Linking Work Design to Mass Customization: A Sociotechnical Systems Perspective*

Mass customization has gained increasing importance in recent years due to its ability to provide customized products efficiently and effectively, and manufacturing companies are continuously searching for ways to develop their mass‐customization ability. Despite extensive literature focusing on mass customization, few studies have systematically examined the impact of work‐design practices on a company's mass‐customization ability. Using the Sociotechnical Systems theory as a foundation, we link work‐design practices with mass‐customization ability, specifically identifying ten work‐design practices and examining their impact on mass‐customization ability using survey data and empirical research methods. The results support our hypothesized links and suggest that work‐design practices that manage both the technical and the social dimensions for achieving organization success have significant impact on a company's ability to achieve mass customization.     

Customization: Impact on Product and Process Performance

Manufacturing capability has often been viewed to be a major obstacle in achieving higher levels of customization. Companies follow various strategies ranging from equipment selection to order process management to cope with the challenges of increased customization. We examined how the customization process affects product performance and conformance in the context of a design‐to‐order (DTO) manufacturer of industrial components. Our competing risk hazard function model incorporates two thresholds, which we define as mismatch and manufacturing thresholds. Product performance was adversely affected when the degree of customization exceeded the mismatch threshold. Likewise, product conformance eroded when the degree of customization exceeded the manufacturing threshold. Relative sizes of the two thresholds have management implications for the subsequent investments to improve customization capabilities. Our research developed a rigorous framework to address two key questions relevant to the implementation of product customization: (1) what degrees of customization to offer, and (2) how to customize the product design process.     

Lowest Cost May Not Lower Total Cost: Using “Spackling” to Smooth Mass‐Customized Production

Consider a manufacturer who mass customizes variants of a product in make‐to‐order fashion, and also produces standard variants as make‐to‐stock. A traditional manufacturing strategy would be to employ two separate manufacturing facilities: a flexible plant for mass‐customized items and an efficient plant for standard items. We contrast this traditional focus strategy with an alternative that better utilizes capacity by combining production of mass‐customized and standard items in one of two alternate spackling strategies: (1) a pure‐spackling strategy, where the manufacturer produces everything in a (single) flexible plant, first manufacturing custom products as demanded each period, and then filling in the production schedule with make‐to‐stock output of standard products; or (2) a layered‐spackling strategy, which uses an efficient plant to make a portion of its standard items and a separate flexible plant where it spackles. We identify the optimal production strategy considering the tradeoff between the cost premium for flexible (versus efficient) production capacity and the opportunity costs of idle capacity. Spackling amortizes fixed costs of capacity more effectively and thus can increase profits from mass customization vis‐à‐vis a focus strategy, even with higher cost production for the standard goods. We illustrate our framework with data from a messenger bag manufacturer.     

Using Frontier Portfolios to Improve Make‐to‐Order Operations

Make‐to‐order (MTO) manufacturers face a common problem of maintaining a desired service level for delivery at a reasonable cost while dealing with irregular customer orders. This research considers a MTO manufacturer who produces a product consisting of several custom parts to be ordered from multiple suppliers. We develop procedures to allocate orders to each supplier for each custom part and calculate the associated replenishment cost as well as the probability of meeting the delivery date, based on the suppliers' jobs on hand, availability, process speed, and defective rate. For a given delivery due date, a frontier of service level and a replenishment cost frontier are created to provide a range of options to meet customer requirements. This method can be further extended to the case when the delivery due date is not fixed and the manufacturer must “crash” its delivery time to compete for customers.     

Mass Customization in the Automotive Industry: Comparing Interdealer Trading and Reconfiguration Flexibilities in Order Fulfillment

Mass customization has been viewed as desirable but difficult to achieve in the volume automotive sector. Here we consider flexibility in automotive order fulfillment systems to enhance the ability to satisfy customers with their desired vehicle variants within acceptable delivery lead times. Two types of flexibility are compared in a Virtual‐Build‐to‐Order system—reconfiguration in the planning pipeline and interdealer trading. A representative simulation model is used to investigate the impact of the two types of flexibility across a wide spectrum of product variety levels. The impacts on major stakeholders in the system—the producer, dealers, and customers—are considered. The study shows that both types of flexibilities can bring significant benefits in terms of reductions in lead time and inventory holding. The level of product variety strongly influences the observed effects—an important finding in the mass customization context. Upstream reconfiguration flexibility brings greater benefits than downstream trading flexibility. Reconfiguration tends to dominate trading as a fulfillment mechanism when both are in operation. The findings have implications for the design and management of automotive order fulfillment systems in improving their ability to offer mass customization. The study has relevance for companies in other sectors with high levels of variety that seek to combine efficiency, speed, and flexibility in order fulfillment.     

