This McKinsey classic discusses how two apparent opposites - production for the masses and customization for each and every consumer, are now playing to significantly change the way industrial value chains have been looked at and managed.
Consumer choice has increased steadily since Henry Ford's Model T, when buyers could pick any color?as long as it was black. After Ford's single product came standard specifi cations for different consumer segments, for example, clothes in different sizes and colors. In the last decade or so, we've seen features that allow each shopper to customize his or her product or service with a range of components, for instance, when ordering a car, computer, or smartphone. Such configured mass customization is bound to reach evergreater levels of sophistication.
There's more to come. Now individualized customization appears to be within reach. This next wave of mass customization - building a unique product for each customer (for example, custom suits and shirts made to fit your body shape) - has been on the horizon but has proved hard to achieve profitably at scale. Successes have usually come from startups or from niche plays by established corporations, and there are many examples of costly failures.
Profitable mass customization of products and services - whether they are ones that are unique for each customer or ones that consumers can configure extensively to their needs - requires success in two broad areas. The first is identifying opportunities for customization that create value for the customer and are supported by smooth, swift, and inexpensive transactions for both consumers and producers. The second is achieving a manageable cost structure and cost level for the producer even as manufacturing complexity increases.