Course Name: Operation Management A RESEARCH PROPOSAL ON Study of degree of mass customization among Indian companies

SUBMITTED TO Prof. Rajesh Jain

Institute of Management, Nirma University

Acknowledgement I am extremely grateful to Prof. Rajesh Jain for providing me the honor of carrying out the project, which helped me to put our learnings into experience. Without his guidance I would not have been able to proceed with our project in the right direction. I would also like to thank our family friends and relatives who have helped us and supported us in all possible ways. A Project report needs co-operation, guidance and experience of many more other than the persons whose name appears on the cover, I would like to thank each and everyone who have helped me in my endeavor.

Contents: 1. Title 4 Page 2 of 8

2. Introduction 3. Literature Review 4. Problem Statement 5. Scope of Study 6. Objectives of the study 7. Research methodology 8. Sampling Design 9. Techniques of Data Collection 10. Statistical tools to be used 11. Limitations 12. Bibliography

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Title: Study of degree of mass customization among Indian companies INTRODUCTION:

Mass customization, in marketing, manufacturing, call centres and management, is the use of flexible computeraided manufacturing systems to produce custom output. Those systems combine the low unit costs of mass production processes with the flexibility of individual customization. Mass customization is the new frontier in business competition for both manufacturing and service industries. At its core is a tremendous increase in variety and customization without a corresponding increase in costs. At its limit, it is the mass production of individually customized goods and services. At its best, it provides strategic advantage and economic value. Mass customization is the method of "effectively postponing the task of differentiating a product for a specific customer until the latest possible point in the supply network." (Chase, Jacobs & Aquilano 2006, p. 419). Kamis, Koufaris and Stern (2008) conducted experiments to test the impacts of mass customization when postponed to the stage of retail, online shopping. They found that users perceive greater usefulness and enjoyment with a mass customization interface vs. a more typical shopping interface, particularly in a task of moderate complexity. There are four types of mass customization:

Collaborative customization - (also considered co-creation) firms talk to individual customers to determine

the precise product offering that best serves the customer's needs (see personalized marketing and personal marketing orientation). This information is then used to specify and manufacture a product that suits that specific customer. For example, some clothing companies will manufacture blue jeans to fit an individual customer. This is also being taken into deeper customization via 3D printing with companies like Shapeways.

Adaptive customization - firms produce a standardized product, but this product is customizable in the hands Transparent customization - firms provide individual customers with unique products, without explicitly Cosmetic customization - firms produce a standardized physical product, but market it to different customers

of the end-user (the customers alter the product themselves)

telling them that the products are customized. In this case there is a need to accurately assess customer needs.

in unique ways. Page 4 of 8

LITERATURE REVIEW Mass customization aims to provide low-cost process differentiation within new markets. Mass customization employs stable well-proven processes. However, the critical difference is that the processes consist of looselycoupled sub-processes which are sufficiently flexible to be combined and recombined as needed. Product change is dynamic, because firms can now deliver goods in the wide variety required by the customer. Note that the marketing effort becomes diffused throughout the organization in order to recognize and meet the specific requirements of each individual customer. The mass customizer is able to splice the product variety of the invention model with the manufacturing efficiency of the mass-producer, thereby achieving a sustained synthesis of strategic goals which seemed impossible just a few years ago. Of course it does not represent a cure-all approach. But in getting more from equivalent resources, mass customization will become an opportunity which few corporate strategists can afford to ignore. The concept of mass customization was first introduced by Davis (1987) and later developed by Pine (1993), who defined it as developing, producing, marketing and delivering affordable goods and services with enough variety and customization that nearly everyone finds exactly what they want. More recently, Salvador et al. (2009) proposed a more pragmatic view of the concept by defining mass customization as a process for aligning an organization with its customers needs. The trade-offs between customization and cost, lead time, productivity, and quality and identifying the best practices that can mitigate such trade-offs. By reducing these trade-offs, companies also decrease the sacrifices made by consumers in order to obtain a mass-customized product, such as those related to the price premium and delivery time (Agrawal et al. 2001, Zipkin 2001).the perceived benefits that consumers derive from a specific mass customization offer are a key component of its success (Broekhuizenand Alsem 2002, Frankeand Piller 2003, Rungtusanathamand Salvador 2008, Squire et al. 2004). The notion of mass customization dates back to 1970 when it was anticipated by Alvin Toffler in Future Shock and delineated in 1987 by Stan Davis (1987) in Future Perfect. Mass customization is essentially an oxymoron, putting together seemingly contradictory notions the production and distribution of customized goods and services on a mass basis. The ultimate in mass customization is manifested in a Nissan Corporations pronouncement: Any volume, any time, anybody, anywhere, and anything (Pine and Maskell, 1998, p. 1). The ideal as put forward by Nissan, essentially consists of two interrelated parts. The first is a visionary approach, viz. the ability to profitably provide customers with anything they want, any time they want it, any way they want it and anywhere they want it. This goal may, however, be hard to realize, even by the most dedicated mass customer. The second aspect implied in this vision is the reality of using flexible processes and organizational structures geared to producing varied and Page 5 of 8

