Product configurator success factors

Based on my experience, a few of the top success factors for implementing a product configurator  include:

• Approaching the implementation a product configurator holistically across the enterprise–don’t allow the configure-price-quote (CPQ) process to be disconnected from back-office processes

• Focusing on CPQ as a tool and process to engage customers rather than a back-office process

• Establishing a product management function that owns the evolution of products and product lines

• Creating and engaging cross-functional product teams who own the success and profitability of a product line

• Acknowledging a product configurator is not going to solve all the problems

• Selecting appropriate product configurator technology

• Pre-engineering around product modularity and offering previously rationalized choices within a coherent product configurator system that supports CPQ

• Implementing a sustainable, scalable process for adding new features and options

• Stop trying to be all things to all people leading to an unprofitable or low margin business that is not sustainable while hoping things will get better–hope is not a strategy

• Having and engaging in a strategy to drive down the cost of variety

I write about this in my book: “Mass Customization: An Enterprise-Wide Business Strategy” available at Amazon.com. You can read more about it at www.happyabout.com/mass-customization.php

What do you think?

Dave Gardner, Mass Customization Expert
http://www-mass-customization-expert.com

© 2011 Dave Gardner

Market of One Dave Gardner interview

Dave Gardner was interviewed by Dr. Amy Vanderbilt on her TrendPOV show titled Market of One–Using Individualization For Advantage to discuss mass customization, how to use it effectively to dominate your market, and how not to lose your profits by customizing the wrong way.

Here’s the link to the interview.

What do you think?

Dave Gardner, Mass Customization Expert, http://www.mass-customization-expert.com

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Selecting a new product configurator

An information technology department contacted me seeking assistance selecting a new configurator software package.

My response:  before we can talk about the technology, I first need to understand your business and your business requirements as well as the needs of your customers and channel partners.

• What is the immediate problem that needs to be solved and how can I help the client create a compelling vision for the future that is implementable?
• Are they looking to create a “me too” solution or a game-changing solution that solidifies their position as a market leader?
• Do they want to make an incremental improvement or do they have time to make a huge impression on their marketplace?

Getting an appropriate configurator system will ensure a company thrives.

Conversely, selecting the wrong system will take a company to a deep dark place the firm will soon wish they had never entered.

David J. Gardner, Mass Customization Expert

http://www.mass-customization-expert.com

More Mass Customization Book Reviews

Here are a couple of more book reviews from Amazon.com about my recently published book  Mass Customization: An Enterprise-Wide Business Strategy:

The task of implementing mass customization projects is challenging and Dave Gardner’s book provides an excellent roadmap for executives to follow. Anyone approaching similar projects should make the book mandatory reading not just for implementation team members, but for anybody directly or indirectly involved with the project. The book is definitely an excellent gateway into the complexity of mass customization. Harold C. Pinto

Good subject/methods overview with enough content detail to explain the what is and how to’s. For those of us who are real practitioners with real world hands on experience planning and implementing successful solutions this is a good introduction with solid “making the complex simple” content. An understanding, overview and guide. Too often books today are so detailed and deep that the reader becomes lost in the weeds of misunderstanding where the objective becomes struggling through the book instead of gaining knowledge on how to understand and execute these assemble/production methods. Manufacturing / production implementations need to result in high value deliverables and today customer focus, speed and simplicity of understanding and execution is critical. Nigel Johnson, Reclipse Business Chain Improvement

This is an excellent roadmap that is significantly aligned with process. The development and implementation of mass customization is a lengthy and delicate process. The author’s discussion on leveraging configuration knowledge is right on the mark. Too often companies and consultants try to start fresh and not take advantage of current knownledge, processes and lessons learned. The authors overview of contrasting strategies is on target since most artcles do not give the reader and an opportunity to compare and contrast the various aspects of the strategy. The chapter on “Deciding What to Offer the Marketplace” is well done and provides the reader with very good diagram in helping management to decide whether or not there is “value in offering a new feature or option” The book is easy reading and provides the reader with a many good ideas that can add value to his or her mass customization system. Dennis T. Kushner

If you haven’t picked up a copy, it’s not too late!  You can order from Amazon.com or here.

David J. Gardner, Mass Customization Expert

http://www.mass-customization-expert.com

Book Review Mass Customization

Here’s what one person wrote in an Amazon.com review about my recently published book  Mass Customization: An Enterprise-Wide Business Strategy:

This is a great book for its intended purpose: to introduce manufacturing company executives to the fundamentals of mass customization.

As a former CFO of several Silicon Valley, publicly traded, high tech manufacturers, I can easily relate to the author’s depiction of salesman “George Kluge.” How many companies have salesman who “game” the system to pad their own wallets via a revenue-based commission system, while creating gaping margin leaks for the enterprise and its shareholders?

