Manufacturing and services: From mass production to mass customization

Abstract

Manufacturing and services constitute two of the five sectors of every country’s economy; depending on the maturity of the economy, they are — in terms of employment — typically the two largest sectors. The outputs or products of an economy can also be divided into goods products (due to manufacturing, construction, agriculture and mining) and services products. To date, the goods and services products have, for the most part, been mass produced; it is the premise of this paper that recent technological advances — including flexible manufacturing, cloud computing, nanotechnology and smart sensing — can better enable the transformation from mass production to mass customization. We regard mass customization as the simultaneous and real time management of supply and demand chains, based on a taxonomy that can be defined in terms of its underpinning component and management foci. From a components perspective, we first consider the value chain of supplier, manufacturer, assembler, retailer, and customer, and then develop a consistent set of definitions for supply and demand chains based on the location of the customer order penetration point. From a management perspective, we classify the methods that are employed in the management of these chains, based on whether supply and/or demand are flexible or fixed. Interestingly, our management taxonomy highlights a very critical research area at which both supply and demand are flexible, thus manageable. Simultaneous management of supply and demand chains sets the stage for mass customization which is concerned with meeting the needs of an individualized customer market. Simultaneous and real time management of supply and demand chains set the stage for real time mass customization (e.g., wherein a tailor first laser scans an individual’s upper torso and then delivers a uniquely fitted jacket within a reasonable period, while the individual is waiting). The benefits of real time mass customization cannot be over-stated as goods and services become indistinguishable and are co-produced — as “servgoods” — in real time, resulting in an overwhelming economic advantage.

Keywords

Value chain / supply chain / demand chain / taxonomy / real time management / mass production / mass customization / manufacturing / goods / services

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