individually customized products and services at the low cost of a standardized, mass production system. This implies that customization is provided within a predetermined variety, where the goal is to ascertain, from the customers perspective, the range within which a given product or service can be meaningfully customized or differentiated for that customer, and then to facilitate the customers choice of options from within that range. The ultimate is, however, the ability to provide uniquely individualized products and services satisfying any requirement, but in a cost effective way From mass production to mass customization The forerunner of mass customization was mass production. In following Pine (1993) who states that the system of mass production has become outmoded and is no longer effective, researchers of customization such as Jelinek and Goldhar (1983) and Kotler (1989) focus on the contrast between mass production and mass customization. Unlike the foregoing, we argue that mass production and mass customization should not necessarily be viewed as incompatible opposites, but rather be seen as two positions on a continuum of continuous improvement, where either of the approaches may be more appropriate under certain conditions. It may also be viable, even preferable, for an organization to individually oriented marketing strategies and of the information flow between the customer and the organization (Logman, 1997, p. 39). The new role of marketers is to be the voice of the customer in the company (Oliva, 1997, p.8). In view of the foregoing, it seems that strategic flexibility together with quick responsiveness is essential. To a growing number of researchers, such as Pine (1993) and Feitzinger and Lee (1997), the emerging paradigm of mass customization is seen as providing the means for attaining strategic flexibility and responsiveness. What is mass customization? The notion of mass customization dates back to 1970 when it was anticipated by Alvin Toffler in Future Shock and delineated in 1987 by Stan Davis (1987) in Future Perfect. Mass customization is essentially an oxymoron, putting together seemingly contradictory notions the production and distribution of customized goods and services on a mass basis. The ultimate in mass customization is manifested in a Nissan Corporations pronouncement: Any volume, any time, anybody, anywhere, and anything (Pine and Maskell, 1998, p. 1). The ideal as put forward by Nissan, essentially consists of two interrelated parts. The first is a visionary approach, viz. the ability to profitably provide customers with anything they want, any time they want it, any way they want it and anywhere they want it. This goal may, however, be hard to realize, even by the most dedicated mass customer. The second aspect implied in this vision is the reality of using flexible processes and organizational structures geared to producing varied and individually customized products and services at the low cost of a standardized, mass production system. This implies that customization is provided within a predetermined variety, where the goal is to ascertain, from the customers perspective, the range within which a given product or service can be meaningfully customized or differentiated for that customer, and then to Page 6 of 8

facilitate the customers choice of options from within that range. The ultimate is, however, the ability to provide uniquely individualized products and services satisfying any requirement, but in a cost-effective way. Simultaneously implementing mass customization and mass production It was pointed out earlier that mass customization and mass production could be viewed as different placing on a continuum of continuous improvement and not necessarily as opposites. With this argument in mind, together with the guidelines set out in the list of conditions shown earlier, the question arises whether the particular challenges of mass customization, the organizational dynamics and capabilities and the particular characteristics of the target markets would also allow an organization to simultaneously practice both mass customization and mass production, albeit in two separate factories. Such a strategy could allow for a progressive move along the continuum until the market requirements and/or the organizations capabilities call for a strategy of mass customization only. In a study by Kotha (1996) of the NBGs strategy in the Japanese bicycle industry, it was found that the interaction between mass production and mass customization can be a source of knowledge creation and in the process create a strong competitive advantage to reap superior performance benefits Mass customization is not for everyone Mass customization offers numerous opportunities and advantages to both producers and consumers. A strategy of mass customization cannot, however, be followed blindly. A number of companies have already run into problems while trying to make the leap to mass customization (Pine et al., 1993). An example is that of Nissan, which reportedly had 87 different varieties of steering wheels, most of which were great engineering feats. But customers did not want many of them and disliked having to choose from so many options. Toyota experienced problems when they invested heavily in robots and instituted measures which deprived employees of opportunities to learn and think about process and thus reduced their ability to improve them. Amdahl did not achieve its goal of delivering a custom-built mainframe within a week. It stocked inventory for every possible combination that customers could order and was saddled with hundreds of millions of dollars in excess inventory. It is thus important that the organization ensures that its customers really desire customized products or services and that it has access to the required processes, procedures and capabilities before embarking on the shift to mass customization. Mass production may be outmoded, but it is still the most viable strategy in some instances. Problem statement What is the level of mass customization prevalent in Indian companies? SCOPE OF STUDY The project limits to only those companies whose products are available in India through retail stores Page 7 of 8

OBJECTIVES OF THE STUDY To find out different companies using mass customization in Indian market. To analyze the operations of the companies following the mass customization. To study the operations effectiveness and efficiency of the company practicing mass customization.

RESEARCH METHODOLOGY: The research approach used is Descriptive Research. Descriptive is useful because we have a clear idea of problems meet during study. It helps to develop concepts more clearly, establish priorities, develop operational definitions and improve the final research design. We have taken up descriptive research as important variables are known and clearly defined. The data used during the research will be secondary data as our scope is the products available in India retails stores so the data will be related to it. Analysis of the data gathered will be carried out to get the answer for our problem statement. TECHNIQUES OF DATA COLLECTION SOURCE: o Journals o Books o Websites STATISTICAL TOOLS The statistical tools will be used for analyzing the data which will be collected are percentage method, chi square, bar diagrams and pie diagrams LIMITATIONS Geographical limitations: project is based only in India so Geographical constraints may limit the scope of study. The project is based only on the products available in retail stores so it may limit the scope of the study. Companies practicing mass customization in India are less in numbers.

BIBLIOGRAPHY 1. http://books.google.co.in/books/about/Mass_customization.html?id=bnRFmig2Z1QC&redir_esc=y 2. http://www.businessdictionary.com/definition/mass-customization.html Page 8 of 8