An Application of Master Schedule Smoothing and Planned Lead Time Control

Make‐to‐order (MTO) manufacturers must ensure concurrent availability of all parts required for production, as any unavailability may cause a delay in completion time. A major challenge for MTO manufacturers operating under high demand variability is to produce customized parts in time to meet internal production schedules. We present a case study of a producer of MTO offshore oil rigs that highlights the key aspects of the problem. The producer was faced with an increase in both demand and demand variability. Consequently, it had to rely heavily on subcontracting to handle production requirements that were in excess of its capacity. We focused on the manufacture of customized steel panels, which represent the main sub‐assemblies for building an oil rig. We considered two key tactical parameters: the planning window of the master production schedule and the planned lead time of each workstation. Under the constraint of a fixed internal delivery lead time, we determined the optimal planning parameters. This improvement effort reduced the subcontracting cost by implementing several actions: the creation of a master schedule for each sub‐assembly family of the steel panels, the smoothing of the master schedule over its planning window, and the controlling of production at each workstation by its planned lead time. We report our experience in applying the analytical model, the managerial insights gained, and how the application benefits the oil‐rig producer.     

Measuring Modularity‐Based Manufacturing Practices and Their Impact on Mass Customization Capability: A Customer‐Driven Perspective

As uncertainty in markets and technology intensifies, more companies are adopting modular product and process architectures to cope with increasing demands for individually customized products. Modularity‐based manufacturing is the application of unit standardization or substitution principles to create modular components and processes that can be configured into a wide range of end products to meet specific customer needs. This study defines modularity‐based manufacturing practices (MBMP), develops a valid and reliable instrument to measure MBMP, builds a framework that relates customer closeness, MBMP, and mass customization capability, and tests structural relationships within this framework using LISREL. Based on 303 responses from members of the Society of Manufacturing Engineers, statistically significant and positive relationships were found among customer closeness, modularity‐based manufacturing practices, and mass customization capability. Managerial implications of the empirical findings of this study and future research directions are also discussed.     

A Production–Inventory Model for a Push–Pull Manufacturing System with Capacity and Service Level Constraints

We study a hybrid push–pull production system with a two‐stage manufacturing process, which builds and stocks tested components for just‐in‐time configuration of the final product when a specific customer order is received. The first production stage (fabrication) is a push process where parts are replenished, tested, and assembled into components according to product‐level build plans. The component inventory is kept in stock ready for the final assembly of the end products. The second production stage (fulfillment) is a pull‐based assemble‐to‐order process where the final assembly process is initiated when a customer order is received and no finished goods inventory is kept for end products. One important planning issue is to find the right trade‐off between capacity utilization and inventory cost reduction that strives to meet the quarter‐end peak demand. We present a nonlinear optimization model to minimize the total inventory cost subject to the service level constraints and the production capacity constraints. This results in a convex program with linear constraints. An efficient algorithm using decomposition is developed for solving the nonlinear optimization problem. Numerical results are presented to show the performance improvements achieved by the optimized solutions along with managerial insights provided.     

