The burning platform for future competitiveness

By Pierfrancesco Manenti | August 02, 2016 | 0 Comments

Supply ChainPower of the Profession

“Any customer can have a car painted any colour that he wants so long as it is black”, famously said Henry Ford, celebrating his invention of mass production. Fast forward more than 100 years and BMW is the recognised leader in build-to-order, which enables customers to design and engineer their own car and get it delivered in two to six weeks.

BMW customers can select among a number of options for the exterior or interior of the car and can choose customised materials and finishing, which specialists at the BMW Individual Manufaktur facility will turn into a completely customised car.

Like BMW, many companies are feeling the pressure from customers demanding more personalised products. In SCM World’s Value Chain 2020 survey, 90% of organisations that responded feel their customers strongly value or value individualised products.

Chart visualizing survey respondents answers to the question "Do your customers value individualized products?".

The avant-garde

BMW is one of the small club of avant-garde organisations that are able to fulfil individual requests for customised products profitably.

Burberry allows customers to create their own individualised trench coat through the Burberry Bespoke online service, where customers can choose the style, fabric, colour and accessories. Coca-Cola’s Freestyle machines allow consumers to create their own beverages, mixing branded soda products with a number of additional flavours.

Personalisation is also happening in industrial B2B environments, led by companies such as eMachineShop, Local Motors and Fast Radius, which seem a lot more like e-commerce businesses than traditional manufacturing suppliers.

The latter, for example, offers direct digital manufacturing services for on-demand parts manufacturing. With a staggering range of 100 3D plastic and metal printing technologies, this isn’t any old manufacturing facility; it’s a flexible facility that can be used to manufacture one-off parts, or mass manufacture thousands of identical parts.

Customers can simply go on their website to create new print jobs, upload the part’s CAD drawing, select materials, colours, number of parts required, production priority and place an order off to be printed. Through a tie-in with UPS, any order placed through Fast Radius can be delivered the next day.

Many want to be first movers

Aside from the avant-garde, the majority of organisations are taking these challenges very seriously today, and want to do something about it quickly. In fact, they not only recognise the value that customised products have for their customers, but they also understand that the competitive battle is going to be played around having this capability in the near future.

Organisations responding to our Value Chain 2020 survey describe product customisation and individualised products as the key strategy they are planning to invest in. Nearly 30% of respondents are investing because they want to be a first mover in offering individualised products, much more so than any other strategy.

Chart comparing survey respondents supply chains to their competitors, and their proposed strategies to deal with problems.

The ability to customise products and fulfil very specific, individual customer needs is, therefore, emerging as the burning platform for future competitiveness. For many organisations this is a fundamental change in current business model and operational processes and, as such, is a daunting task to achieve.

Offering individualised products requires a thorough transformational change that’s able to overcome the major barriers to individualised products, including the ability to make products in a lot size of one and bear the cost of customisation profitably.

Transformational initiatives

In my recent report on individualised products, I explored a number of transformative initiatives that companies are planning over the next few years to be able to profitably offer customised products to their customers.

One of the key finding of the reports suggests that offering individualised products requires a foundational strategy made up of product platforms, postponement of variability and integrated organisation. These strategies give businesses the physical capability to put together individualised products.

To win the competitive battle, however, companies will have to build more capabilities on top of this foundation. They will have to become fully digitised in the way they design, make and service their products. Connected products will be delivered, monitored, updated and serviced digitally.

Consumption and usage will also be monitored for a more responsive supply chain. Finally, products will be manufactured in agile and intelligent factories, which might often be outsourced to on-demand direct digital manufacturing service organisations.

The days of Henry Ford’s mass production principles are long since gone. Don’t miss this opportunity.

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