Customers are demanding customization of products more than ever and manufacturers are under enormous pressure to meet their demands.
Imagine you are a manufacturer with a large order of tens of thousands of the same product. Your factories are ready to spring into action. But in the last minute, your customer calls you up asking if you could create different versions of their product and still meet the agreed deadline.
Of course, such a request sounds outrageous. You can’t change an order to make different versions of the same product at the last minute. Or could you?
Mass Customization in Manufacturing
With digitalization in Industry 4.0, it is now becoming possible to customize a product for different groups of end-users within a single production order. This process is known as mass customization, which is making changes to a product to satisfy a particular group of consumers. It could mean different flavors or colors of the same product, or even developing a completely new product for a specific market segment. Some manufacturers call this “built to order” or “made to order” — just different ways of referring to mass customization.
For example, Apple’s MacBooks now come with different RAM sizes, hard drive capacities, screen widths, peripherals and outer finishes. Because MacBook users consist of subgroups, each with different needs, different lines of work, and different lifestyle preferences, these subgroups are the driving force behind mass customization of MacBooks.
Benefits and Current Obstacles
Mass customization has the potential to help manufacturers maintain mass production efficiency while increasing personalization of individual products. There are major benefits for all participants in the manufacturing supply chain:
However, one major obstacle to mass customization relates to the supply chain, which cannot efficiently handle mass customization due to different operating models. Supply chains operate on a “push” model — pushing products along the supply chain from factories to customers.
Mass customization requires manufacturers to operate on a fundamentally different model than they are accustomed to —the “pull” model. Orders are “pulled” from customers and their products are built according to their specific orders.
Why Blockchain for Mass Customization? Data Sharing!
Blockchain technology solves this problem by enabling mass customization along existing supply chains, especially with customizable standard products. The solution to this problem centers around data sharing.
Part of the problem is that most data is stored in centralized silos, making it difficult to share necessary information among all supply chain participants. Unlike centralized data storage that makes mass customization prohibitively expensive, the decentralization of data storage using blockchain technology reduces friction and increases trust while sharing data.
Thanks to smart contracts, manufacturers can now reduce costs associated with mass customization by eliminating manual interaction and automating most of the process. Not only does data sharing without an intermediary increase trust through higher transparency, but it also speeds up the entire design and manufacturing process.
In the end, manufacturers would be nimble and agile enough to fulfill production orders, even with customization and last-minute changes, and thanks to blockchain technology, still turn a decent profit.
Author: Nabeel Keblawi