Is mass personalization the next big hurdle for manufacturers? As with any business, manufacturers constantly face a host of marketplace challenges. Currently topping the list are the hyper-competitive business models, ever-increasing regulatory burdens, expert workforce availability, reskilling and training requirements and costs, and the effects of global geopolitics such as tariffs and human rights concerns.
Not getting a whole lot of attention right now is mass personalization. It’s a concept that’s been around for years, and one which various producers have toyed with from time to time. (Remember custom-printed M&Ms? They’re still out there!) But it’s never really taken off in a big way, whether because of scalability, viability or both.
That may be changing, according to Sreenivasa Chakravarti, Vice President of the Manufacturing Business Practice at Tata Consultancy Services (TCS), a leading global IT services, consulting and business solutions provider. TCS is among the top three global IT Services brands, with offices in 46 countries, and more than 436,000 employees across 149 nationalities. Last year they delivered revenues of $20.9 billion. They’ve found that manufacturing is leading the move toward mass personalization – but that many producers are in danger of being left behind if they do not embrace digital technologies.
“One of the things we’ve been looking at is how industry is shaping up, given the commoditization of manufacturing,” Chakravarti said. “How are producers identifying differentiating competencies? The best ones are re-looking at their own businesses and identifying adjacent capabilities. They realize there are much bigger business opportunities out there.”
TCS’s 2019 global study, titled Winning in a Business 4.0 World, surveyed senior business decision-makers from more than 1,200 large enterprises spanning 11 industries and 18 countries. This global survey benchmarked large companies in what TCS calls Business 4.0 growth and transformation, mapping their adoption of the four critical business behaviors of driving mass personalization, creating exponential value, leveraging ecosystems, and embracing risk:
- Manufacturers are leading the pack in mass personalization, ahead of organizations of most other industries. 83 percent of respondents can customize products and services for almost every interaction.
- Manufacturers investing in mass personalization capabilities report higher volumes (63 percent), value of customer interaction (60 percent) and higher profitability (64 percent)
- Manufacturers are efficient at both leveraging ecosystems (55 percent) and creating exponential value (30 percent) through the improved innovation capabilities and access to new markets.
- However, a mere 25 percent of manufacturers are embracing the risk needed to successfully transform into such businesses.
The main driver, according to TCS, is the adoption of and effective use of Industry 4.0 (or again, as TCS terms it, Business 4.0) technologies and methodologies. “How do companies get started? It’s definitely more complex,” Chakravarti explained. “They have to look at what their future needs will be in the advanced manufacturing arena that will provide these kinds of opportunities.” That involves everything from the mundane (for example, managing orders and production schedules when products are customized) to the high-tech (for example, leveraging the Cloud for data collection and analysis, and making more effective use of flexible new manufacturing methods such as 3-D printing).
“Manufacturers have the opportunity to create much more value and benefit from it,” said Chakravarti. “But it’s much easier said than done. How do all stakeholders realize the benefits? What about IP and data privacy? These are all key challenges, things that will take time to figure out. It has to be a mutual discovery process.”
Conversely, however, companies don’t have a lot of time to waste. “The evolution to mass personalization won’t take too long,” Chakravarti said. “The marketplace is going to demand it, so manufacturers will have to stay ahead of it.”
It all goes back to those four behaviors mentioned above. “These behaviors demonstrate the difference between the old and new,” Chakravarti explained. “They represent the development of a redesigned value chain that is configured to provide an experience-driven ecosystem. It will require more collaborative efforts, some of which are already underway.”
He offered a couple of current examples. “Look at shared mobility,” he said. “There you’re building from 100-plus years of transportation experience. But they’re rethinking the platform and creating new value.” The self-driving fixed-route ride-sharing EV testing being done currently by May Mobility in several cities is a very personalized, local approach to transforming urban transportation, for example.
Air transport is another example. “The airline experience is changing, from B2B to B2B2C,” Chakravarti said. “You still have the same airliner manufacturers. But the airlines themselves – the service providers – are under great pressure to offer something different, something much better than what we have today. How can those companies work together to let people create their own individual journey?” Competitors are already popping up; witness Boom Supersonic, for example, and their race to develop a new supersonic passenger jet. The experience will come from purpose driven economic models, where stakeholders collaborate to deliver the expectations in a seamless manner.
“The most important thing is to look at how businesses are being redefined,” said Chakravarti. “Competitive advantages are shifting. What drives competitiveness has been changed. If companies can see the opportunities that arise because of that, they’ll be far more successful.”
It’s a combination of factors that come into play. “Technologies are a piece,” Chakravarti continued. “It’s not about the use of one technology at a time, but harnessing the combinatory effect of Machine First models which are intelligent and agile, and on the Cloud. Embedded software, AI, advanced manufacturing – they all play a part. But other elements like business models are critical, too. Mass personalization changes the operating model, taking it from competitive to more collaborative. Companies need to be asking themselves, ‘What is the risk? How do we mitigate it, or build around it? What kind of business model will offer the most value in the future?’”
Moving from mass production to mass personalization will be messy and costly, that much is certain. But the opportunities are worth it, according to Chakravarti. “All this becomes much more attractive in terms of profitability,” he said. “Existing profit margins for most manufacturers are in the low single digits. I think exponential growth is possible. Value creation equals growth opportunity.”