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Posts Tagged ‘Customization’

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Custom-made bikes are a very small slice of the US bike market. According to The Atlantic, the vast majority of bikes sold in the US are made in Asia and a handful of companies dominate the market (America’s Rebel Band of Custom-Bike Builders, Apr 3).

Though thriving, the 100 or so builders in the hand-built bicycle scene make up about 3.3 percent of the overall U.S. bike industry, which was valued at $6.1 billion in 2012 and is sourced almost completely overseas, according to bicycle industry expert Jay Townley with the Gluskin-Townley market research firm and a report by the National Bicycle Dealers Association. In 2011, 99 percent of bicycles sold in the U.S. were assembled in Asia—93 percent in China and six percent in Taiwan.

Additionally, just four companies—Dorel Industries, Accell Group, Trek Bicycle Corporation, and Specialized Bicycle Components—own about half of the 140 bicycle brands available in this country, including Schwinn, Cannondale, Raleigh, Gary Fisher, Trek, and Specialized, Townley said.

The article goes on to note that while small, those custom builders are responsible for a lot of the innovation in the industry. Because their work is premised on doing something unique, they are inclined to take more chances than a larger firm. So what does it take for these small guys to be successful?

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3012591-slide-slide-2-177-feature-the-wireAt first glance, simple products like metal baskets or paint brushes should not be made in America. These should be simple to make, the product should be standard, so production should go to a low-cost location. But that ain’t necessarily so. A pair of recent articles discusses how some small US manufacturers are managing to compete in seemingly staid, boring industries.

The first story is from Fast Company and focuses on Marlin Steel, a firm that once focused on wire baskets for bagel shops (The Road To Resilience: How Unscientific Innovation Saved Marlin Steel, Jul/Aug). That’s a business that eventually went to hell as cheap imports came into the market. The fortunes of the company changed with an order from Boeing.

The job that rescued Marlin Steel was small–20 baskets, a $500 order. Greenblatt was handling sales in 2003, so he took the call himself. “It was an engineer from Boeing,” he says. “He didn’t think I was in the bagel-basket business. He just needed custom wire baskets.” The Boeing engineer, who had seen a Marlin ad in the Thomas Register, a pre-Internet manufacturing directory, wanted baskets to hold airplane parts and move them around the factory. He wanted them fast. And he wanted them made in a way Marlin wasn’t used to–with astonishing precision. For bagel stores, says Greenblatt, “if the bagel didn’t fall out between the wires, the quality was perfect.” The Boeing engineer needed the basket’s size to be within a sixty-fourth of an inch of his specifications. “I told him, ‘I’ll have to charge you $24 a basket,’” says Greenblatt. “He said, ‘Yeah, yeah, whatever. No problem. When are you going to ship them?’”

It turns out that the guy from Boeing was not alone in wanting custom baskets for use in a factory. Further, lots of other buyers were much more concerned with getting just the right basket really soon than with whether the price was as cheap has possible. The image above is something used in a GM factory to hold pump housings when they are being cleaned. (more…)

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Few things would be more luxurious than a truly custom-made product that is tailored to your every desire. That, of course, is expensive but there is a medium ground between a truly custom product and something that is merely off the rack. Mass customization promises customers a sort of unique offering. I say “sort of unique” because mass customization programs usually are built off a modular product architecture so they inherently constrained customers to not mess with the interfaces between modules. On the other hand, they usually offer a wide range of choice for each module. The wonders of combinatorics then quick in and the customer can choose from possibly millions of alternatives. Another customer may be able to make the exact same choices, but the chances of that happening are ultimately very slim.

And that gets us to Burberry Bespoke, the mass customization program that the British trench coat maker recently launched. Here is how the Wall Street Journal (Mink or Fox? The Trench Gets Complicated, Nov 3) described the program.

Called Burberry Bespoke, the program is a full-scale attempt at “mass customization,” a long-time goal of retailers and unusual for a designer fashion house. Customers select the cut of their trench coat, the fabric, the color, and then navigate through options such as bronze-studded sleeves, bridle leather cuff straps, mink linings and shearling collars.

Bit by bit, the screen assembles the virtual trench coat as specified. The real-life version arrives in four to eight weeks, in a box the size of a human torso, from Burberry’s factory in Yorkshire, England (leather trenches are dispatched from Italy). The tag displays a special limited-edition number, plus a clear designation in block letters: “Bespoke.”

