Mass customization

EBay Makes a Comeback

Posted on by farzana30131f14

EBay

Today’s world is primarily driven by the internet, including e-commerce. This does not come to the surprise of EBay CEO, John Donahoe. Technology has driven scale and automation and our shopping experiences have become less dependent on human interaction and more dependent on a steady WiFi connection. Donahoe says, “these changes in the commercial landscape tend to be ‘phrased in zero-sum terms: big retailers versus the little guy. Local versus global. ‘”

While EBay is a major contributor in this landscape, its biggest competition is Amazon. Amazon is known for driving retailers out of business, especially with its most recent proposition to deliver packages with drones. One thing that stands out about Amazon is the idea of “showrooming.” Amazon’s mobile application will allow you to scan a barcode of any item in a store and it will show comparable items with competitive pricing. You can essentially buy the item in a few clicks while still in the store.

EBay is initially thought of as an auction website. However, “since Donahoe took over in 2008, he has slowly moved the company beyond auctions, developing technology partnerships with big retailers like Home Depot, Macy’s, Toys ‘‘R’’ Us and Target and expanding eBay’s online marketplace to include reliable, returnable goods at fixed prices.” This is EBay’s process strategy that will revolutionize the e-commerce world, and to Donahoe’s hope, take on Amazon.

In our Management of Operations course, we have talked about the idea of a “process strategy.” The objective is to create a process to produce products that meets customer requirements within cost and other managerial constraints. EBay is taking on a “mass customization” approach to its process strategy. It is the rapid, low-cost production of goods and service to satisfy increasingly unique customer desires. EBay is creating a “process redesign.” It is the fundamental thinking of business processes to bring about dramatic improvements in performance. We learned that changing processes like this can be difficult and expensive. EBay did not acquire all of its retailers for cheap, they had to put in an investment in order to create profitability which is what is needed in a process redesign.

EBay wants to push the concept of a “digital wallet.” While other digital payment options exist, like Google Wallet and Apple Pay, EBay wants to expand it. In 2002, EBay bought PayPal as a way to safely transfer money between people who don’t know each other. EBay has also been experimenting with a concept it calls Connected Glass, an interactive glass that may one day create a “smart” mirror in a store that can take measurements and allow you to try on outfits virtually.

While Donahoe doesn’t know exactly where all of his technological efforts will lead him and EBay, he says, ‘‘I would say everything we’re doing is just enabling the future.’’

Do you think the PayPal Digital Wallet is going to take off? Or will it be forced to the side by Apple Pay and other digital wallets?

Read the article here

Pimp My Ride?

Posted on by janelle30113f14

We recently learned about the different process strategies. They range from process focus, with a low level of output and a high variety of products, to product focus, with a high level of output and standardized products. In between the two is mass customization, characterized as “the rapid low-cost production of goods and services to satisfy increasingly unique customer desires”. It is the perfect combination of product and process focuses and although it is difficult to achieve it has a great payoff if you do.

We have seen successful example of mass customization with Dell computers. Dell allowed the customer to go into their website and create from scratch a system that met their specific and individualized needs. It was a hit for a while, until Apple began to dominate the electronics market. But the fact that people latched onto this idea shows that as consumers we know what we want and how we want it. So why don’t we do this with every product? Larger products? Namely cars.

Nissan Skyline R33 w/ Heat-Sensitive, Color-Changing Paint

It was a surprise to me, possibly because I only have a basic knowledge of cars, that you can in fact customize a car to your exact specification and that wasn’t just a concept limited to the very very wealthy and MTV’s Pimp My Ride. Beyond choosing black, white, grey, or red, and whether you want a drop top or not there are so many ways to customize a vehicle. There’s heat activated color changing paint and cars that have up to 1,750 horse power. Amazing.

So, ignoring basic cost restrictions, why are we all out here with the same basic variation of the same car? Why is there no website like Dell’s where someone can go and build their car from scratch meeting their specifications and limited only by their imaginations?

