Here's the Menu - How Do You Want Yours?

Feb. 13, 2007
From garage doors to electrical enclosures to customized motorcycles, here’s a look at “mass customization,” and how it’s practiced today by three U.S. manufacturers.
Once was the time when the term “mass customization” must have seemed like a puzzling oxymoron to North American manufacturing professionals schooled in the ways of low-cost, high-volume mass production. But those days are fast waning. Thanks to advances in rules-based information technology (IT) tools and streamlined, flexible production processes, more manufacturers today are finding ways to produce personalized products at prices close to or equaling those of mass-produced goods. And with low-cost overseas producers eating the lunch of many U.S. manufacturers, it may be time for companies that haven’t yet considered the concept to take a closer look. “Mass customization, I think, is one of the best ways that U.S. businesses can continue to compete,” says Rick Smith, vice president of channels and professional services at RuleStream Corp., a Wakefield, Mass., enterprise software provider. “Customers generally are willing to pay more for an exact fit to their needs, and that’s exactly what mass customization shops are set up to do.” Build-to-orderMass customization means different things to different people. But the term today is often used synonymously with phrases such as build-to-order (BTO) or configure-to-order (CTO). And in a growing number of cases, companies in engineer-to-order (ETO) businesses are also adopting mass customization tools and techniques as a way to streamline their order-taking and engineering processes. Compared to traditional mass production methods, mass customization represents a “paradigm shift,” says Dave Gardner, a Reno, Nev.-based consultant who operates the Web site, “It’s about being customer-driven,” he explains. “It’s not building to forecast and putting stuff out on a channel and hoping that a customer comes and buys it. Instead, it’s about interacting directly with the customer, letting the customer choose from a menu the order configuration that he or she wants.”One of the most oft-cited examples of a successful build-to-order manufacturer is Dell Inc. The $57 billion Round Rock, Texas-based personal computer (PC) maker has built a highly successful business by letting individual consumers choose from a pre-configured menu to select exactly the components they want built into their PCs. A wide variety of other products are also built-to-order, ranging from cars, fire trucks, motorcycles and boats, to windows and doors, clothing and shoes. The list also includes industrial products as diverse as pumps, irrigation gates, and electrical and electronic enclosures. “If you buy a high-end Porsche, you’re basically buying capacity in the factory, and if you choose, you can configure everything down to the color of the stitching in the seats,” points out Paul Loftus, managing director for the North American industrial practice of consulting firm Accenture, in Reston, Va. “You also see it in the aerospace business, and in heavy equipment such as tractors and earthmovers. The features and functions you can get on those products is amazing, and all of it is configurable.”Configure itThe key word is “configurable.” Software “product configurators” are critical components of most mass customization operations. A basic configurator incorporates the engineering rules and formulas governing how various standard and pre-engineered components available for a configurable product can be put together. The choice of a certain engine for a vehicle limits which transmissions may be selected for that vehicle, for example. Some configurators can also handle more complex engineering changes or parametric variant modifications that can be made to components. The size of a window might be variable within predetermined dimensions, for instance.Depending on the product, a configurator interface may be made available to consumers over the Web, as in the case of Dell. But for more complex products and for most industrial products, the configurator is typically used by a manufacturer’s sales force or by order entry personnel, who work with customers in configuring products for order. The configurator takes the user through a series of questions to configure a product, then calculates costs and delivers price quotes or estimates based on components selected and modifications requested. The order data is typically passed along to the manufacturer’s enterprise resource planning (ERP) system, which configures a bill of materials and drives supply chain orders or part replenishment based upon the order selections.The configurator data is often used to determine routing information and print up work instructions for operators on the production floor, or provide program data for driving factory computer numerical control (CNC) machines. In the case of ETO, or engineer-to-order, products, the order output data may be fed to computer-aided design (CAD) systems.Most of the major ERP vendors offer configurators for use with their products. A number of third-party vendors also supply configurators, and many manufacturers have developed their own, home-grown configurators to meet the particular needs of their product lines. Manufacturers should choose a configurator product carefully, says Gardner, of “The configurator is a critical component, and if you buy the wrong one, or one that is inappropriate for your company, you can get into deep trouble,” Gardner warns. “Things don’t necessarily scale well. Something that works very well at a small or simple level of complexity can completely fall apart at a higher complexity level.”Crazy permutations One manufacturer that is pleased with its choice of configurators is Martin Door Manufacturing, a Salt Lake City-based garage door manufacturer. “At Martin Door, we treat every order that goes through here as if it were a custom job, even the stock