After introducing the basic concepts of mass customization (and each of its various manifestations), Chapter 4 really nails it with a checklist for executives analyzing whether their mass customization goals have been achieved.

The appendices include sample, albeit simplistic, examples of various process steps.

I would also suggest readers who have seen Professor Netessine’s critical review of this book in this space to consider the source. As Mr. Gardner clearly states right up front on page 2 of the book, its intended audience is business people who are neophytes to the concepts involved and need a primer. Clearly, for an academic schooled in the deep theory and practice of Operations Management, this book may be “shallow.”

Those of us who spend our days in the trenches of daily business operations in all of its breadth and multi-directional challenges need this kind of help.   Douglas J. McCutcheon

Thanks for your kind thoughts, Doug!

David J. Gardner, Mass Customization Expert

http://www.mass-customization-expert.com

Attributes of mass customization Part II

The use of the term “mass customization” certainly seems catchy early in the 21st century. Some are using the expression when it really doesn’t apply to the business model that they have adopted.

In a prior post, I enumerated the attributes of mass customization. Mass customization is a distinct business paradigm with certain attributes just as mass production is a distinct business paradigm with its own set of attributes.

Mass customization is about producing an end product on demand (and, only after receipt of an order) based on a customer’s requirements that are derived from previously articulated and modularized set of features and options all the while producing that end-product with the same efficiency as a mass-produced product.  Mass customization is an enterprise-wide business strategy that starts with customer input to drive order demand.

Too many “customizer” manufacturers focus on constructing a feature set in a silo separate from the rest of the organization and then rely on either the craft production paradigm or the engineer-to-order paradigm to produce the end product thus sacrificing profit and speed.  Companies that do this really have not embraced mass customization, rather, they have embraced customization.

Neither craft production or engineer-to-order paradigms offer the efficiencies that permit an individual order configuration to be produced on demand with the same efficiency as a mass produced product.

Here is a quick view of how I see the different business paradigms having evolved over time:

Are there situations where a manufacturer might not want to reveal to the outside world that they are employing mass customization?  Absolutely.

Customers at the high-end of the marketplace think that anything produced under any paradigm with the word “mass” in it is less personalized, less unique and can’t possibly offer superior value.

Under those circumstances, it would be best for a manufacturer to deemphasize the business paradigm under which a product is produced and emphasize the uniqueness and value the customer is getting.  For example, there is a product configurator for the Bentley GTC Speed, a very high-end automobile that can hardly be characterized as a mass-produced car.

David J. Gardner, Mass Customization Expert

http://www.mass-customization-expert.com

Attributes of mass customization Part I

I consistently take the position that mass customization is a business paradigm just as mass production is a business paradigm.  Some companies offering personalized or configured products are “customizers” and have not yet crossed the chasm into the mass customization business paradigm.

If you are a discrete manufacturer, what is it like to be a mass customizer? How do you know you’ve reached that state? From Chapter 4 of my book, Mass Customization: An Enterprise-Wide Business Strategy, here are the attributes of a mass customizer that matter most:

• Offers custom product configurations derived from standardized product modules or product modularity (or components or capabilities). This, of course, assumes that there has been a “product rationalization” effort to identify those essential options that the marketplace will require.

• Maintains a listing—usually within a product configurator—of standardized product modules as well as any rules for combining the product modules into fully configured products.

• Provides a means to seamlessly share the same understanding about product configurability across the enterprise (with customers, distributors, sales, order administration, engineering, manufacturing, and service).

• Extends the capability to create order configurations and explore alternatives to its customers and distributors (extended enterprise) via a product configurator. This product configurator allows customers to conduct a “what if” analysis looking at different product and pricing options. Ideally, the system should identify the lead time to obtain an order configuration.

[Note: Three things a customer really cares about are (1) what are my options, (2) how much is this configuration going to cost, and, (3) how long will it take to produce it? Truly effective systems need to address all of these issues.]

• Views the likelihood that any two order configurations would be identical as a coincidence.

• Builds configured orders only after receipt of an order—does not stock any finished products.

[Note: This is not to imply that there aren’t subassemblies and parts sitting on the shelf to support order demand. It means these parts aren’t allocated to specific orders until after an order is booked by the manufacturer.]

• Engineering is not involved in the creation of a bill of material to support individual order configurations.

• Order demand driven directly to manufacturing via a sales order.

• Engineering involved only when a new product module is needed or to finalize the engineering work on things that must be postponed until just before the order hits the factory. For example, engineering may need to confirm certain items prior to production commencing.

• Engineering defines “allowable” product configurations based on technical feasibility, not marketing or sales policy. This is important. You do not want to change the logic behind allowable or permissible configurations every time the marketing or sales philosophy changes. To do otherwise creates constant rework and churn.

