How to reach Mass Customization through Product Configurability?
Mass customization is a hot topic because customers want to configure their own, individual solutions. They don’t want a standardized package, but a solution that meets specific needs.
Question is how companies can make that happen?
A modular product architecture enables you to reduce complexity and accelerate value creation. Here's more on what it is and how you can harness it for mass customization.
Configurability is about how well a product can be configured and customized, and is primarily linked to:
- How the product is designed and structured
- How the product is represented in IT systems
- How the supply chain is set up to support a configurable product.
Configuration is the activity of arranging parts or elements in a particular form, figure or combination, and primarily linked to processes and tools, so unique customer requests can be translated into a delivered product.
When understood together, configurability and configuration enable the mass customization of products so companies can meet specific, individual customer needs in an efficient and effective way.
Configurable Product Design
To create configurable designs, products should be flexible enough to allow for the adding, removing or replacing of elements without impact across the product. Changes must be isolated to the directly customized element, without causing indirect changes to surrounding elements.
A modular design has exactly this ability. Why? Because functions, features and performances are encapsulated in individual modules and the modules themselves are protected from each other by interfaces. This allows one module, or variants of one module, to be changed while still fitting through the interface, without changing any other module.
Configurability and IT Systems
A customizable product needs to be represented in IT systems so that elements can be easily added, removed or replaced.
One important aspect of configurability is the level at which parts are documented in the model bill of materials (BOM). Many companies sub-optimize the BOM in order to simplify or reduce part number count. Parts are then documented on a too high level, and above the level at which customers want to add, remove or change elements. This means that only predefined combinations of elements exist and no unplanned combinations can be made. And over time, the goal of part number count reduction becomes harder since the number of combinations needed grows exponentially with a multiplication effect. At this stage, companies are still only making predefined combinations and configurability suffers.
Another important aspect is how to manage the total configurable product range in terms of the bill of materials. Do you have multiple super-BOMs for different products? If so, this means you can make changes inside one super-BOM, e.g. add, remove or change elements, but for other changes you have to change to another super-BOM and throw away what you just did, open up a new super-BOM and start from scratch. A truly modular BOM, on the other hand, can handle the full range of products.
Configurable Supply Chain
The supply chain can disable configurability even if the product design and IT systems are set up well.
The most common reason for this is that the manufacture or purchase of sub-assemblies is on too high a level to stock. This problem is similar to that of documenting parts on too high a level. If you buy or sub-assemble predefined combinations on too high a level, suppliers and internal sub-assemblies are unable to run new, unplanned combinations with an acceptable lead time.
To solve this we need to delay the so-called ‘variance point’. This is the point in the production process where parts and assemblies become a unique order combination, instead of generic parts that fit into multiple combinations. By delaying the variance point, all assembly operations that make the combination order unique are not made until the order is received. At this point, the requested combination is known and assembled to order. Only generic parts up to module level are purchased or produced to stock, before the order, and are then ready to be assembled in the correct combination.
Configuration and CPQ-Systems
Configuration is the activity of arranging parts or elements in a particular form, figure, or combination. This concept primarily relates to the process and tools needed to translate a unique customer requests into a producible product.
Configure Price Quote (CPQ) systems often see the quote, or customer order, as the end of the configuration process. But what would happen if you extended the configuration process to the point where you actually launch the internal production order?
You can then accommodate for the fact that the configuration process should not only provide a correct, customer unique quote, but also a unique, producible bill of materials, including all technical and manufacturing documentation: drawings, diagrams, material specifications and instructions.
One-touch configuration means that each customer order is touched only once. That personal touch is typically from a sales representative or the customer directly through an online configurator.
The configurator needs to secure that the input is correct, complete and consistent. If so, interconnected systems can then generate all the quotes, internal and external specifications, bill of materials, documentation, production and material plans and orders.
One-touch configuration, or straight through processing, is fairly easy to achieve for standard, catalogue products. These are often not actually configured, but filtered by a search function that matches the request to a pre-defined product that is already documented and producible.
Complex products come in too many combinations for a pre-defined catalogue assortment. Non-catalogue complex products tend to involve a unique combination that has never been sold, engineered or produced before. And this is mass customization.
How to Overcome IT Challenges
There are several technical, IT, organizational and process challenges to overcome if you want to achieve one-touch configuration for complex products. The biggest challenge is often how to connect sales to R&D, engineering and production.
The sales organization works with customers on a high level, and tends to use a configuration model that covers the whole product assortment. One configuration model is necessary to avoid the scenario where changes in the customer request, which are not uncommon, force personnel to start from scratch in a new model.
The output from sales configuration is usually a high-level, flat list of specifications and priced objects. At the other end of the organization, R&D, engineering and production work on a detailed level and need a hierarchical structure.
Challenges with Super BOM
One product model, often called a Super BOM, typically covers one certain size and type of product. A wide assortment, with different product sizes and types, necessitates multiple Super BOMs.
A Super BOM often lacks overview and cannot repeat parts and assemblies freely without repeating rules again and again in all positions. When it grows too big, any overview of how assemblies can be reused in multiple positions is lost and the BOM itself becomes unpractical. When this happens, complexity gets too high and control is lost.
The main challenge is to connect two organizational areas that are using different product structures, definitions and levels of detail: sales with its typically flat, high-level structure and R&D, engineering and production with their hierarchical structure and full detail. The Super BOM approach works fine for products with rather low variance and complexity, i.e. where one Super BOM is enough. But when variance and product complexity increase, the maintenance cost for multiple Super BOM explodes and connecting sales, R&D, engineering and production systems becomes difficult, expensive and unstable. If it’s doable at all.
What is a Modular BOM?
A modular product architecture provides you with an information model that has a Modular BOM at its base.
In contrast to a Super BOM, a Modular BOM allows you to have a product model in R&D and engineering that can be connected to sales. The Modular BOM separates the actual hierarchy of the product (structure) from the parts and assemblies (content), which means you can freely reuse parts and assemblies and the complete assortment can be built into one model.
The commercial structure allows sales to work on a high level to create their flat list of specification and priced objects. The product properties with goal values serve multiple purposes, including control over how the commercial structure is populated, user input to the configurator, and control over how the Modular BOM is populated.
A Modular BOM ensures consistency and synchronization of customer requests with sales, R&D, engineering and production. It’s flexible, customer centric and can connect your organization.
How to Approach Mass Customization?
A modular and configurable architecture is optimal for mass customization, whether you’re aiming for a CPQ sales configuration, a producible BOM configuration, or straight-through-processing in a one-touch flow. A modular product architecture is not always necessary for configuration, but enables you to more easily meet unique customer demands, and it’s cheaper and faster too.
In this blog Examples of Product Configurators - And the Importance of Guided Selling Alex Ginsburg takes a deeper look at examples of product configurators and summarize his findings and what we can learn from these companies to improve their customer experience with well-designed product configurators and guided selling techniques. You can also view this 15 min video on how to
Importance of understanding customer needs for successful sales and product development
Example of needs-based / guiding configurators
3 main insights when preparing your configuration solution for guided selling
How to get started