronting the pressures that arise from the different quarters of its business. Other than being one of the leading manufacturers of computers, HP has become synonymous with its high-tech innovation of products. Theirs is what can be termed as a technology breakthrough. HP founders David Packard and William Hewlett were people of vision. Its business is wide touching the areas of medical products, computers, and printers. Companies are slowly realizing that the delivery of customized goods can be flexible and fast. The successful implementation of a standardization strategy was effected by HP Company. This strategy has helped the company to sell laser jet printers across the world but mainly in North American countries and across Europe.
The company has formed a partnership with another company in Japan which makes the engines of the printers, which is later transported by sea. Through mass customization HP has transformed the printer power supply from a standard power supply to 110v and 220v. These two units of power supply can work in two different countries. The universality of power supply enabled HP to sell products in many countries. This universality rules out cases of imbalance in supply. Mass customization approaches are two dimensional object dimension, which is incorporated in modularity i.e using the standard modules to facilitate the assembly of finished products according to the specified product dimensions. Modular design of production and the method could ease mass customization given that it is the method of accomplishing both the size and scope of economy necessary (Duray et al, 2000).
The mathematical modeling approach shows modularization as a function of interface constraints characterized by the quantity of components and respective interfaces. By doing analysis of how the relationship between the supplier and the buyer can power modularization, HP utilizes a modular design which offers a network of supply which is so flexible that the requirement to customize the products at a greater speed and which are not expensive are imminent. In this design, the finished goods composition is usually separated in to parts. The composition of end products is separated into parts. Some of these parts are common in all products, whereas others are not. There are three benefits which can be attributed to the modular design.
A company maximizes the number of standard components it uses in all forms of the product, bring together those mechanisms for all product options in the prior stages of the assembly process, and defer the addition of the components that differentiate the manufactured goods until the later stages of the process. Secondly, an organization can make the modules of the product separately. Different modules can be manufactured at the same time. Manufacturing modules at the same time considerably shortens the gross time that is required for production. Thirdly, diagnosing the problem becomes easy, which makes it possible an organization to eliminate or isolate problems that may crop up. Consider a part that is not standardized: a dedicated power supply, or a power supply that cannot without human intervention convert voltage.
In global electronics market, building a devoted power supply into a merchandise in the first stages of production forces a company to commit to the product`s nation of destination. If an organization has a long manufacturing process or release time from industrial unit to end consumer, having this kind of power supply makes it complicated to mass-customize well. An organization could standardize materials, design or purchase a distinct supply of power that would function across an entire product family or, preferably, across many product families. On the other hand, the organization could reschedule the assembly of the power supply in anticipation of a later point in the production process. Either approach would consequence in greater flexibility and lower costs.
There are various ways that HP can use to improve the situation in its company. More businesses are opening their eyes to the new technology, and they are utilizing the technology in conducting their activities. Electronic sale is increasing by the day. In short intervals and step by step in the introduction of e-commerce there are several recommendations which HP can use as guidelines. The company should integrate an internal database to ensure that there is a smooth flow of information.
The creation of an e-business platform is also very important. This platform makes the products available. The supply chain should also be managed electronically. Customers who are offered an effective online service will find it easier to interact with the company. The company should establish personalized web pages and a customer interaction centre. This way the organization will prevent loss of market share to competitors who include Dell among other successful e-business companies. Customers interact with the organization through the company`s website. They are supported through software downloads and troubleshooting information. This interaction has made the company to receive 600 calls per year from the customers. It has also enabled the company to ship out more than 500 million products.
Any company will achieve more than 90% of its success if it will have a holistic view of its customers. The interaction through social networks has also enabled the company to collect different views from customers. Hewlett Packard uses the advantage it has over the other multinationals- the knowledge of utilizing the social network and the internet in general. There are various programs which the company uses in marketing. The programs include email marketing, direct marketing and customer loyalty.
Hp can be said to be one of the well positioned multinationals in the world. This success can be attributed to the integration of internal and external logistics. This competitive advantage has been unmatched by other companies. The company needs to increase the alliance with other organizations in order to improve service delivery and brand building.
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An outline for Management through mass customization.