What if one day, we all woke up, opened up our closets to grab out clothes for the day, and there were nothing but blue shirts? Your pants are still there, but we all just wear blue shirts every day. A ridiculous thought, right? We have (and prefer to have) different colored shirts, shirts with different patterns, shirts for different occasions, and shirts made from different types of material.
What is ‘Make to Order at Scale’?
‘Make to Order at Scale’ is a disruptor driven by the end users’ expectation that products and services will be personalized to meet their unique needs and requirements. This build-to-order customization of products has disrupted manufacturing for a while. But it has gained further traction lately and is driving consumer packaged goods (CPG) manufacturers to get creative with their approach.
Consumers want variety. In fact, there is variety in almost every type of consumer product out there, ranging from different colors and styles to different smells and flavors. But over the last decade or so, consumers have outgrown those choices. Consumers today want to go one step further and customize more about the clothes they wear and the food and drinks they consume.
How is ‘Make to Order at Scale’ Disrupting Manufacturing?
‘Make to Order at Scale’ is impacting many manufacturing industries. The customization of consumer products has been happening for years in select markets, but recently, it has expanded into a full blown trend, and products in almost any segment can be customized by consumers. Customization is also moving rapidly into food and beverage manufacturing.
For a price, consumers have been able to customize candy and soft drinks with personalized labels. These were high-end customizable items and typically done as novelties or for special occasions. Today, consumers are putting increasing pressure on the segments within consumer goods and food and beverage manufacturing over customized products. The food and beverage industry now needs to be creative to meet these growing needs to remain competitive. As they say, if there is a high enough demand for something and people have the money to pay for it, there will be someone to provide it.
‘Make to Order at Scale’ is really a double edged sword for manufacturers. Competing in the market with products made to order keeps a company in the game so to speak and relevant, and can improve sales. Though, if not managed properly, costs could increase and the customized products could become a liability rather than an asset. That is why offerings of make to order products have to occur at the right place in the manufacturing process to where primary ingredients and materials needed are the same until the customization takes place. It maintains a reasonable cost of goods sold while offering the make to order features consumers are looking for.
Which Industries are Being Impacted?
Several key manufacturing industries are being impacted by ‘Make to Order at Scale’, but we will focus on the Consumer Packaged Goods (CPG) industry, primarily in how it affects Consumer Products as well as Food and Beverage (F&B).
In the Consumer Products industry, apparel was one of the first categories to offer customization. Now there is a push to customize products in Consumer Electronics. Consumer Electronics is actually a very interesting category for this disruptor. The category consists of almost any product with a power supply. Products in this sector consist of mobile phones, computers, televisions, household appliances and power tools. Until recently, these products were pretty standard in terms of look and feel and really had no need to be customized.
Today, technology is allowing consumers to adapt personalization into product design and drive new products and those with added accessories. Personal electronics and major appliance manufacturers now let consumers customize the end product. Smart technologies are adding intelligence into the appliance to assist in consumers’ lifestyles. Advanced technologies, such as 3D printing, could revolutionize production of smaller products and speed up the manufacturing process.
Food and Beverage
In Food and Beverage, we are seeing customization in shelf-stable products, like candy and beverages, and in creameries and fresh food products. With the ability to customize many personal products, consumers are now looking at the food and beverage industry for make-to-scale and customized products. Manufacturers are now experimenting with kiosks in supermarkets globally where consumers can mix and match products. The manufacturer sells product in bulk, and the consumer can mix and match to their tastes.
Vending services are expanding to allow consumers to create their own customized meals and beverage flavor mixes. And with advances in 3D printing technology, the options could soon be endless for customized food and beverage products. Consumers would then be able to customize their own sizes of containers for products. There are actually a number of food companies that are already using 3D printing to create food.
Fresh foods are another area that is seeing customization to a degree, or increases to make to order at scale products. Consumers are focusing on local food products where available to support regional producers. Local products are being favored because consumers feel these are trusted sustainable sources. Food service and fast food restaurants have been offering customized food products for years and more personalized food establishments are on the rise.
Is there a ‘Make to Order at Scale’ Strategy?
Historically, CPG products are the prototypical examples of non customized make to stock manufacturing. What could be more made to stock than packages of cereal or containers of laundry detergent that look the same in all markets where they are sold? Competitive pressures in the CPG marketplace, however, have radically changed consumer expectations for many consumer products and for standard food and beverage items.
Today, economic conditions, trends, health concerns and social media have all influenced the products consumers want to buy. As social media continues to expand, trends are changing faster than ever as people share their tastes, preferences and individualism with the world via the Internet. This not only has people copying others, it also inspires their own creativity, which translates into the desire for even more customized products. These trends are influencing manufacturers to step up their customized product offerings.
Although most food companies have not shifted to make to order strategies, the number of SKUs that leave the food factory has exploded exponentially — all with very little variation to the base food products but with some tweaks. Mass customization and configured products offer consumers distinctive, individualized choices, and they give manufacturers enormous opportunities to boost sales, brand awareness and loyalty.
Where Do Manufacturers Go from Here?
Consumer-customized products offer a number of challenges to the manufacturer. Before diving into the business of customized products, companies must incorporate this approach into their strategic plans. The thought process should be similar to that used for promotions. Customization of products should improve sales and profitability without a tremendous increase in costs. Accurate product forecasting for base products and distribution plans need to channel back to manufacturing and procurement. Planning and execution is critical as setups and changeovers become more challenging and additional components, ingredients and packaging need to be designed and ordered.
Giving consumers the ability to customize products will allow the CPG marketplace to continue to expand. This gives companies the ability to boost profits, expand offerings and engage directly with their consumers. Those that succeed will be the ones who have laid out their customization strategies clearly and build simple, executable models that meet the needs of the consumer.