orders,” declares Robert Scott, chief engineer at the company. With options based on size, color, windows, insulation and material, among other variables, the company’s garage doors can be built in literally billions of different permutations, says Scott. Yet, door pricing, based on options selected, is basically the same for any size order, he notes, and the company promises shipment within two business days. “We can get you anything you want, all of these crazy permutations, all of these colors, everything, in 48 hours, and our on-time shipping rate has been 100 percent for years,” Scott boasts.Scott says that a major key to Martin Door’s flexibility is its configurator software, provided by Experlogix Inc., of Santa Barbara, Calif. Martin Door order-entry personnel use the Experlogix Configurator as they take telephone orders from dealers and consumers, walking each caller through a series of questions about the order. From this information, the configurator creates a work order that contains all of the information about how a door will be made, and a map of how it will flow through the plant, Scott says. Next, do thisThis information is moved into a SQL database, and a small secondary program is used to distribute the instructions to each of the plant’s 119 work centers. Machine operators and assemblers can view work orders on computer screens at the work centers, and can also print out instructions that walk them through specific steps for each order. “When they print it out, the paper tells them exactly how to build it, how to cut it, how to drill it, how to paint it, or whatever their operation is,” Scott notes. “When they tell the system they’re done, it notifies the next guy down the line on what to do next.”The configurator, installed in 2001, has made possible the company’s unblemished 48-hour shipping record, says Scott. “Before, we were at a two-week lead time on standard orders and it could go to three or four weeks on some of the other stuff,” he recalls. Further, the number of options available to buyers prior to 2001 was significantly less. “We had not even a hundredth of the permutations that we offer now. We had five basic colors, we sold the basic sizes and we had a few windows we offered, and everybody in the plant had to know exactly what to do, so the training burden was incredible,” Scott relates. “Now, the system totally coordinates everything and tells everybody what to do.” The Experlogix Configurator, which links to Martin Doors’ Visual Enterprise software, supplied by Infor Global Solutions, Alpharetta, Ga., has also helped the company reduce inventory by about 30 percent, Scott continues. “The computer system now keeps track of all the materials, every nut, bolt and screw. And when you’re in control and know exactly where you’re at on materials, you can drop your safety stock,” he notes.Scott adds too that the application of Lean Manufacturing and other modern management methodologies at the Martin Door plant have also played a role in helping the company meet its 48-hour shipping target. For example, Martin Door has implemented SMED, or single minute exchange of die, a method for reducing machine changeover times, as a way to keep small batch sizes flowing smoothly through the plant. Various sources point out, in fact, that the philosophies of Lean Manufacturing fit well with the concepts of mass customization manufacturing. Another example of that can be seen at Hoffman, an Anoka, Minn., manufacturer of electrical and electronic enclosures that is part of Pentair Inc., based in Golden Valley, Minn.One by one“Hoffman builds enclosures one at a time, exactly how you need them,” says text displayed near the top of the company’s Internet home page, in reference to the “modification services” portion of Hoffman’s business. Hoffman has been manufacturing enclosures since 1953, and the bulk of its production is still standard product. But non-standard products provide an additional market opportunity. “Our modification services are a menu-driven approach to offering customers the ability to modify what is in our standard catalog offering,” explains Doug Franz, vertical market manager at Hoffman. The program started about 10 years ago, when the company first launched a mass customization program, he says, as a way to reduce lead times required for non-standard product orders. Hoffman enclosures can be manufactured in what Franz calls a “near-infinite” variety of configurations, with variables including material, size, color, shelving, location of holes and cut-outs for cable entry, and accessories such as fans, filters and air conditioners. As one of the larger players in the enclosure market, Hoffman 10 years ago was unable to match the lead times of some smaller, more nimble competitors in delivering non-standard enclosure products. “It was taking us anywhere from six to 10 weeks, and the market at that time was probably three to four weeks,” Franz relates. Lead times slashedToday, thanks to a combination of its mass customization modification services program and a focus on Lean Manufacturing, which began seven to eight years ago, Hoffman has cut lead time for non-standard products to two to three weeks, he says. The company took time out of the inquiry-to-order cycle by developing an automated, menu-driven pricing tool that is used by Hoffman sales offices to quote many non-standard products. Incorporating the most commonly requested modifications, the tool eliminates the previous requirement for the sales staff to coordinate with Hoffman’s home office prior to making a quote—a process that previously required up to four days, Franz explains. When a non-standard order is placed, it goes into a configurator that integrates with Hoffman’s J.D. Edwards ERP system, which drives materials replenishment and internal costing, creating a bill of materials and routing instructions. The ERP system is not yet linked to Hoffman’s SolidWorks 3D CAD system, but parametric data created by engineers is downloaded electronically to drive factory CNC machines.Through continuous Lean-based improvements over the years, Hoffman has streamlined its production process, which has led to dramatic reductions in factory lead time needed for non-standard product, says Tracy Theisen, manager, product marketing. Among other things, the company has shortened changeover times through SMED initiatives, and now runs smaller lot sizes to improve flexibility on its production lines.