Manufacturing and services: From mass production to mass customization

Article

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 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. [1]
    Anand, K.S., Pac, M.F. & Veeraraghavan, S. (2011). Quality-speed conundrum: trade-offs in customer-intensive services. Management Science, 57(1): 40–56MATHCrossRefGoogle Scholar
  2. [2]
    Bhattacharje, S. & Ramesh, R. (2000). A multi-period profit maximizing model for retail supply chain management: an integration of demand and supply side mechanisms. European Journal of Operational Research, 122(3): 584–601CrossRefMathSciNetGoogle Scholar
  3. [3]
    Croom, S., Romano, P. & Giannakis, M. (2000). Supply chain management: an analytical framework for critical literature review. European Journal of Purchasing & Supply Management, 6(1): 67–83CrossRefGoogle Scholar
  4. [4]
    Davis, S.M. (1987). Future Perfect. Addison-Wesley Publishing, MAGoogle Scholar
  5. [5]
    ElHafsi, M. (2000). An operational decision model for lead-time and price quotation in congested manufacturing systems. European Journal of Operational Research, 126(2): 355–370MATHCrossRefMathSciNetGoogle Scholar
  6. [6]
    Elimam, A.A. & Dodin, B.M. (2001). Incentives and yield management in improving productivity of manufacturing facilities. IIE Transactions, 33(2): 449–462Google Scholar
  7. [7]
    Eyers, D. & Dotchev, K. (2010). Technology review for mass customisation using rapid manufacturing. Assembly Automation, 30(1): 39–46CrossRefGoogle Scholar
  8. [8]
    Frohlich, M.T. & Westbrook, R. (2002). Demand chain management in manufacturing and services: web-based integration, drivers and performance. Journal of Operations Management, 20(6): 729–745CrossRefGoogle Scholar
  9. [9]
    Harris, F.H. & Pinder, J.P. (1995). A revenue management approach to demand management and order booking in assemble-to-order manufacturing. Journal of Operations Management, 13(4): 299–309CrossRefGoogle Scholar
  10. [10]
    Haug, A., Ladeby, K. & Kasper, E. (2009). From engineer-to-order to mass customization. Management Research News, 32(7): 633–644CrossRefGoogle Scholar
  11. [11]
    Heikkila, J. (2002). From supply to demand chain management: efficiency and customer satisfaction. Journal of Operations Management, 20(6): 747–767CrossRefGoogle Scholar
  12. [12]
    Huttunen, K., Eloranta, E. & Holmstrom, J. (2000). Managing the Demand-Supply Chain: Value Innovations for Customer Satisfaction. John Wiley & Sons, New York, NYGoogle Scholar
  13. [13]
    Korhonen, P., Huttunen, K. & Eloranta, E. (1998). Demand chain management in a global enterprise-information management view. Journal of Operations Management, 9(6): 526–531Google Scholar
  14. [14]
    Krishnamurthy, A., Suri, R. & Vernon, M. (2000). A new approach for analyzing queuing models of material control strategies in manufacturing systems. In: Proceedings of the 4th International Workshop on Queuing Networks with Finite Capacity (QNETs2000), West Yorkshire, U.K., July 2000Google Scholar
  15. [15]
    Kumar, A. (2007). From mass customization to mass personalization: a strategic transformation. International Journal of Flexible Manufacturing Systems, 19: 533–547CrossRefGoogle Scholar
  16. [16]
    Lampel, J. & Mintzberg, H. (196). Customizing customization. Harvard Business Review, 38(1): 21–30Google Scholar
  17. [17]
    Landeghem, H.V. & Vanmaele, H. (2002). Robust planning: a new paradigm for demand chain planning. Journal of Operations Management, 20(6): 769–783CrossRefGoogle Scholar
  18. [18]
    Lederer, P.J. & Li, L. (1997). Pricing, production, scheduling, and delivery time competition. Operations Research, 45(3): 407–420MATHCrossRefMathSciNetGoogle Scholar
  19. [19]
    Lummus, R.R. & Vokurka, R.J. (1999). Defining supply chain management: a historical perspective and practical guidelines. Industrial Management and Data Systems, 99(1): 11–17CrossRefGoogle Scholar
  20. [20]
    Matzler, K., Waiguny, M. & Fuller, J. (2007). Spoiled for choice: consumer confusion in Internet-based mass customization. Innovative Marketing, 3(3): 7–18Google Scholar
  21. [21]
    Mentzer, J.T., DeWitt, W., Keebler, J.S., Min, S., Nix, N.W., Smith, C.D. & Zacharia, Z.G. (2001). Defining supply chain management. Journal of Business Logistics, 22(2): 1–25CrossRefGoogle Scholar