While it’s fun to think about there are currently obvious restrictions to this idea, and major differences between the production of a computer and a car. My question is could this be a future possibility? We saw the efficiency of a Tessla production center that required less workers and allowed for a greater accuracy and output of production. Could we take this model and expand on it to the point where at the click of a button we have a fully customize product ready for delivery to our nearest dealership. Would people even participate in something like this? We saw the success of Dell but we also saw its decline when something else was introduced to the market. Apple computers sold better but have less opportunities to be individualized, but people don’t seem to mind. What would be the drawbacks in mass customization (and there are probably a lot) of motor vehicles?

Sources:

http://www.complex.com/sports/2013/12/best-custom-cars-2013/overdrive-ad

http://mtv.mtvnimages.com/onair/pimp_my_ride/_all_seasons_main_image_recrops/season2_main_281x211.jpg?quality=0.85

Do You Want Fries With That Shake?

Posted on by kristin30111f14

578159

In today’s growing world, it seems as if every one wants exactly what they want exactly when they want it. To accommodate this growing trend among needy and picky consumers, many businesses have delved into the world of mass customization. Mass customization is a “rapid, low-cost production that caters to constantly changing unique customer desires” (Heizer and Render 274). This process deals with high volume and high variety, with many parts and component inputs that result in many different and unique output versions. Mass customization dominates almost every economic and industrial sector – shoes, clothing, phones, computers, and now…food!

Due to the increasing trend of mass customization and consumer preference, fast food chains such as McDonald’s and White Castle have implemented kiosks into a few of their stores in the United States that allow customers to create their own customized order at their convenience. If you think about it, it really is ingenious. How many times have you gone to McDonald’s or any other fast-food restaurant, ordered a meal with certain specifications, and the cashier did not relay that information to the kitchen, and your order was messed up? As a picky eater, this happens to me all the time, and it is frustrating. Through the implementation of self-serve kiosks, customers can order their weird or picky combinations in their own privacy without having to repeat that same order back to the cashier multiple times to make sure they have it down correctly.

There are many advantages to using kiosks in fast food restaurants: reduced labor costs, enhanced customization, speed, convenience, and standardized menu information and marketing messages (Blank). Much like how Chipotle utilizes its more well-trained employees during peak rush hour times, these kiosks help alleviate pressure from the employees in restaurants by assisting with customer service (Kiosk Europe). However, there are also some disadvantages to using kiosks when ordering food. These include initial cost for purchase, training, and installation, customer support for when the customer does not understand how to use the machine or when the machine does not work, and maintenance. When looking at the disadvantages, I cannot help but draw comparisons to self-checkouts that many grocery and convenience stores utilize, which we briefly touched on in class. While these kiosks and self-checkouts might save time in theory, if a customer is unfamiliar with the technology, the process takes much more time than ordering or checking out from someone who is trained for that specific task.

From personal experience, I think that kiosks are good in theory, but not so much in practice. This summer, I travelled to Berlin and Prague with DePaul for a business seminar/study aboard. In Berlin, a few of us decided to check out a European McDonald’s to see the differences between an European McDonald’s and an American McDonald’s. Besides the change in general atmosphere, we noticed four kiosks, where people were placing their orders. We decided to try…and we failed. Not only was the kiosk in German, but we could not figure out how to change the language settings, and we were not familiar with the European menu!

Have you ever used a kiosk or tablet to order at a fast food restaurant? If so, how was your experience?

Will fast food kiosks go down the same path as self-checkouts at convenience stores, or will they have more success?

Sources:

Blank, Christine. “Burgers By Design.” QSR Magazine. January 2014. http://www.qsrmagazine.com/exclusives/burgers-design

Heizer, Jay and Barry Render. “Process Strategy.” Principles of Operations Management. 272-294.