“Years ago, when we built standard products, we would release orders for 100 of a standard unit. Now our lot sizes might be as low as five on those standard units. We just run them more frequently,” Theisen says. “That makes us more flexible, because it allows us to run non-standard units whenever we want. We no longer have to wait until that long run of standard product is completed,” she explains.The effort has paid off. “The bulk of our business has historically been standard products, but we’ve more than tripled the non-standard portion of our business over the last 10 years,” says Franz. “So this has become a tremendous growth area for us as we’ve implemented mass customization practices, and also embraced Lean Manufacturing.”Custom choppersAnother style of mass customization can be seen in Hermitage, Pa., where two-year-old Hardbikes, a custom motorcycle manufacturer, has set up shop. Bike enthusiasts can design their own motorcycle on the company’s Web site using Hardbikes’ online configurator, then visit one of the company’s 17 dealers for a personal “fitting” using the company’s Hardrider fixture, or product simulator. Once the order is placed through a dealer, the company delivers the built-to-order bike within 60 days, says Bob McCollum, Hardbikes vice president of operations.Using the online configurator, customers can choose from any of eight styles of motorcycles, including choppers and bobbers, based on four basic platforms. Customization choices include wheel styles, engines, color and graphic designs, and multiple options and accessories ranging from primary belt drive style to passenger pegs and pads, throttle bosses, stirrups, grips and lights. “There are about 4 million different combinations that you can put together,” says McCollum. In the last step in the process, the
customer visits a dealer, who sets up the Hardrider fixture is to match the motorcycle platform selected, and then makes adjustments to the position of the handlegrip bars, foot pegs and seat to match the buyer’s physical stature. “You can actually sit on the Hardrider and feel exactly how the motor-
cycle is going to feel,” says McCollum. “Once you get comfortable, you can enter those settings into our configurator as well.”
When the customer is ready to order, the dealer e-mails the configurator data to Hardbikes, where it is entered into the company’s ERP system, supplied by Seradex, of Burlington, Ontario, Canada. Using the ERP system, Hardbikes creates a bill of materials and work order; the company’s purchasing agent is automatically notified of parts needed for purchase, and the ERP schedules the job for the shop floor. The motorcycles are built in assembly line fashion at a series of six stations, with one worker at each station. “Once all of the raw materials hit the building, the motorcycle only takes about four to five days to complete,” McCollum says. Hardbikes maintains about a month’s worth of inventory of commonly used parts at each station, and places orders for other, less commonly used parts as needed, with a special eye toward components that might present timing issues.  “Sometimes, if we know there’s a risk of a component taking longer than that 60-day window that we’ve got to deliver the motorcycle, we’ll work with our vendor to inventory the part at its facility, and do periodic releases based on our actual orders,” McCollum observes. But he is also quick to point out that Hardbikes has an ongoing program for maximizing parts standardization, which it sees as key to the company’s flexibility. “We have a whole library of parts that you can use to build a motorcycle, and we rank them on how many of our products each part is used on,” McCollum notes. A component that is used on all four of the company’s motorcycle platforms is ranked a 4, a part used on three platforms is a 3, and so on. standard parts“We don’t have a problem inventorying number 4s, but we do have a problem inventorying number 1s, because then we’re obviously at risk for obsolescence,” McCollum observes. The company sets goals for its engineering staff to eliminate a certain number of 1-ranked parts from its parts list each quarter, because “that keeps things flexible, and that’s what makes mass customization work. We’ve got to have standardization across all of these platforms in order for us to efficiently make all these bikes.”In assembling the bikes, Hardbikes employees work from the bill of materials on each order, using inventoried parts housed at each station; a tagging system with Hardbike-specific part numbers aids identification, and each worker goes through various quality checkpoints. The line can build up to eight motorcycles per week, Scott says, and the company has a plan for boosting capacity when it’s needed by installing a parallel line, enabling each operator to work on two bikes at a time. Hardbikes shipped about 150 motorcycles in 2006, its first full year of operation, according to Scott, and currently has 17 dealers, mostly east of the Mississippi river. The company plans to increase its dealer count to 50 by yearend, and expects to become profitable in 2007, he adds. McCollum says he has worked with Hardbikes founder Gene Kirila at several previous companies that have practiced mass customization methodologies. And he hints that Hardbikes won’t be the last. “We think that this whole business model can apply to a lot of other markets, not necessarily just custom motorcycles,” he concludes. 

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