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.
Similar content being viewed by others
References
Anand, K.S., Pac, M.F. & Veeraraghavan, S. (2011). Quality-speed conundrum: trade-offs in customer-intensive services. Management Science, 57(1): 40–56
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): 584–601
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): 67–83
Davis, S.M. (1987). Future Perfect. Addison-Wesley Publishing, MA
ElHafsi, M. (2000). An operational decision model for lead-time and price quotation in congested manufacturing systems. European Journal of Operational Research, 126(2): 355–370
Elimam, A.A. & Dodin, B.M. (2001). Incentives and yield management in improving productivity of manufacturing facilities. IIE Transactions, 33(2): 449–462
Eyers, D. & Dotchev, K. (2010). Technology review for mass customisation using rapid manufacturing. Assembly Automation, 30(1): 39–46
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): 729–745
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): 299–309
Haug, A., Ladeby, K. & Kasper, E. (2009). From engineer-to-order to mass customization. Management Research News, 32(7): 633–644
Heikkila, J. (2002). From supply to demand chain management: efficiency and customer satisfaction. Journal of Operations Management, 20(6): 747–767
Huttunen, K., Eloranta, E. & Holmstrom, J. (2000). Managing the Demand-Supply Chain: Value Innovations for Customer Satisfaction. John Wiley & Sons, New York, NY
Korhonen, P., Huttunen, K. & Eloranta, E. (1998). Demand chain management in a global enterprise-information management view. Journal of Operations Management, 9(6): 526–531
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 2000
Kumar, A. (2007). From mass customization to mass personalization: a strategic transformation. International Journal of Flexible Manufacturing Systems, 19: 533–547
Lampel, J. & Mintzberg, H. (196). Customizing customization. Harvard Business Review, 38(1): 21–30
Landeghem, H.V. & Vanmaele, H. (2002). Robust planning: a new paradigm for demand chain planning. Journal of Operations Management, 20(6): 769–783
Lederer, P.J. & Li, L. (1997). Pricing, production, scheduling, and delivery time competition. Operations Research, 45(3): 407–420
Lummus, R.R. & Vokurka, R.J. (1999). Defining supply chain management: a historical perspective and practical guidelines. Industrial Management and Data Systems, 99(1): 11–17
Matzler, K., Waiguny, M. & Fuller, J. (2007). Spoiled for choice: consumer confusion in Internet-based mass customization. Innovative Marketing, 3(3): 7–18
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): 1–25
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): 107–118
New, S.J. (1997). The scope of supply chain management research. Supply Chain Management, 2(1): 15–22
Olhager, J. (2003). Strategic positioning of the order penetration point. International Journal of Production Economics, 85(3): 319–329
Pine, B.J. & Gilmore J.H. (1997). The four faces of mass customization. Harvard Business Review, 75(1): 91–101
Quinn, F.J. (1997). What’s the buzz? Logistics Management, 36(2): 10–18
Ross, A. (1996). Mass customization-selling uniqueness. Manufacturing Engineer, 75(6): 260–263
Salvador, F., Martin de Holan, P. & Piller, F. (2009). Cracking the code of mass customization. MIT Sloan Management Review, 50(3): 71–78
Sebastian, J.G. & Lambert, D.M. (2003). Internet-enabled coordination in the supply chain. Industrial Marketing Management, 32(3): 251–263
Simchi-Levi, D., Kaminsky, P. & Simchi-Levi, E. (2003). Designing and Managing the Supply Chain: Concepts, Strategies and Case Studies. McGraw Hill-Irwin
So, K.C. & Song, J.S. (1998). Price, delivery time guarantees and capacity selection. European Journal of Operational Research, 111(1): 28–49
Taleb, N.N. (2010). The Black Swan: Second Edition. Random House, Inc., New York, NY
Tan, K.C. (2001). A framework of supply chain management literature. European Journal of Purchasing & Supply Management, 7(1): 39–48
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): 1–6
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): 102–113
Tien, J.M. & Berg, D. (1995). Systems engineering in the growing service economy. IEEE Transactions on Systems, Man, and Cybernetics, 25(5): 321–326
Tien, J.M. & Berg, D. (2003). A case for service systems engineering. International Journal of Systems Engineering, 12(1): 13–39
Tien, J.M. & Berg, D. (2006). On services research and education. Journal of Systems Science and Systems Engineering, 15(3): 257–283
Tien, J.M. & Cahn, M.F. (1981). An Evaluation of the Wilmington Management of Demand Program. National Institute of Justice, Washington, DC
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): 257–278
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, NY
Vollman, T.E., Cordon, C. & Heikkila, J. (2000). Teaching supply chain management to business executives. Production and Operations Management Journal, 9(1): 81–90
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, DC
Author information
Authors and Affiliations
Corresponding author
Additional information
James M. Tien received the BEE from Rensselaer Polytechnic Institute (RPI) and the SM, EE and PhD from the Massachusetts Institute of Technology. He has held leadership positions at Bell Telephone Laboratories, at the Rand Corporation, and at Structured Decisions Corporation. He joined the Department of Electrical, Computer and Systems Engineering at RPI in 1977, became Acting Chair of the department, joined a unique interdisciplinary Department of Decision Sciences and Engineering Systems as its founding Chair, and twice served as the Acting Dean of Engineering. In 2007, he was recruited by the University of Miami as a Distinguished Professor and Dean of its College of Engineering. He has been awarded the IEEE Joseph G. Wohl Outstanding Career Award, the IEEE Major Educational Innovation Award, the IEEE Norbert Wiener Award, and the IBM Faculty Award. He is also an elected member of the prestigious U. S. National Academy of Engineering.
Rights and permissions
About this article
Cite this article
Tien, J.M. Manufacturing and services: From mass production to mass customization. J. Syst. Sci. Syst. Eng. 20, 129–154 (2011). https://doi.org/10.1007/s11518-011-5166-x
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11518-011-5166-x