Mass customization: what it means, the four types and how plants quote it
Mass customization means making products to each customer’s specification with close to the efficiency of mass production. In a plant, it rests on a modular product family and a configurator that turns each customer’s choices into a valid, priced bill of materials. This guide gives the definition, the four types with examples, and prices one configured order from its modules.
What mass customization means
The Cambridge Business English Dictionary defines mass customization as producing large numbers of products, each designed for a particular customer. Researchers add the condition that makes it hard. Mitchell Tseng and Jianxin Jiao, quoted in Wikipedia’s article on mass customization, define it as meeting each customer’s needs with near mass production efficiency.
The same article dates the term to Stan Davis, who coined it in his 1987 book Future Perfect. Joseph Pine developed the idea in his 1993 book on mass customization as a new frontier in business competition.
Paul Zipkin, writing in MIT Sloan Management Review in 2001, called it a capability that a few companies had realized. His examples included custom-fitted jeans from Levi Strauss and Andersen Windows, which could build a window to fit any house.
Mass customization vs mass production
Zipkin’s article sets out the difference. In mass production with variety, the customer picks one of the variants the plant already made and stocked. In mass customization, each customer provides unique information, the process has to be flexible enough to act on it, and there is no finished-goods inventory. The customer waits for the product to be made.
| Mass production | Mass customization | Engineer to order | |
|---|---|---|---|
| What the customer gives | A choice from the catalogue | Choices inside a defined set of options | Requirements that an engineer turns into a design |
| Finished stock | Built ahead and held | None for the finished product; modules may be stocked | None |
| Lead time | Ships from stock | Build time after the order | Engineering, approval and build time |
| How the price is set | A price list per item | Rules and module costs for each configuration | An estimate for each order |
| Example | A standard catalogue bracket | An industrial door sized to the opening from standard modules | A special machine designed for one process |
The middle column is the hard one to quote, because every order differs and an engineer cannot check every request. The guide to engineer to order covers the column on the right.
The four types of mass customization
In a 1997 Harvard Business Review article, James Gilmore and Joseph Pine set out four approaches to customization. The article’s abstract says managers will more often need a mix of them than a single approach. A 2019 review in Frontiers in Built Environment names the four: collaborative, adaptive, cosmetic and transparent. The descriptions below follow Wikipedia’s summary of the four types, with an example from a plant for each.
- Collaborative. The company works with each customer to pin down the exact product, then makes it. A sales engineer settles a door’s opening size, insulation and operator with the buyer, and the plant builds that door.
- Adaptive. The company makes one standard product that the user adjusts. A conveyor with a variable-speed drive ships the same way to every customer, and each customer sets its own speeds.
- Cosmetic. The product is standard, and its presentation changes for each customer. The same enclosure ships in the buyer’s colour, with the buyer’s labels and part numbers on the paperwork.
- Transparent. The company tailors the product without telling the customer it is customized, so it has to read the customer’s needs accurately. A maker of service kits can adjust each customer’s kit to the parts that customer actually orders.
A plant that builds to order often works in the collaborative type, and the quote is where that collaboration happens.
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Start a conversationMass customization examples
The cases below run from consumer products to machine tools. Each one combines a defined option space with a process that builds to the order.
- Windows and jeans. Zipkin cited Andersen Windows and Levi Strauss’s custom-fitted jeans in 2001. A 2009 article in MIT Sloan Management Review later listed Levi Strauss’s custom jeans among the high-profile failures.
- Personal computers. The same 2009 article names Dell in the PC market as one of the few extreme cases executives associate with the idea. It also shows Mini owners designing their car’s roof with an online tool kit.
- Trucks. Scania builds every truck from a modular system with a fixed number of standard interfaces, and it changes modules to suit each customer’s needs and application. The guide to modular design covers how that system works.
- Machine tools. DMG MORI describes its Pfronten plant building its whole monoBLOCK model mix in flow assembly, in 34 cycles, including variants with a pallet changer or a milling-turning table.
What a plant needs to mass customize
Fabrizio Salvador, Pablo Martin de Holan and Frank Piller studied mass customization for a decade. Their research included a survey of more than 200 manufacturing plants in eight countries. Their 2009 article names three capabilities a company needs. Each one maps to something a plant can build.