Optimal Policies for Selling New and Remanufactured Products

Because of environmental and economic reasons, an increasing number of original equipment manufacturers (OEMs) nowadays sell both new and remanufactured products. When both products are available, customers will buy the one that gives them a higher (and non‐negative) utility. Thus, if the firm does not price the products properly, then product cannibalization may arise and its revenue may be adversely impacted. In this paper, we study the pricing problem of a firm that sells both new and remanufactured products over a finite planning horizon. Customer demand processes for both new and remanufactured products are random and price‐sensitive, and product returns (also called cores) are random and remanufactured upon receipt. We characterize the optimal pricing and manufacturing policies that maximize the expected total discounted profit. If new products are made‐to‐order (MTO), we show that when the inventory level of remanufactured product increases, the optimal price of remanufactured product decreases while the price difference between new and remanufactured products increases; however, the optimal selling price of new product may increase or decrease. If new products are made to stock (MTS), then the optimal manufacturing policy is of a base‐stock policy with the base‐stock level decreasing in the remanufactured product inventory level. To understand the potential benefit in implementing an MTO system, we study the difference between the value functions of the MTO and MTS systems, and develop lower and upper bounds for it. Finally, we study several extensions of the base model and show that most of our results extend to those more general settings.     

Investigating the Level of End‐User Development and Involvement Among Time‐Based Competitors

As global markets and technology change, time‐based competitors create product development and manufacturing practices that reduce response time and enhance customization capabilities. These practices require an information‐rich internal environment that is capable of flexible resource deployment and direct and continuous feedback. To build this environment, time‐based competitors are developing end‐user capabilities and involving them in information systems (IS) activities. Data collected from 265 manufacturers were used to determine if firms with high levels of time‐based product development and time‐based manufacturing practices also have high levels of end‐user involvement in IS‐related activities, end‐user training effectiveness, and end‐user computing skills. The results of this study support that contention.     

Looking Inside Glitch Mitigation Capability: The Effect of Intraorganizational Communication Channels

Manufacturers can reduce the occurrence of glitches in their operations by building capabilities to prevent them, yet mitigation capabilities are also needed to contain the effects of the glitches that will still inevitably occur every now and then. We examine the glitch mitigation capability of a production process from an information‐processing perspective and propose that (i) the impact of operational glitches on delivery performance is contingent on the formalization of intrafirm communication channels and (ii) this effect is stronger when formal communication channels are complemented with informal channels. We test our model in a sample of 163 make‐to‐order production processes and find support for the first hypothesis and partial support for the second hypothesis. The statistical analyses also reveal nonhypothesized empirical regularities, which we explore through an additional qualitative study based on 34 site visits and 30 interviews with production planners. The results have practical implications for the design of intraorganizational communication channels, and they also contribute to the research on organizational resilience and communications by showing that when coping with disruptions, the formal communication channels have advantages that are seldom discussed in the literature or recognized by practitioners.     

MIXED ASSEMBLY AND DISASSEMBLY OPERATIONS FOR REMANUFACTURING

In this paper we consider the problem of designing a mixed assembly‐disassembly line for remanufacturing. That is, parts from the disassembly and repair of used products can be used to build “new” products. This is a problem common to many OEM remanufacturers, such as Xerox or Kodak. We study two main configurations, under the assumption that the disassembly sequence is exactly the reverse of the assembly sequence. Under a parallel configuration, there exist two separate dedicated lines, one for assembly and one for disassembly, which are decoupled by buffers—from both disassembly operations, which have preference, as well as parts from an outside, perfectly reliable supplier. Under a mixed configuration, the same station is used for both disassembly and assembly of a specific part. The problem is studied using GI/G/c networks, as well as simulation. Due to a loss of pooling, we conclude that the parallel configuration outperforms the mixed line only when the variability of both arrivals and processing time are significantly higher for disassembly and remanufacturing than for assembly. Via a simulation, we explore the impact of having advanced yield information for the remanufacturing parts. We find that advanced yield information generally improves flow times; however, there are some instances where it lengthens flow times.     

The Impact of Organizational Structure on Mass Customization Capability: A Contingency View

This study investigates the role of organizational structure in facilitating the development of mass customization (MC) capability in various manufacturing settings. Specifically, three dimensions of organizational structure are considered—flatness, centralization, and employee multifunctionality. We model organizational structure as a second‐order factor whose value is captured on a mechanistic‐organic continuum, where the organic form is characterized by a flat, decentralized structure with a wide use of multifunctional employees. We propose that a positive relationship exists between the organic organizational structure and MC capability. Additionally, building upon contingency theory, we argue that this positive relationship is moderated by mass customizer type—full mass customizers, which customize products at the design or fabrication stage of the production cycle, versus partial customizers, which customize products only at the assembly or delivery stages. Based on a study of 167 manufacturing plants from three industries and eight countries, we find that, for the overall sample, organic structure plays a significant role in enabling firms to pursue MC capability. However, an analysis of full versus partial mass customizers shows that the positive impact of organic structure on MC capability is statistically significant only for full mass customizers, not for partial mass customizers.     

