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Omega 32 (2004) 295 – 300

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Mass customization in operations management:

oxymoron or reality?
R.S. Selladurai∗
School of Business and Economics, Indiana University Northwest, 3400 Broadway, Gary, IN 46408, USA
Received 15 October 2002; accepted 25 November 2003

Abstract
Mass customization in production and operations management, a process of integrating mass production/standardization
principles with customization, seems to be gaining momentum in the United States as well as all over the world. Major
companies like Dell, Motorola, Hewlett-Packard, General Motors, Ford, Chrysler, Toyota, Proctor and Gamble, and others are
experimenting and also e8ectively implementing this process in their production and operations facilities. Mass production
and customization have traditionally been at the two opposite extremes of the production continuum. However, integrating
these together as mass customization seems to be the practice of the present with the strong likelihood that it would be a
continued trend of the future. This paper explores the concept of mass customization, focuses on methods to achieve mass
customization, explains why it is not an oxymoron but a reality, looks at the advantages and disadvantages, and discusses how
it may be e8ectively used in production and operations management.
? 2004 Elsevier Ltd. All rights reserved.

Keywords: Mass customization; Operations management

1. Introduction Hewlett-Packard, General Motors, Ford, Chrysler and others

Mass Customization refers to a process of production of
goods and services tailored to suit the needs of customers in
a mass market. Pine [1] and Gilmour and Pine [2] contended
that mass customization was the process that displaced mass
production as the primary method used in production facil-
ities. Most of these studies on mass customization appear
to be developed from a strategic management perspective,
and very limited research in the operations management per-
spective of mass customization exists in the production op-
erations management literature [3].
However, this concept of mass customization is certainly
a production operations management issue, especially as it
pertains to the new, nontraditional process of integrating
mass production and customization into mass customiza-
tion. Also, major manufacturers such as Dell, Motorola,
∗ Tel.: +1-219-980-6646; fax: +1-219-980-6916.
E-mail address: rsellad@iun.edu (R.S. Selladurai).
are speciBcally using mass customization processes in their
production facilities. Moreover, some studies have showed
the positive consequences of integrating mass customization
into the traditional mass production systems [4]. Therefore,
mass customization is undoubtedly a production operations
management issue and must be looked at from an operations
management perspective, and this paper does so by taking
this novel approach.
2. Mass customization: its evolution and uniqueness
The traditional methods of production used by manufac-
turing companies focused on mass production which used
standardization principles. The traditional mass production
company is bureaucratic, hierarchical, and highly standard-
ized. Workers operate under close supervision and perform
highly routine, standardized, and repetitive tasks. This type
of a traditional production process leads to the manufacture
of low-cost, standard goods and services. The time period

0305-0483/$ - see front matter ? 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.omega.2003.11.007
296 R.S. Selladurai / Omega 32 (2004) 295 – 300
most typical of mass production was from the early 1900s
when Henry Ford introduced the modern assembly line in
production of automobiles through the 1970s when mass
production was the most dominant production method for
all companies.
Mass production processes led to the continuous im-
provement methods of production [5]. The continuous
improvement company is more participative, empowered,
crossfunctional team-based and focusing on total quality
management (TQM) principles. Workers are given more
participative and decision-making responsibilities and man-
agers perform the facilitative and coaching function of
motivating their employees toward continuous improve-
ment e8orts in the production facility. This type of a
production system results in the manufacture of low-cost,
high quality, standard goods and services. The time pe-
riod most typical of continuous improvement was in the
1980s when companies like Motorola began implementing
TQM and other continuous improvement programs in their
production operations management.
The continuous improvement production methods led
to the unique concept of mass customization, a process
in which all aspects within the organization from peo-
ple, processes, organizational structures, and technology
are geared to provide customers speciBcally what they
need and want [1]. An eHcient, well-integrated organi-
zational system of production facilitates this process of
mass customization. The result is low cost, high quality,
customized goods and services produced on a large scale
to a mass market. The time period most typical of mass
customization was in the mid-1990s through the present
time when companies like Dell began e8ectively imple-
menting mass customization in their production operations
facilities.