The company estimates that there are about 12 million different combinations that can be ordered. The graphic above shows one possibility and the video below includes some screen shots of the web site.

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How do you get replacement parts? In a developed country the answer is pretty simple. For some things (e.g., car parts), you may need to go through a dealer or specialized retailer. For others, you may be able to just stop by a general hardware store. But what if you are in a developing nation? Then you might have to get creative.

Markplace had a fun report about craftsmen in Mozambique carving replacement parts (like the gear above) out of ebony (Ebony woodcarvers learn to craft machine parts, Oct 3).

Young Makonde sculptors apprentice for years, sanding and polishing the works of their teachers. They study the ornate canes and traditional busts that are still a bestseller to tourists. But the expert woodcarvers are also finding a market for more “functional” sculptures. Manuel Xavier is a customer here at the woodcarvers’ collective. He repairs gas stoves for a living but has trouble finding spare parts.

MANUEL XAVIER: Here in the north, there is a lack of equipment for gas stoves.

A month ago, Xavier got a call from an unhappy customer. She said that the knobs on her stove had broken off.

XAVIER: I told the woman who owns the stove, “That part isn’t sold here in the North.” Not in stores, or anywhere else. So I decided to have them made out of Pau Preto.

Pau Preto is what the locals call the wood in Portuguese. In English, it’s known as African blackwood, or ebony. …

And versatile. Sculptors have carve parts for espresso makers, sewing machines, and motorcycles. For film projectors, and even computers. Patterson says that storekeepers in Mozambique don’t have the capital to keep spare parts in stock.

The article goes on to report that doing replacement parts is harder than doing creative sculptures. For the latter, there is no formal standard of perfection. Replacement parts, however, must conform to what they replace for them to be useful.

It’s a cute story, but does it have any relevance in the West? We’ll never have hand carved replacement parts, but what if they could printed on demand?

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We are nearly two months into the baseball season and we have yet to have a baseball related post. Now that the Red Sox have crept above 500, it is time to rectify the situation. Check out this video on making baseball gloves:

The interesting part of this to my mind is what it says about manufacturing in America.

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So here is an interesting business model that leads to a nice supply chain contracting story (from Finnish shoe firm pays lifetime royalties, Oct 12, Globe and Mail). Pomarfin, a Finnish shoemaker, was facing increased competition from cheaper firms manufacturing in Asia and was forced to look for ways to differentiate its products. It seemed to find an answer in mass customization.

Not wanting to walk away from its manufacturing roots, Pomarfin decided to compete in the emerging world of mass customization by making made-to-measure shoes for well-off men who hate shopping for shoes and want a perfect fit. Pomarfin envisioned installing a foot scanner in retail stores that sold its shoes. Clerks would scan the customer’s foot, and the image would be uploaded to a server in Pomarfin’s manufacturing plant, which would create and ship the customer a pair of shoes for his unique feet.

Pomarfin named its new made-to-order brand “LeftFoot.” Once a customer scanned his foot with a LeftFoot machine, he could reorder a custom shoe through the website, cutting out the need to visit a retail store.

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I lived in North Carolina for five years and have since been somewhat fascinated by the furniture industry. North Carolina is to sofas  as Michigan is to sedans.

In some ways, furniture seems like cars and other consumer durables. Buying a full bedroom set or a nice sofa and armchair is pretty big purchase both financially and emotionally. Not only will you shell out a lot of money, you will using the thing daily while hoping that you keep it a long time. There is, however, a big difference between cars and furniture. The barriers to entry for the latter are fairly low. It does not take much in terms of capital equipment and investment to get into the business. Admittedly, if your goal is to sell through every Macy’s in the country, that would be different. But if you are content to start small, you can get into the business pretty easily. Hell, I have bought a real sweet upholstered kid-sized living room set on the side of the road in Pittsboro, NC, from a guy who worked out of his garage and whose accent I could barely decipher.

In any event, it’s a tough business with a lot of players scrambling for distribution and trying to create unique products. On top of that, there has been increasing competition from imports as this graph (from an NPR story back in December) makes clear:

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I have spent enough time in North Carolina to be interested in a good furniture story. I gotta admit that I have never heard of anything quite like this: Made.com let’s people vote on what styles it should sell and then builds winning styles to order.