  22. [22]
    Naylor, J.B., Naim, M.M. & Berry, D. (1999). Leagility: integrating the lean and agile manufacturing paradigms in the total supply chain. International Journal of Production Economics, 62(1–2): 107–118CrossRefGoogle Scholar
  23. [23]
    New, S.J. (1997). The scope of supply chain management research. Supply Chain Management, 2(1): 15–22CrossRefGoogle Scholar
  24. [24]
    Olhager, J. (2003). Strategic positioning of the order penetration point. International Journal of Production Economics, 85(3): 319–329CrossRefGoogle Scholar
  25. [25]
    Pine, B.J. & Gilmore J.H. (1997). The four faces of mass customization. Harvard Business Review, 75(1): 91–101Google Scholar
  26. [26]
    Quinn, F.J. (1997). What’s the buzz? Logistics Management, 36(2): 10–18Google Scholar
  27. [27]
    Ross, A. (1996). Mass customization-selling uniqueness. Manufacturing Engineer, 75(6): 260–263CrossRefGoogle Scholar
  28. [28]
    Salvador, F., Martin de Holan, P. & Piller, F. (2009). Cracking the code of mass customization. MIT Sloan Management Review, 50(3): 71–78Google Scholar
  29. [29]
    Sebastian, J.G. & Lambert, D.M. (2003). Internet-enabled coordination in the supply chain. Industrial Marketing Management, 32(3): 251–263CrossRefGoogle Scholar
  30. [30]
    Simchi-Levi, D., Kaminsky, P. & Simchi-Levi, E. (2003). Designing and Managing the Supply Chain: Concepts, Strategies and Case Studies. McGraw Hill-IrwinGoogle Scholar
  31. [31]
    So, K.C. & Song, J.S. (1998). Price, delivery time guarantees and capacity selection. European Journal of Operational Research, 111(1): 28–49MATHCrossRefGoogle Scholar
  32. [32]
    Taleb, N.N. (2010). The Black Swan: Second Edition. Random House, Inc., New York, NYGoogle Scholar
  33. [33]
    Tan, K.C. (2001). A framework of supply chain management literature. European Journal of Purchasing & Supply Management, 7(1): 39–48CrossRefGoogle Scholar
  34. [34]
    Tien, J.M. (2000). Individual-centered education: an any one, any time, any where approach to engineering education. IEEE Transactions on Systems, Man, and Cybernetics Part C: Special Issue on Systems Engineering Education, 30(2): 1–6MathSciNetGoogle Scholar
  35. [35]
    Tien, J.M. (2003). Toward a decision informatics paradigm: a real-time information based approach to decision making. IEEE Transactions on Systems, Man and Cybernetics, Part C: Special Issue, 33(1): 102–113CrossRefGoogle Scholar
  36. [36]
    Tien, J.M. & Berg, D. (1995). Systems engineering in the growing service economy. IEEE Transactions on Systems, Man, and Cybernetics, 25(5): 321–326Google Scholar
  37. [37]
    Tien, J.M. & Berg, D. (2003). A case for service systems engineering. International Journal of Systems Engineering, 12(1): 13–39Google Scholar
  38. [38]
    Tien, J.M. & Berg, D. (2006). On services research and education. Journal of Systems Science and Systems Engineering, 15(3): 257–283CrossRefGoogle Scholar
  39. [39]
    Tien, J.M. & Cahn, M.F. (1981). An Evaluation of the Wilmington Management of Demand Program. National Institute of Justice, Washington, DCGoogle Scholar
  40. [40]
    Tien, J.M., Krishnamurthy, A. & Yasar, A. (2004). Towards real time management of supply and demand chains. Journal of Systems Science and Systems Engineering, 13(3): 257–278CrossRefGoogle Scholar
  41. [41]
    Tyndall, G., Gopal, C., Partsch, W. & Kamauff, J. (1998). Supercharging Supply Chains: New Ways to Increase Value Through Global Operational Excellence. John Wiley & Sons, New York, NYGoogle Scholar
  42. [42]
    Vollman, T.E., Cordon, C. & Heikkila, J. (2000). Teaching supply chain management to business executives. Production and Operations Management Journal, 9(1): 81–90CrossRefGoogle Scholar
  43. [43]
    Yasar, A. & Tien, J.M. (2003). A robust dynamic pricing approach that tracks the customer’s imputed valuation. In: Proceedings of the 2003 IEEE International Conference on Systems, Man & Cybernetics, Washington, DCGoogle Scholar

Copyright information

© Systems Engineering Society of China and Springer-Verlag Berlin Heidelberg 2011

Authors and Affiliations

  1. 1.College of EngineeringUniversity of MiamiCoral GablesUSA

Personalised recommendations