The best example of e8ective mass customization in ac-
tion is the production facility at Dell Computers. When a
customer wants to buy a computer system, he/she can use a
computer and the internet to go online and place the order
for a computer system. The personal computer system is de-
Bned in terms speciBcations such as memory size, processor
speed, hard disk size, software, and other peripherals. Dell
provides a variety of these speciBcations for the customer to
choose from. The customer selects from the various options
for the di8erent aspects of the computer system according
to his/her choice. Then, Dell produces a computer system
as per the customer’s needs and delivers it to the customer
within three to 5 days in most cases. Dell can manufacture
a built-to-order system of high quality and low cost and
does this on a mass production scale to customers all over
the world. According to Dignan [6], Dell has developed a
reputation as a lean and mean PC manufacturer with high
eHciency in its production processes. By producing a mass
customized product at low cost (expense ratio of 9.9 percent
well below its competitors Compaq’s 19 percent and Gate-
way’s 27 percent), Dell continues to gain market share and
proBts [6].
Part
Process Product
(Component)
Standardization Standardization
Standardization
Mass
Customization
Procurement Partial
Standardization Standardization
Fig. 1. Methods to Achieve Mass Customization.
3. Methods to achieve mass customization
Fig. 1 illustrates the dominant operational methods that
facilitate the mass customization concept in practice. These
include four standardization approaches—part standardiza-
tion, process standardization, product standardization, and
procurement standardization [7]. When a company uses
common parts or components for various product items
in a product line, it derives several beneBts—it lowers its
costs due to the economies of scale, reduces inventories,
and improves the forecasting of the component needs.
Robertson and Ulrich [8] distinguished between internal
and external commonality of parts. They contended that if
the commonality is built into the internal components (for
example, wires hidden under the hood in an automobile)
rather than the external components (such as the dash-
board), this would be less obvious to customers. So, the
potential risks of low product di8erentiation leading to a
cannibalization e8ect as a result of using standardization
parts are considerably reduced, if such standardization and
commonality are internally based.
Also, mass customization is facilitated through the use
of process standardization. When companies can delay the
customization to as late in the process as possible, they
can make use of the many beneBts of process standardiza-
tion. Hewlett-Packard, for example, adds some of its cus-
tomized components such as manuals and power supplies
in their printers being shipped to the European markets at
the distribution centers in Europe, thus delaying its cus-
tomization to the last stages of the production and distribu-
tion chain [9]. When using product standardization, com-
panies may advertise a wide variety of products but stock
only a few of them (standardized items), may be using the
80/20 rule. If customers demand certain un-stocked items,
the Brm may produce them after receiving this order or
use a process called downward substitution to meet this de-
mand. It may substitute a higher functionality/speed item
for a lower functionality/speed item when the lower end
item is not available. Similarly, rental car companies substi-
tute the upgrade or higher-end car when the requested car is
unavailable.
 R.S. Selladurai / Omega 32 (2004) 295 – 300
Standard Product Manufacture of
Delayed
plus Customized Customized
Differentiation
Services Products
Effective
Modularize Continuous Mass
Components
Integration and
Customization
Response
Fig. 2. Sequence of Progression from Standardization toward Mass
Customization.
When using procurement standardization, Brms acquire
the common equipment and components to carry out their
operations. Thus, even though a wide variety of products
may be manufactured, these items need similar production
equipment and use a shared set of components, thereby
enabling the Brm to beneBt the cost-savings from buy-
ing standardized materials and equipment. The computer
PC industry uses this concept e8ectively in that it pro-
cures common equipment and components to produce its
systems.
In addition to these four standardization approaches, Brms
may also adopt a Bfth one namely the partial standardiza-
tion approach. In using the partial standardization approach,
Brms o8er customers a limited number of options to choose
from while keeping their products mostly standardized. Dell
Computers uses this approach e8ectively—when ordering
from Dell, a customer may select a standardized computer
system but along with this customizes his/her purchase by
choosing from selective options for the various categories
of the product. For example, when buying a laptop com-
puter system, the customers can choose from several types
of processors ranging from 1.4 to 1:7 GHz M; several mem-
ory options ranging from 512 MB through 2 GB; or several
video cards of 32 MB through 128 MB types and similar
options for all the other speciBcations of the system. Dell
o8ers these options at di8erent speciBc prices so that cus-
tomers may choose those options they want for their sys-
tems and pay the prices according to the options selected.
