Used in marketing, manufacturing and management, mass customization represents the use of flexible computer-aided manufacturing systems to produce custom output, combining low unit costs of mass production processes and flexibility of individual customization.
Different interpretations have been given to this concept. Among them, Kaplan and Heinlein define it as "a strategy that creates value by some form of company-customer interaction at the fabrication / assembly stage of the operations level to create customized products with production cost and monetary price similar to those of mass-produced products". (Source: Kaplan, A.M., Heinlein, M.(2006): Toward a parsimonious definition of traditional and electronic mass customization, Journal of Product Innovation Management, 23(2), 168-182.)
Although the term was initially coined by Stan Davis, Joseph Pine II also discusses about it in his book Mass Customization: The New Frontier in Business Competition (ISBN 0-87584-946-6), presenting an image of this paradigm at the beginning of the 90s.He even suggested a business model, „the 8-figure-path”, which describing the process from invention to mass production to continuous improvement to mass customization and back to invention.
An article on Harvard Business Review in 1997, written by Pine and Jim Gilmore, talks about four types of mass customization:
Software-based product configurations, offering the possibility to add and/or change functionalities of a core product or to build fully custom enclosures from scratch, are just some examples of implementations of mass customization that are operational today. Only limited adoption must be taken into consideration in such cases, being known the fact that individual products (atomic market fragmentation) aren’t necessarily products produced individually, but rather similar variants of the same mass produced item.
True "mass customizers" in the original sense are not the companies which supply purely electronic products (even if these are more successful with mass-customization business model), since they do not offer an alternative to mass production of material goods. Among the companies producing tangible goods and services immediately directed by customer demand must be included:
Due to the fact that lengthy supply-chains, as well as the economics of configurability do not allow many of the industries to economically offer mass customization, some well known early businesses which attempted mass customization went out of business. For example, in the industry of bicycle production, in 1999 Cannondale was considered the new model fit for mass customization, as stated in a 1999 report : "Cannondale [...] for example can configure over 8 million different frame and color variations in its bicycles." Still, the mass customization action could not help preventing the company's subsequent bankruptcy in 2003 (also blamed on other causes such as a failed attempt to enter the motorsports market), and the model was no longer taken into consideration by business gurus, sometimes the company’s business model being used even as an example whilst it was out of business.
In the process of combining the low unit cost of mass production with the flexibility of individual customization, customers must also be efficiently integrated into value creation activities. In relation to this process and to the concept of „mass customization” there is another term, „configuration system”, seen as the interactive interface between customer and manufacturer, enabling customers to add and/or change functionalities of a core product or making fully custom enclosures from scratch. The success of mass customization depends much on this configuration system, whose development is strongly connected with the customer’s actions and the sales: a poorly developed configuration system means decreased customer satisfaction and loyalty, leading to low sales.