Viewpoint

Citation

Lyons, A.C. and Coronado Mondragon, A.E. (2006), "Viewpoint", Journal of Enterprise Information Management, Vol. 19 No. 5. https://doi.org/10.1108/jeim.2006.08819eaa.002

Viewpoint

Manufacturing is driven by consumer demand for products. Future success will be increasingly dependent on a manufacturer's ability to anticipate, identify and respond to customers' needs (Rockwell, 1997), and, in particular, efficiently handle the demand for bespoke products tailored to individual needs. Furthermore, customers will expect these individualised products cheaper than today's mass-produced products (Gilmore and Pine, 1997). Future manufacturers will be required to mass customise, that is, produce high-volumes of individualised products. This will be one of the dominant industrial paradigms of the twenty-first century and will be at the core of next-generation manufacturing.

However, the term mass customisation is not new. Feitzinger and Lee (1997) identified the key to mass customisation as being the postponement of product differentiation until the last possible moment; Duffell (1999) advocated the use of sales configurators to facilitate customisation; Beatty (1996) claims that mass customisation is a paradoxical idea that has only become possible with the arrival of techniques such as just-in-time and total quality management. Ross (1996) claims mass customisation can become a reality due to IT and industry increasingly having a business process and customer focus. Although this body of work has been primarily espoused by the academic community and is fundamentally theoretical in nature, there are industrial examples of mass customisation today. Some clothing items (Gilmore and Pine, 1997), greetings cards (Rockwell, 1997) and shoes (Selve, 2005) can be made to order in relatively high volumes and although Dell Computers assemble-to-order a high volume of personal computers, albeit with a relatively low-level of both product and supply chain complexity, the realisation of the concept is elusive in complex, economy-driving, high-value manufacturing sectors such as aerospace, automotive and telecommunications.

The most significant inhibitor of the development of mass customisation is not the inadequacies of today's processing technologies although significant work remains to be done, the highest hurdle is the responsiveness of today's supply chains. Even where customisation does exist in complex manufacturing and where research has been undertaken, it is often only at the highest level of the supply chain, that is, within the original equipment manufacturer (OEM) where attempts are being made to be sufficiently flexible. Innovations in supply chain arrangements will be at the heart of the next generation of manufacturing systems. Supply networks have begun to change quite dramatically, driven by new logistics arrangements and by developments in information and communications technology (ICT). However, the idea of total supply chain customisation in a high-volume environment, where every participant in the supply of raw materials, component parts, sub-assemblies and assemblies is producing only to the unique requirements of an end consumer is considered unattainable.

Figure 1 Mass customisation and supply chain innovations

Figure 1 shows a prediction of how the next generation of manufacturing will be characterised by a far higher degree of information and material (physical) flow innovation than exists today. Mass customisation will require innovative information systems for the parallel processing of customer order information throughout supply chains and innovative material flow systems for the transportation of parts and modules to the points of consumption.

The changing, global supply-chain landscape

Supply management is accepted as a key element of business strategy within many industries and in an attempt to maximise performance across supply chains, suppliers and manufacturers are embarking on new and sometimes radical approaches to levering performance improvement. Supply chains compete against supply chains rather than assemblers against assemblers and competitive advantage is recognised as being achieved by a supply chain delivering value to its end consumers relative to its competitors' supply chains (Christiaanse and Kumar, 2000). The trend is for manufacturers to rationalise their activities, concentrate on a core set of downstream competencies and processes and outsource more non-core business. The future, however, heralds far more innovative relationships between manufacturers and suppliers, and between suppliers and suppliers. Key changes may include some of the following informational and physical innovations.

Physical innovations

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  The trend towards outsourcing discrete parts, modules and systems will increase for many manufacturers. The emergence of large, global, first-tier conglomerates acting as systems' integrators is catalysing this trend. However, in future, the practice will be to outsource activities and entire functions. First tiers will also act as supply chain co-ordinators. Assemblers will one-stop shop. They will assemble a smaller set of modules and component packs, sourced and manufactured by larger, first-tier systems integrators and co-ordinated by the suppliers themselves or by third-party logistics specialists, some of which will act as surrogate sourcers, sourcing component parts on behalf of assemblers. Logistics providers will be increasingly involved in supply chain partnership activities.

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  A consequence of supplier partnerships has been the emergence of supplier parks and villages adjacent to assembly plants particularly in the automotive sector (Kochan, 1997; Millington et al., 1998). Some assembly plants are destined to resemble the bullseye of a series of concentric rings of multi-tier suppliers, some providing distinct production or sequenced in-line supply (SILS) capability, others providing a combination of production and SILS activity. Such developments are intended to guarantee supply, JITS (just-in-time and sequence) deliveries and rapid response to assemblers.

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  Carriers or logistics specialists will co-ordinate modules and parts, arrange them into kitting lists and deliver direct to the point of consumption. Supplier implants extend this concept by not only delivering direct to the point of consumption within the assembler's facility but also by taking complete control of inventory management, materials handling and some assembly activities. Vendor-managed inventory, where suppliers are responsible for the management of stocks at, for example, an OEM site and commonplace in the retail sector (Wei and Krajewski, 2000) will become equally prevalent in manufacturing.

Information innovations

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  Integrative development – the future landscape is for suppliers to become seamlessly assimilated into the supply network of OEM's (supply chain fusion). In Japan, this is a mature activity; multi-tier supplier associations are commonplace (Dyer and Ouchi, 1993). In Europe, the presence of supplier development roundtables will increase as purchasing consortia begin to form. Schedule sharing and EDI integration will increase as supply chain fusion becomes prevalent.

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  Internet-based supply chains will make supplier activity completely visible, and parallel processing from the point of sale a supply chain challenge. E-supply could remove $billions off pipeline WIP within distinct industry sectors of Western Europe alone, making mass customisation a reality. Organisational inertia and slack such as WIP and lead time will be illuminated by the transparency of web-based customer orders and the seamless sharing of information throughout the chain (Kehoe, 2000). Supply rate will be completely co-ordinated with demand rate at most levels of the supply chain; demand amplification or the bullwhip effect will be eliminated.

The challenge

Table I addresses two types of supply innovation: emergent (green shoots) and projected (bluesky). A green shoot is one in which there has been a recent yet real change in supplier behaviour or assembler/supplier interaction yet is a development that is to gain industry-wide recognition. Bluesky is predominantly untried, high-risk innovation yet potential future direction for many supplier configurations.

Table I Greenshoot versus bluesky innovations

The above greenshoots remain largely unproven as to their ability to positively contribute to the development and performance of all participants in a total value chain. Supply chain performance measurement is becoming increasingly complex as the pace and dynamics of supplier/assembler interaction and behaviour change rapidly. Too often, assemblers focus only on their first-tier suppliers when considering improvement initiatives, and they often fail to understand the implications of their decisions on the performance of those suppliers residing lower within the chain and therefore, are ignorant of the total cost to the whole system. The bluesky innovations demand a step change in the far-sightedness of industry leaders and the creativity of industrialists and researchers to provide the means to make them realisable (Lyons and Kehoe, 2000).

Andrew C. Lyons and Adrian E. Coronado MondragonThe University of Liverpool Management School, Liverpool, UK

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