Perceived Value of the Mass‐Customized Product and Mass Customization Experience for Individual Consumers

The operations management literature on mass customization mainly focuses on the questions of whether and how manufacturers can efficiently deliver customization. Researchers have analyzed the trade‐offs between customization and dimensions of operational performance such as delivery times, quality, and costs. However, we argue that providing efficient customization is not sufficient per se to assess the value of mass customization. From this perspective, this paper focuses on complementary mechanisms for creating value: the benefits perceived by individual consumers. Two global components of perceived value within the context of mass customization are identified: mass‐customized product, with three dimensions, and mass customization experience, with two dimensions. The Consumer‐Perceived Value Tool (CPVT) is proposed to empirically measure the five perceived benefits related to the mass‐customized product and to the codesign process from the consumer viewpoint. The psychometric properties of the CPVT are assessed using three samples. The implications of this approach are discussed, along with directions for further research.     

A Competitive Model of Customization with Lead‐Time Effects

In this article, we study the competitive interactions between a firm producing standard products and a firm producing custom products. Consumers with heterogeneous preferences choose between n standard products, which may not meet their preferences exactly but are available immediately, and a custom product, available only after a certain lead time l. Standard products incur a variety cost that increases with n and custom products incur a lead time cost that is decreasing in the lead time l. We consider a two‐stage game wherein at stage 1, the standard product firm chooses the variety and the custom firm chooses the lead time and then both firms set prices simultaneously. We characterize the subgame‐perfect Nash equilibrium of the game. We find that both firms can coexist in equilibrium, either sharing the market as local monopolists or in a price‐competitive mode. The standard product firm may offer significant or minimal variety depending on the equilibrium outcome. We provide several interesting insights on the variety, lead time, and prices of the products offered and on the impact of problem parameters on the equilibrium outcomes. For instance, we show that the profit margin and price of the custom product are likely to be higher than that of standard products in equilibrium under certain conditions. Also, custom firms are more likely to survive and succeed in product markets with larger potential market sizes. Another interesting insight is that increased consumer sensitivity to product fit may result in lower lead time for the custom product.     

Impact of Information Technology Integration and Lean/Just‐In‐Time Practices on Lead‐Time Performance*

Managers seeking to improve lead‐time performance are challenged by how to balance resources and investments between process improvement achieved through lean/just‐in‐time (JIT) practices and information technology (IT) deployment. However, extant literature provides little guidance on this question. Motivated by both practical importance and lack of academic research, this article examines empirically the relationships among interfirm IT integration, intrafirm IT integration, lean/JIT practices, and lead‐time performance using data from IndustryWeek's Census of Manufacturers ( IndustryWeek, 2006 ). The results provide several new insights on the relationship between IT integration and lean/JIT practices. First, the study confirms that implementing lean/JIT practices significantly reduces lead time. Second, lean/JIT practices mediate the influence of IT integration on lead‐time performance. This suggests that process improvements that result from lean/JIT practices are important contributors to the success of IT integration. Even companies that have experienced success in reducing lead time through lean/JIT practices may benefit from IT integration practices such as those embodied in enterprise resource planning systems. The findings provide managers with empirical evidence and a theoretical framework on the balance between lean/JIT and IT for effecting improvement in lead‐time performance, thus offering practical guidance on this important question. Future research is needed to extend the lean/JIT practices in this study to supply chain practices and explore the relationship between supply chain practices and IT integration.     

