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Management Series: operations

Supply Chains for a new era of personalised manufacturing

Growing demand for customised products delivered to customers quickly has seen the development of high-speed bespoke supply chains. A new study examines the potential benefits of this supply chain option.

Author(s): Professor ManMohan S Sodhi - Cass Business School; Christopher S. Tang - UCLA Anderson School of Management

Customers increasingly want products that are customised to their own personal tastes and delivered to them as quickly as possible. Aided by emerging technologies such as 3-D printing and robotics, manufacturers can now respond to this growing demand through high-speed bespoke supply chains. ManMohan S. Sodhi and Christopher S. Tang have recently cast their eye over this new means of customer engagement in an article for MIT Sloan Management Review.

A range of benefits can be discerned. Across product categories we find companies engaging with customers online and inviting them to customise and order products from their websites. These products can be generated quickly by 3-D printing and robotics technology in factories located close to the customer. They can then be despatched through the highest speed options available. As well as being highly valued by the customer, this service provides very specific information about product requirements that opens up new levels of market intelligence for companies.

These high-speed bespoke chains also help fulfil a demand for rarely ordered products, such as replacement parts for discontinued automobiles. Rather than having to keep these products in stock they can simply be manufactured to order, reducing inventory and equipment overhead costs.

Developing a high-speed bespoke supply chain allows for more product variety, with niche products. Such products can prove to be highly profitable, as customers have shown a willingness to pay more for items that are rarer to find or that have been personalised to their tastes.

The onshoring of manufacturing can be facilitated by these supply chains, thanks to the advanced technology and the need to deliver the items to the customer in a short a time as possible. This is an attractive idea to many Western governments, who wish to see the restoration of manufacturing jobs that have been lost over recent decades to countries where labour costs are cheaper. The bulk of manufacturing would continue in such competitive markets but growth in specialised and profitable product manufacturing at home would be welcomed.

The authors look at specific examples of the high-speed bespoke supply chains in action, such as shoe customisation services offered by sportswear companies Adidas and Nike. The plans of toy giant Mattel to essentially install these supply chains in the home, with the late 2017 launch of accessible 3-D printing technology for children, are also discussed.

Finally, the potential barriers to adopting high-speed bespoke supply chains are identified. Despite the challenges they pose, the study concludes that the benefits of this new supply chain, those of greater customer engagement and more responsive and nimble production facilities, make it well worth exploring.

The article Supply Chains Built for Speed and Customization has been published in the Summer 2017 edition of MIT Sloan Management Review.

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