There are two intriguing aspects. First, there is the crowd-sourcing story. Made.com posts designs and lets members vote on which ones should go into production. (Go here to see what is currently being reviewed.) There is a question of how much the voting really matters. That is, is this process really how they decide on their assortment or is this more of a publicity machine?

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On May 1, North American car makers (or more accurately, their dealers) had 2.1 million units on hand. That sounds like a lot — and I would certainly hate to have to wash all those vehicles — but in the grand scheme of things, it is remarkably little (Carmakers turn into inventory control freaks, May 17, Automotive News).

Ever since the disruption of cash for clunkers last August, automakers have matched production closely to U.S. sales. It has paid off in leaner, more balanced inventories. 2.1 million units on hand May 1 equaled a 56-day supply, the lowest in 19 years of records for the month. The average has been a 69-day supply. For manufacturers and dealers, there were 562,900 fewer unsold units to finance than a year ago, even though April sales volume jumped 20 percent.

“Since the end of 2009, there is a real sense of discipline with the balance of supply and demand,” said Jeff Schuster, head of forecasting for J.D. Power and Associates. “The true test will be the continuation of this approach post-recovery.” Except for Toyota, all major players have reduced incentives this year, raising per-vehicle margins.

To further put those numbers in perspective, industry inventories were averaging 86 days in early 2009. Going back to the relative boom years from 2004 – 2007, industry inventory was around 4.3 million units which represented about 70 days of demand. Thus both the absolute and relative amount of inventory in the supply chain have fallen.

Much of the decrease is due to Chrysler and GM.  The last year has seen both firms cut their inventory by 42%. Of course, some of the absolute decrease in inventory is due to them kicking dealers to the proverbial curb as they exited bankruptcy. On top of that, GM no longer has Hummers, Saturns, Pontiacs or Saabs on its books.

Still both firms have been fairly disciplined about trying to stick close to demand as sales have rebounded as opposed to stuffing dealers with inventory.  One reason is that the UAW blinked and agreed to eliminate the Jobs Bank. For years, laid off Big 3 workers were paid for not working. They received over 90% of their regular wages to wait around for demand to pick back up. It’s good work if you can get it, but it provided horrible incentives for the Big 3. If you can’t shed costs by idling a plant or scaling back to one shift, why not keep it open for two shifts and hope to sell the cars? That was a large part of why the Big 3 always had such huge inventories. The Jobs Bank went away with Chrysler’s and GM’s bankruptcy and they are now able to make more sensible production and inventory decisions.

In a related vein, BMW is planning to push custom ordered cars in the US (BMW Tries to Convert ‘Impulsive’ Americans to Orders, May 14, Bloomberg). (more…)

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I am teaching the core operations class again this quarter and we are just getting to supply chain management and the newsvendor problem. Thus I was happy to see an article on a custom shirt maker in Sunday’s New York Times that makes a perfect talking point (Putting Customers in Charge of Design, May 16). The firm in question is Blank Label. Here is what their website says:

Blank Label is empowering you to be your own dress shirt designer. Forget about shopping at your local retail stores to buy a dress shirt ten thousand other guys can get, or a dress shirt that fits like a parachute. Design your own custom dress shirt to fit your style, personality and body. Make an incredibly unique dress shirt tailored to you. It’s better than a bespoke experience because you get more say in the design of your dress shirt and ours is actually a fun experience.

There have, of course, been custom dress shirt makers around for years and many have operate over the web.  Part of what sets Blank Label apart is the price point. The other part is an emotional pitch (from the NYT article):

“The value proposition of customization at retail prices was a cornerstone of our company from the very start,” Mr. Bi tells me by phone from Shanghai, where Blank Label shirts are sewn to customers’ specifications and delivered anywhere in the world in about four weeks. But Blank Label, his Web start-up based in Boston, offers something else that off-the-rack doesn’t: “the emotional value proposition: how expressive something is.”

“People really like a Blank Label shirt because they can say, ‘I had a part in creating this.’ ”

Their website continues the creativity emphasis inviting you to “co-create your custom men’s dress shirt within 10 minutes.”

What does this have to do with the newsvendor problem? (more…)

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