Kiosk Europe. http://www.kioskeurope.com/ke/why-self-service/markets/fast-food

Meehan, Sarah and Jayne O’Donnell. “Self-lane checkouts boost convenience, theft risk.” USA Today. 9 April 2012. http://usatoday30.usatoday.com/money/industries/retail/story/2012-04-06/self-scanning-checkout/54117384/1

Photo: http://www.qsrweb.com/articles/mcdonalds-aggressive-change-includes-localization-digitization/

Mass Customization: Tailoring To The Individual

Posted on by spr1323nnadeem

NIke, Dell, and Swatch

The system of mass customization benefited manufacturers by offering services and achieving greater customer satisfaction and brand loyalty. In addition, customization brought greater advance information on market trends and reduces inventory. Usually, many companies cannot handle the mass customization system because of the way how their supply chains are designed and optimized for producing predetermined amounts of stock.  Because of this, some manufacturers believe that the profit margins are too low for those who adopt the mass customization system, and thus the system is not economically feasible since it depends on the type of the product.

To increase sales, most manufacturers integrate the most common appealing features into their products to move units.  Conversely, the ideology of mass customization is that every aspect of a product will be tailored to a customer specifically.  For example, Swatch, the world’s largest watchmaker company, produces standardized internal mechanism components en masse, but also offers a wide variety options such as colors, straps, faces, and so on. The idea of a personally tailored product has been adopted by prominent vehicle manufacturers, computer manufacturers, and many more.

Dell, as another example, has demonstrated the idea of mass customization and utilizes it to allow their customers a very personal PC experience. Dell allows customers to assemble their own desktops and laptops online by customizing components such as, hard disk, graphics cards, processor, memory (RAM), and other options before assembly and delivery.  Amazingly, Dell manages to offer a fair amount of variety with their components, but achieves the lowest cost of production in the entire industry, leveraging the benefits of e-commerce and mass customization in selling directly to customers.

Both Swatch and Dell offer personalized experiences, but these two manufactures do not offer an unlimited number of choices.  Instead, companies learn what sort of spectrum that customers would be comfortable purchasing in and adjust the limits accordingly so that customers will end up happy with both their product and service.

Nike, as the most popular sports equipment manufacturer in the world, pioneered many ideas in the industry of mass customization. In spite of this large number of products tailored to golf, basketball, tennis, and soccer enthusiasts, operations managers at Nike have improved product quality while reducing overall costs. Nike allows customers to customize many of their products. For instance, customers can print their own names and numbers on shoes as well as customize their shoe strings to different color. Consequently, these practices boosted sales of Nike products to phenomenal levels, smartly marrying the links between sales, production, design, supply chain, and logistics.

The greatest downfall of mass customization is wait time.  Considering that each product must be tailored to a specific customer, often being done by hand, it will take longer to be in a purchaser’s possession.  That is where uniformly mass produced products are advantageous, as they do not have to meet a specific criteria.  In addition, most custom products cannot be returned to a manufacturer, since the item was created specifically for an individual and the likelihood that that product would meet another person’s needs exactly is slim.

 

Should more businesses adopt the idea of tailoring a product to an individual’s needs?

 

 

 

 Sources:

“Combining Elements of Mass Production with Those of Bespoke Tailoring.” The Economist. The Economist Newspaper, 22 Oct. 2009. Web. 23 May 2013.
http://www.economist.com/node/14299807

Mello, Adrian. “Mass Customization Won’t Come Easy.” ZDNet. N.p., 19 Dec. 2001. Web. 23 May 2013.
http://www.zdnet.com/news/mass-customization-wont-come-easy/296569

“NIKE ID – The First Example of Mass Customization Driving Profit? | Crossroad Innovation.” Crossroad Innovation NIKE ID The First Example of Mass Customization Driving Revenue Comments. N.p., 10 Sept. 2010. Web. 23 May 2013.
http://www.crossroadinnovation.com/nike-id

“NIKEiD.” Mass Customization. N.p., n.d. Web. 23 May 2013.
http://www.mass-customization.com/custom-shoes/nikeid/