Partial standardization is increasingly becoming popular in
production and operations management across several in-
dustries especially the computer, printer, and automobile
industries.
Also, Pine [1] discussed Bve ways that enable the progres-
sion of a company from mass production to mass customiza-
tion. These include customizing the services around the stan-
dard products, producing customizable products, providing
delayed di8erentiation, ensuring quick response to customer
needs, and modularizing components. Pine contended that
almost all companies follow this path of progression to-
ward mass customization. Fig. 2 suggests a typical progres-
sion of Brms from mass production/standardization toward
297
mass customization. As Brms progress through the vari-
ous stages, they become increasingly customized and less
standardized.
Further, Duray [4] categorized manufacturers as four
types of customizers based on the degree of customer in-
volvement and the degree of modularity in their production.
These include fabricators, involvers, modularizers, and
assemblers, with fabricators at the higher end of customiza-
tion, the assemblers at the lower end, and the involvers and
modularizers in the middle.
4. Mass customization is not an oxymoron—it is reality
Although mass customization appears to be an oxymoron
made up of two contradictory terms—mass production and
customization—it is very much a reality today as several
companies in the United States and the world are using
this concept in their daily production and operations man-
agement. Dell Computers, Motorola, IBM, 3Com, Sun Mi-
crosystems, Proctor and Gamble, Toyota, General Motors,
Ford, Chrysler, Hewlett-Packard, and others have e8ectively
used mass customization in their production. Over the years,
manufacturers have used mass production methods, which
evolved into continuous improvement methods, and then
these changed into mass customization methods. Making a
product speciBc to the needs of the customer is the essence
of successful business practices. Doing so on a mass produc-
tion scale led to the mass customization concept. What was
often viewed as impossible—a strategy of combining the two
opposite extremes of mass production and customization—
actually has become real and visible in practice. In fact,
the widespread use of this unique concept of mass cus-
tomization in the production methods is considered a major
factor for the phenomenal success of companies that have
implemented mass customization. Using mass customiza-
tion in their operations appears to give the companies a
strong competitive edge over their rivals who may not yet
be adopting this strategy. As Duray [4] found in her study,
Brms that used mass customization performed signiBcantly
higher in terms of Bnancial performance related to market
share, return on investments, and proBt margins than their
counterparts that did not use mass customization. Perhaps,
this may help explain the tremendous overall and Bnan-
cial success that Dell production plants have experienced
as a result of their increasing use of mass customization in
production [6].
Also, some of the major factors that have contributed
to the strong growth and popularity of mass customization
include the emergence of the internet and the phenomenal
success of high-tech companies especially Dell Comput-
ers. The growth of the internet has given the manufac-
turers a platform for taking orders online from a mass
market audience for customized products such as cos-
metics, shoes, bicycles, clothes, vitamins, computers and
computer related accessories, at very minimal costs. The
298 R.S. Selladurai / Omega 32 (2004) 295 – 300
internet allows companies to provide high customization
at low cost and has displaced to a large extent the tradi-
tional and more expensive method of highly skilled and
trained salespeople interacting with customers. The familiar
story of the tremendous success of high-tech companies
especially Dell have caused many other companies to
seriously consider mass customization strategies in their
production systems so that they too may be e8ective and
successful.
Mass customization is a reality because it is an attractive
strategy for both manufacturers and customers. Producers
are able to reduce their inventories and manufacturing over-
head costs, eliminate waste in their supply chains, and ob-
tain more accurate information about demand. Customers,
on the other hand, get reasonably priced, tailor-made prod-
ucts according to their personal preferences of style, fea-
tures, colors, and functions.
5. Bene!ts of mass customization
Ahlstrom and Westbrook [3] surveyed several companies
that used mass customization and found many positive
beneBts that companies reported they experienced. These
included (in the order of importance) increased customer
satisfaction, increased market share, increased customer
knowledge, reduced order response time, reduced manufac-
turing cost, and increased proBt. It appears that the beneBts
companies experienced with mass customization were re-
lated more to the customers and market impact than proBt
and cost factors.