• Engineering designs the product with product modularity in mind.

• Product management makes determinations about “saleable” product configurations.

• No people-dependency for expert knowledge about product configurations.

• A “mass customizer” needs to be a “progressive manufacturer.”

Progressive Manufacturers infuse technology into all areas of their business to create sustainable competitive advantage by connecting the customer to the manufacturing process.

Source: David Brousell, Managing Automation, Progressive Manufacturing Summit 2006: 7 Rules to Win in a Global Market; emphasis added.  The notion of being a “Progressive Manufacturer” is an incredibly important concept in terms of implementing mass customization. Each highlighted word embodies the essence of mass customization.

Can a company be a mass customizer and meet only a few of the attributes enumerated above? No. They are all critical.

These attributes also show why mass customization is really an enterprise-wide business opportunity, not a departmental challenge.  The efficiencies of mass customization must flow across the entire enterprise as the opportunity is to create unique products with the same efficiency one would expect from a mass produced product.

David J. Gardner, Mass Customization Expert

http://www.mass-customization-expert.com

Why mass customization is important

Mass customization is about:

• producing a customized product on demand
• for a specific, named customer
• after receipt of an actual order, and,
• producing it with the same efficiency as one would expect from a mass-produced product.

Most manufacturers of “customized products” produce them under sub-optimal business models called “build to order,” “assemble to order,” “configure to order,” “make to order,” or “engineer to order.”

It is one thing to be a “customizer”—it is quite another to be a “mass customizer.”

A customizer does not benefit from the efficiencies that can be derived from mass customization.  Industry experts estimate a customizer’s inefficiencies nominally cost 1.5-3.5% of gross revenues year after year and sometimes much more.

Many customizers experience low single-digit profits that they are constantly challenged to attain as the cost of variety increases which further erodes profits.  There is nothing worse than working your tail off to make almost no profit quarter after quarter, year after year.

To realize enterprise-wide efficiencies, I have long advocated that manufacturers offering configurable products move to the “mass customization” business paradigm. I have written about this in my recently published book, Mass Customization: An Enterprise-Wide Business Strategy, widely spoken about this, and, apply this principle with my clients as well.

I have written that mass customization will do for manufacturers the 21st century what mass production achieved in the 20th century.

In 1998, Fortune Magazine declared mass customization the organizing principle for manufacturers in the 21st century. I would caution that mass customization is not for all manufacturing–just some. There will always be a need for mass produced products in our economy. You will find those goods in retailers like Wal-Mart, Target, Macy’s, drug stores, etc.

Mass customization has broad applicability for manufacturers of customized products–products where the customer influences the final product that they desire.

If you are a customizer, isn’t it time you implemented a solution that improves efficiency and profits inherent in an effective mass customization implementation?

David J. Gardner, Mass Customization Expert

http://www.mass-customization.expert.com

Mass Customization Self-Diagnostic Assessment

I have developed an assessment tool for discrete product manufacturers to look at their business execution for customized products.

This tool can be used by  individuals or in group meetings to understand the current state of the business.  It may identify gaps and could result in rather spirited debate if discussed at an executive staff meeting.

To access the PDF version of this assessment, please click the link below:

Mass Customization Self-Diagnostic Assessment

I would love to hear your reactions to this tool.  Please contact me via email at info (at) mass-customization-expert.com

David J. Gardner, Mass Customization Expert

http://www.mass-customization-expert.com

Fritz Henderson Out as GM CEO

In the last 24 hours, we’ve learned that Fritz Henderson is out as CEO of General Motors after a tenure of only 8 months. He’s an insider who has been with GM his entire career.  His family preceded him at GM.  Hardly a guy you’d consider an agent of change.

Today, the Wall Street Journal reports that Fritz saw nothing wrong with the GM culture.  Really?  As Alan Weiss often says, Fritz sounds like someone “breathing his own exhaust.”

Now GM is looking for a new CEO, a search many are claiming could take up to a year.  And, while GM waits for a new CEO,  the status quo will pretty much prevail.  There will be more cost-cutting, trimming and no new strategic direction. If they are unable to make a deal to sell the Saab brand, it is likely they will dump that business, perhaps as early as the end of the year.

One idea GM probably is not considering is adopting the mass customization business paradigm.  Mass customization could be a game-changing strategy that could transform the automotive  industry if it is properly implemented.

Think about it:  build cars to order rather than to stock, personalize vehicles to meet customer preferences, do something that no one else is doing.

Is this a compelling idea?  Absolutely.

The first, bold automotive industry CEO to adopt mass customization (not customization) is going to win big for the company, customers, and (if those constituencies are winning) for the shareholders.

GM: Think product and process innovation.  Get your mojo back. Call me.

Dave Gardner, Mass Customization Expert

http://www.mass-customization-expert.com