Manufacturing has lost over 2.1 million jobs since the recession began. Many of these jobs will not be returning...especially labor intensive manufacturing. (Look at the textile industry.) These types of jobs will go to where the labor cost is the lowest….and that’s not in America. So what is Future of American Manufacturing?
If you were not providing any unique value…sorry to tell you…you might not be able to stay around and/or be profitable.
Quality has always been a major differentiator in manufacturing. Made in America is a mark of quality all around the world. If you are building a new chemical plant, do you want to buy valves and pumps made in China? The answer is no. Look at the recent drywall from China incident making people sick in the US. This example shows a possible impact of low quality and low cost items. But having great quality is becoming an EXPECTATION to doing business.
Great Customer Service? Yes great customer service can allow you to maintain your margins, but competitors can invest in customer service as well and it is becoming an EXPECTATION from customers as well.
What is left? Relationships…. understanding your customer and potentially being able to produce made-to-order products profitably. Product Configuration and Mass customization have been concepts that have been around for a while that more and more American Manufacturers are embracing. Product Configuration involves systemization of your manufacturing process to allow customer specific requirements to be entered into the system and a manufacturable product configuration being returned. Mass customization aims to provide goods and services that meet individual customers' requirements with near mass production efficiency.
The mass customization value proposition comes from the dual opportunities of increased market share and higher profit margins. It starts with understanding the Customer Sacrifice Gap, Good Variety vs. Bad Variety and the Four (4) Faces of Mass Customization.
Customer Sacrifice Gap – the gap between the product the customer wants and what is available in the market
Good Variety vs. Bad Variety – good variety is product/service variety that customers are willing to pay additional for. Bad variety is variety that customers are not willing to pay for.
Four (4) Faces of Mass Customization
• Transparent – providing customers with customized products whose customization is
transparent or unknown by the end user
• Collaborative – customers collaborate with customizer on the design and delivery of the product to specifically meet the customer’s needs
• Adaptive – providing a standardized product that is able to be customized in the
hands of the end user
• Cosmetic – providing a standardized product that is marketed to different
customer groups in unique ways
How to Mass Customize?
These benefits are not obtained by incremental changes to a mass production system, but by a fundamental switch in production paradigms. Our advice for making the change is:
1) Start small. As systems and techniques are proven, scale them up.
2) Start at the front end of the production processes first, use shallow customization there, and as the mass customization systems are proven, backwards integrate into the parts of the mass production systems which will provide the greatest consumer value by being made flexible.
3) Use software systems designed to support this new paradigm, don't expect that mass production software can be made to fit this new paradigm with only minor modifications.
4) Make the above stated benefits of mass customization the goals of the mass customization project. As the mass customization project is being planned and deployed, check the project against these goals.
5) Let us know if there is any way we can help.
Agent Technologies, Inc.
FREE Download of Chapter on Product Configuration from our Book: The Consumer's Workshop: The Future of American Manufacturing (Download)