Also, Dell Computers which is the world leader in the
PC market seems to be beneBting tremendously as a re-
sult of implementing mass customization. Dignan [6] dis-
cussed some of the key measures of success for Dell espe-
cially in terms of eHciency. Current inventory levels at Dell
are four days; approximately 90 percent of Dell’s compo-
nents are purchased online; each factory receives new com-
ponents every two hours; component inventory is measured
in hours rather than the traditional days; number of touches
or worker steps in the production process has been cut 50
percent; Dell’s expense ratio is the lowest in the industry
at around 9 percent; and its highly integrated distribution
and supplier networks give Dell a big competitive edge over
its competition. After the September 11, 2001 World Trade
Center crisis, air travel and border restrictions a8ected dis-
tribution networks for all American companies. However,
Dell Computers was able to quickly identify where pro-
duction would be a8ected and increased its production at
its European and Asian plants. Dell also prioritized cus-
tomer orders according to importance and was able to de-
liver quickly and meet the needs of many companies that
had lost thousands of computers in the attack. In contrast
another major computer manufacturer had diHculty ship-
ping out $300 million worth of orders due to supply network
problems.
6. Disadvantages of mass customization
Some disadvantages also were reported by companies
that used mass customization Ahlstrom and Westbrook [3].
These include in order of importance increased material cost,
increased manufacturing cost, lower on-time deliveries, sup-
plier delivery performance, increase in order response time,
and reduction in product quality. Apparently most of these
disadvantages were cost related. Although cost could be an
advantage of mass customization, it sometimes could be
a disadvantage because of the premium cost that the pro-
duction system incurs for including the Mexibility of cus-
tomization, and sacriBcing some degree of cost eHciency
that usually is associated with standardization. Further, the
production process at most companies may not have fully
evolved into a mass-customizing one, but continues to pro-
duce batches of standardized products.
Also, production costs have skyrocketed at some indus-
trial companies such as Toyota Motor Company [5]. Experts
at Toyota contend that in addition to Japan’s recession and
the declining economy, some diHculties they experienced
with mass customization implementation practices were also
contributing factors for Toyota’s lower proBts and declin-
ing competitive strength. Toyota executives discovered the
hard way that mass customization is clearly di8erent from
continuous improvement and was an unfamiliar way of do-
ing business for them. They found out that both continu-
ous improvement and mass customization need very di8er-
ent organizational structures, values, management roles and
systems, learning and training techniques, and customer re-
lations. Therefore, implementing mass customization was
proving for them more costly and more diHcult than what
they expected resulting in a weaker competitive position and
declining proBts.
7. Organizational strategies for e(ective mass
customization
Although mass customization appears to have some dis-
advantages, the beneBts that a company enjoys from its use
seem to far outweigh the negatives. To implement mass
customization e8ectively companies need to consider some
speciBc organizational strategies (Fig. 3).
Modifying organizational structure. Firms need to mod-
ify and sometimes transform, if necessary, their organiza-
tional structure to facilitate mass customization. As Fig. 2
points out, companies may need to change their structure to
Bt the progression from standardization toward mass cus-
tomization with each progressive stage indicating higher
customization. Companies that are adaptable to the chang-
ing environment and tailored to speciBcally meet the cus-
tomer demands/expectations are more likely to be e8ective
[10]. Dell for example has eliminated any intermediaries
in its production chain and interacts directly with its cus-
tomers especially via the internet. This eliminates the need
 R.S. Selladurai / Omega 32 (2004) 295 – 300
Modifying Operationalizing
Type and Nature
Organizational Mass
of Product
Structure Customization
Effective Mass Minimizing Cost
Integration Customization of Operations
Modularity in
Automating Strong Customer
Product and
Process
Technology Relations
Fig. 3. Organizational Strategies for E8ective Mass Customization.
to use the expensive salespeople and/or wholesalers, retail-
ers, and middlemen thus making the whole operations more
cost-e8ective. Also, improved relationship between produc-
tion and marketing within the Brm needs to be developed;
internal and external Mexibility should be enhanced; and the
integration of the entire information technology and support
system must be strengthened.
Operationalizing mass customization. Companies need
to focus on adapting the operations function to mass cus-
tomization. Ahlstrom and Westbrook [3] found that the three
top methods used by companies to implement mass cus-
tomization include material processing, increased range of
stock, and assembly of core modules. The production factory
is considered the heart of the business; operations should
work together with other functions in the Brm to provide
products and services that anticipate and respond speciB-
cally to customers’ needs.
