Mass Customization

Rohit Kapoor

Coverage
26-08-2015

Introduction
Supply chain integration and optimization
Necessary but not sufficient

Supply Chain Mapping: Existing

Position

Shape of the value-addition curve

Point of differentiation
Customer entry point in the supply chain

Restructuring
Altering the SC
At least 1 of the 3 dimensions

Value Addition Curve

Tracing back
Goods or services are delivered to the end
customer

Customer Entry Point in the SC

Two situations
Bulk of activities done before the customer
entry
Vice-versa
Role of forecasting?

Point of Differentiation
Garment
Fabric dyeing and stitching stage

Tooth paste
Packaging

Automobile
Painting

Some Ideas on Point of

Differentiation
Before point of differentiation
Forecasting
On aggregate level
Tons of tooth paste, number of cars, number of garments

After point of differentiation

Forecasting
Variant level

Ideally
Point of differentiation?
Postpone

Ideally
Customer order point?
Advance

Ideally
Shape of the value addition curve?
Alter

Impact of Supply Chain

Integration/Optimization

Postpone the Point of

Differentiation
Postponement case studies
Hewlett-Packard
Asian Paints
Benetton

Illustrative Case Studies

Dell Computers
National Panasonic Bicycle
Dalmia Cements

Decoupling Inventory
An inventory that permits
Downstream portions of the supply chain
To operate independently from the upstream portion

Restructure Placement of
Inventory in the Chain

A manufacturing firm with a supply chain

consisting of 1 plant and 3 distribution
centers which cater to 3 markets.
Within the plant, the firm has 3 processes:
sourcing, conversion and distribution.
The lead time and cost associated with each
process is as follows:
Lead Time Value Addition Cumulative
Process
(Weeks) at Process (Rs.) Value (Rs.)
Sourcing
1
50
50
Manufacturing
1
25
75
Distribution
1
25
100

Illustration Contd.
In each market, weekly demand follows a normal
distribution with a mean equal to 300 and a standard
deviation of 100.
Given competitive dynamics, the firm wants to offer
very short lead times to customers and has to keep
stock at each of the 3 distribution centers.
As a management policy the firm works with 98%
cycle service level at each stock point.
The firm has to decide whether to keep the stock
point at the end of sourcing and manufacturing.

Options
(0, 0, 1)
No decoupling points

(0, 1, 1)
One decoupling point at the end of manufacturing

(1, 0, 1)
One decoupling point at the end of sourcing

(1, 1, 1)
Two decoupling points

Analysis
Pipeline Inventory
Will be same across options
Safety stock will change

Optimum safety stock locations

Further

Safety Stock Comparison for

Four Options