MANAGING CYCLIC INVENTORIES

Cyclic inventory is the buffer following a machine that cycles over a set of products, each of which is subsequently consumed in a continuous manner. Scheduling such a machine is interesting when the changeover times from one product to another are non‐trivial—which is generally the case. This problem has a substantial literature, but the common practices of “lot‐splitting” and “maximization of utilization” suggest that many practitioners still do not fully understand the principles of cyclic inventory. This paper is a tutorial that demonstrates those principles. We show that cyclic inventory is directly proportional to cycle length, which in turn is directly proportional to total changeover time, and inversely proportional to machine utilization. We demonstrate the virtue of “maximum changeover policies” in minimizing cyclic inventory—and the difficulty in making the transition to an increased level of demand. In so doing, we explicate the different roles of cyclic inventory, transitional inventory, and safety stock. We demonstrate the interdependence of the products in the cycle—the lot‐size for one product cannot be set independently of the remaining products. We also give necessary conditions for consideration of improper schedules (i.e., where a product can appear more than once in the cycle), and demonstrate that both lot‐splitting and maximization of utilization are devastatingly counter‐productive when changeover time is non‐trivial.     

REQUIREMENTS PLANNING FOR CONTROL OF INFORMATION RESOURCES

Producing reports assembled from files, records, and raw data is a major function of the computer in modern organizations. Transaction processing, records management, file organization, and data-base management are aspects of the information production function that have received a good deal of attention. But planning, scheduling, and controlling the production of information products have been neglected. For complex applications involving assembly of reports from multilevel information sources, the requirements planning model is suggested as an effective alternative to present methods. Thus, our suggestion is that the computer be used to plan, schedule, and control computer production of information products. Presently available material requirements planning software may be employed with minor modifications that depend on the given information system characteristics. In this paper an example of requirements planning as applied to production of information in a satellite control system is presented.     

An Agent‐Based Model for Pathogen Persistence and Cross‐Contamination Dynamics in a Food Facility

We used an agent‐based modeling (ABM) framework and developed a mathematical model to explain the complex dynamics of microbial persistence and spread within a food facility and to aid risk managers in identifying effective mitigation options. The model explicitly considered personal hygiene practices by food handlers as well as their activities and simulated a spatially explicit dynamic system representing complex interaction patterns among food handlers, facility environment, and foods. To demonstrate the utility of the model in a decision‐making context, we created a hypothetical case study and used it to compare different risk mitigation strategies for reducing contamination and spread of Listeria monocytogenes in a food facility. Model results indicated that areas with no direct contact with foods (e.g., loading dock and restroom) can serve as contamination niches and recontaminate areas that have direct contact with food products. Furthermore, food handlers’ behaviors, including, for example, hygiene and sanitation practices, can impact the persistence of microbial contamination in the facility environment and the spread of contamination to prepared foods. Using this case study, we also demonstrated benefits of an ABM framework for addressing food safety in a complex system in which emergent system‐level responses are predicted using a bottom‐up approach that observes individual agents (e.g., food handlers) and their behaviors. Our model can be applied to a wide variety of pathogens, food commodities, and activity patterns to evaluate efficacy of food‐safety management practices and quantify contamination reductions associated with proposed mitigation strategies in food facilities.     

Managing Imbalanced Supply Chain Relationships for Sustainability: A Power Perspective

This study adopts a power perspective to investigate sustainable supply chain relationships and specifically uses resource‐dependence theory (RDT) to critically analyze buyer–supplier–supplier relationships. Empirical evidence is provided, extending the RDT model in this context. The concept of power relationships is explored through a qualitative study of a multinational company and agricultural growers in the UK food industry that work together to implement sustainable practices. We look at multiple triadic relationships involving a large buyer and its small suppliers to investigate how relative power affects the implementation of sustainable supply‐management practices. The study highlights that power as dependence is relevant to understanding compliance in sustainable supply chains and to identifying appropriate relationship‐management strategies to build more sustainable supply chains. We show the influences of power on how players manage their relationships and how it affects organizational responses to the implementation of sustainability initiatives. Power notably influences the sharing of sustainability‐related risks and value between supply chain partners. From a managerial perspective, the study contributes to developing a better understanding of how power can become an effective way to achieve sustainability goals. This article offers insights into the way in which a large organization works with small and medium size enterprises to implement sustainable practices and shows how power management—that is, the way in which power is used—can support or hinder effective cooperation around sustainability in the supply chain.