- Find where customer needs differ. The plant decides which attributes customers really choose, such as size, insulation or operator, and fixes the rest. Those attributes become the option lists. The questions a sales engineer asks on every quote are a good place to start.
- Reuse and recombine what the plant already has. A modular product family and flexible processes let new orders reuse existing parts. Wikipedia describes the related practice of postponing the point where a product is differentiated for a customer until as late as possible in the supply network.
- Help customers find their solution. A configurator guides each buyer to a valid product. The article credits Huffman and Kahn’s 1998 paper, “Variety for Sale: Mass Customization or Mass Confusion?”, with first describing the burden of choice.
Without the third capability, every configured order lands on the desk of the one sales engineer who knows the rules.
From a customer’s choices to a priced bill of materials
In a plant, a mass-customized order passes through the same steps every time. Software can carry most of them, with a person approving the result.
Worked example: 8,424 doors from one set of rules
The numbers are a made-up example, computed with a short script. An industrial sectional door family offers 13 widths from 2.4 to 6.0 m and 9 heights from 2.4 to 4.8 m. Buyers also choose one of 2 panel insulations, 3 window options, 6 colours and 2 operators. That is 13 × 9 × 2 × 3 × 6 × 2 = 8,424 combinations.
One example rule says a door wider than 5.1 m needs the electric opener. It removes 972 combinations and leaves 7,452 valid ones. The plant does not stock any of them as finished doors. It keeps 21 module part numbers: 2 panel types cut to size from coil, 9 track kits, a window insert, 2 operators, a hardware kit and coil in 6 colours.
Here is one order: a 4.2 × 4.2 m door with the thinner panel, one row of windows, a standard colour and the electric opener. Costs are example figures in Canadian dollars.
| Line | Rule | Qty | Unit cost | Line cost |
|---|---|---|---|---|
| Door panel, 40 mm insulated | Width × height, in m² | 17.64 | $68.00 | $1,199.52 |
| Track kit for a 4.2 m height | Picked by height | 1 | $640.00 | $640.00 |
| Window insert | One per full metre of width | 4 | $45.00 | $180.00 |
| Electric opener | Operator choice | 1 | $780.00 | $780.00 |
| Hardware kit | One per door | 1 | $120.00 | $120.00 |
The parts come to $2,919.52. Assembly and packing take 2.5 hours at $78.00, which adds $195.00, for a cost of $3,114.52. At a 32 percent margin, the price is the cost divided by 0.68, or $4,580.18, quoted as $4,580. The next order uses the same rules and the same module costs, whatever its size. Only the 21 modules need a current cost, and the configurator turns them into a price for any of the 7,452 valid doors.
Where mass customization goes wrong
Mass customization adds work before anything reaches the shop floor. These are the problems to plan for.
- Too many choices. A buyer who faces every option at once has to sort through all of them, which is the burden of choice that researchers flagged. A configurator that asks one question at a time and offers only valid answers shortens that list.
- Waiting. With no finished-goods stock, the customer waits for the build, as Zipkin points out. A slow quote adds its own delay before the build even starts.
- Prices behind cost. Option prices typed into a price list years ago stay put when material costs move. A price built from current module costs moves with them.
- Rules in one head. When the rules live in one person’s spreadsheet, every configured order waits for that person.
Where AI does the work
AI handles the reading and drafting around each configured order. The rules and the costs stay in software a person can open, and a named person approves each quote.
- Turning requests into configurations. Customers describe what they need in emails, specifications and marked-up drawings. A model drafts the configuration from them, and the sales engineer confirms each option.
- Flagging requests outside the rules. When a request falls outside the option space, it says which rule failed and routes the order to an engineer.
- Checking each package. It compares the bill of materials, the drawing and the price lines with the configuration and flags anything that does not match.
- Keeping module costs current. It reprices modules from recent purchase invoices and lists the quotes a cost change would affect.
How ThriveAI builds mass customization into your quoting
ThriveAI builds the configurator from the Excel builder your team already trusts. Derik starts with a free map of that workbook: every option, rule and lookup table, and the gaps where an order cannot be expressed. The first stage runs four weeks for one product family. In it, he builds the configurator and the cost roll-up and checks them against ten or more of your past orders. Prices come from your own material costs, hours and markup method, and your CAD template produces the model and the quote drawing. A named person approves every quote before it goes out. The Excel builder to CPQ app offer lists what the four weeks deliver.