Supply-chain integration: implications for mass customization, modularization and postponement strategies

This paper focuses on three interrelated and complementary strategies for managing supply-chain integration: mass customization, postponement and modularization. While the goal of mass customization is to produce customized goods at low costs, postponement strategy focuses on delaying customization as close to the customers as possible. The extent of customization and postponement of products is rooted in modularization of product architecture designs. Product customization can take place either based on a common platform with additional options or based on combining and mixing-and-matching modules to achieve different product characteristics. It also requires a supply-chain strategy to facilitate assembly, logistics and outsourcing decisions. We analyse mass customization, postponement and modularization strategies through a ‘modularization characteristic curve’, which is shaped by two variables: opportunities for modularization and interface constraints, which represent the aggregate effect from interface compatibility effects, component customization, value inputs and supplier–buyer interdependence. Managerial implications of these strategies are also discussed.

[1]  Kenneth Flamm,et al.  Creating the Computer: Government, Industry and High Technology , 1990 .

[2]  K. Eisenhardt.  Building theories from case study research , 1989, STUDI ORGANIZZATIVI.

[3]  K. Weick,et al.  Loosely Coupled Systems: A Reconceptualization , 1990 .

[4]  M. Tushman,et al.  On the Organizational Determinants of Technological Change: Towards a Sociology of Technological Evolution , 1992 .

[5]  S. Kotha.  Mass Customization: The New Frontier in Business Competition , 1992 .

[6]  B. J. Pine,et al.  Making mass customization work , 1993 .

[7]  R. Garud,et al.  Changing competitive dynamics in network industries: An exploration of sun microsystems' open systems strategy , 1993 .

[8]  R. Garud,et al.  Using the Brain as a Metaphor to Model Flexible Production Systems , 1994 .

[9]  S. Kotha.  Mass customization: Implementing the emerging paradigm for competitive advantage , 1995 .

[10]  Karl T. Ulrich,et al.  Product Design and Development , 1995 .

[11]  R. Garud,et al.  Technological and Organizational Designs for Realizing Economies of Substitution , 1997 .

[12]  Ron Sanchez,et al.  Modularity, flexibility, and knowledge management in product and organization design , 1996 .

[13]  D. Teece.  Firm organization, industrial structure, and technological innovation☆ , 1996 .

[14]  Carliss Y. Baldwin,et al.  Managing in an age of modularity. , 1997, Harvard business review.

[15]  B. J. Pine,et al.  The four faces of mass customization. , 1997, Harvard business review.

[16]  D. Lambert,et al.  SUPPLY CHAIN MANAGEMENT -- MORE THAN A NEW NAME FOR LOGISTICS , 1997 .

[17]  Charles H. Fine.  Clockspeed: Winning Industry Control In The Age Of Temporary Advantage , 1998 .

[18]  M. Cooper,et al.  Supply Chain Postponement and Speculation Strategies: How to choose the right strategy , 1998 .

[19]  Hau L. Lee,et al.  Mass Customization at Hewlett-Packard : The Power of Postponement , 1999 .

[20]  J. Hsuan.  Impacts of supplier–buyer relationships on modularization in new product development , 1999 .

[21]  Henry Mintzberg,et al.  Reflecting on the Strategy Process , 1999 .

[22]  Ron Sanchez,et al.  Modular Architectures in the Marketing Process , 1999 .

[23]  Moreno Muffatto,et al.  Introducing a platform strategy in product development , 1999 .

[24]  J. Hsuan.  Modularization in New Product Development: A Mathematical Modeling Approach , 1999 .

[25]  T. Skjøtt-Larsen,et al.  Managing the Global Supply Chain , 1999 .

[26]  Henry Chesbrough,et al.  When is Virtual Virtuous? Organizing for Innovation , 1999 .

[27]  H. Commandeur,et al.  Restructuring European supply chains by implementing postponement strategies , 1999 .

[28]  Ricardo Ernst,et al.  Evaluation of supply chain structures through modularization and postponement , 2000, Eur. J. Oper. Res..

[29]  William L. Berry,et al.  Approaches to mass customization: configurations and empirical validation , 2000 .

[30]  Hans-Henrik Hvolby,et al.  Models for supply chain reengineering , 2001 .

[31]  Melissa A. Schilling.  Toward a General Modular Systems Theory and Its Application to Interfirm Product Modularity , 2000 .

[32]  R. V. Hoek,et al.  The rediscovery of postponement a literature review and directions for research , 2001 .

[33]  Giovani J.C. da Silveira,et al.  Mass customization: Literature review and research directions , 2001 .

[34]  F. Salvadora,et al.  Modularity , product variety , production volume , and component sourcing : theorizing beyond generic prescriptions , 2002 .

[35]  Juliana Hsuan Mikkola,et al.  Managing modularity of product architectures: toward an integrated theory , 2003, IEEE Trans. Engineering Management.

[36]  J. Mikkola.  Modularization in new product development: implications for product architectures supply chain management, and industry structures , 2003 .