Type and nature of product. The nature of the product
also impacts the degree of mass customization. Some prod-
ucts and markets may not be appropriate for such mass cus-
tomization changes. Customers of commodity products like
oil, gas, wheat, corn, for example may not expect product
di8erentiation. Also, some other products and markets es-
pecially in public utilities and government sectors have to
be standardized and customization is not an option—in fact
rules and regulations may prohibit any form of variations
from a standardized product. Electricity and water supplies,
for example, cannot be o8ered on a customized basis to cus-
tomers for obvious reasons in that the high risks to human
life and safety may be avoided.
E3ective and rapid integration. Quick integration and
instantaneous production and delivery to customer are es-
sential for e8ective mass customization [5]. Companies like
Dell, Hewlett-Packard, Land’s End, and AT& T and many
others use speciBc software and the internet to quickly record
customer needs and speciBcations; then they use their pro-
duction and operations “factory” to change these into cus-
tomized product designs and processes; and integrate all
these to produce the Bnal product and service, which are
then delivered to the customers as soon as possible and
299
often within few days of receiving the order. The whole
process of mass customization from initial order receiv-
ing to Bnal product delivery should be smoothly coordi-
nated and integrated with very little friction to be e8ectively
implemented.
Minimizing operations cost. Minimal cost of operations
is another essential factor for mass customization imple-
mentation. Beyond initial investment to create the mass cus-
tomized operations factory, the whole production system
must add as little as possible to the cost of production of
the product or service. Dell, for example, has a very low
expense operating ratio of about nine percent which makes
it extremely cost-e8ective for the company and also con-
tributes to its proBtability. Finding other ways to lower the
cost of production and operations of the Brm will make it
easier to implement mass customization.
Modularity in product and process. Product and process
modularity are critical determinants of mass customization
e8ectiveness. Modularity in products means the design and
production of the product are based on the appropriate com-
bination of di8erent components or subassemblies, called
modules, and customers may be interested in various op-
tions for each module. The best illustration of modularity
may be seen in Lego’s toys where various pieces or com-
ponents may be “Bt together” in a variety of shapes and
forms and these may be changed several times to Bt the cus-
tomized preferences. The personal computer manufacturer
o8ers the modularity feature in terms of memory size, pro-
cessor speed, video card, hard disk size, and peripherals, and
customers may select from a variety of options for each of
these modules. Similarly, a modular process causes a prod-
uct to go through a speciBc set of operations and enables
the storage of inventory in semi-Bnished form; and products
di8er from one another based on the types of operations that
were used in the production line.
Automating technology to enhance standardization.
Mass customizers need to automate as many tasks as
possible to make use of the beneBts of automation and
standardization. Also, the links between modules must be
automated and the activities of integrating people and tools
to perform them must be integrated instantly. Communica-
tion networks, shared databases that provide simultaneous
customer information, computer-integrated manufacturing,
workMow software, and other group technology related re-
sources must all be integrated to ensure that the company
uses the right resources to serve and satisfy its customers’
unique and speciBc needs/wants.
Strong customer relations. Mass customization needs
continuous, close interactions between the Brm and its
customers. By being in constant touch with its customers,
the Brm can Bnd out what its customers speciBcally need
and produce products and services to meet these needs and
deliver them quickly and eHciently. This is an important
key factor for the mass customization success. Without
strong customer relations, a Brm cannot e8ectively meet
customers’ demands and implement the mass customization
300 R.S. Selladurai / Omega 32 (2004) 295 – 300
strategy. All of the Brm’s activities should be coordi-
nated to focus on and achieve close interactions with the
customers.
Also, overall when Brms that used mass customization
were evaluated in terms of Bnancial performance, they per-
formed signiBcantly higher in terms of market share, re-
turn on investments, and proBt margins than their counter-
parts that did not use mass customization [4]. Successful
mass customizing Brms may continually use and transfer
the valuable information into the organization’s knowledge
base as well as adapt and customize to customers’ needs.
Therefore, with the focus on these eight strategies e8ectively
implemented, mass customization clearly would beneBt the
Brm in terms of improved overall performance, especially
Bnancial performance; and Dell’s remarkable overall and B-
nancial performance over the years provides an excellent
corroboration to this point [6].
8. Conclusion
Mass Customization is increasingly gaining momentum in
production and operations management. Combining the two
opposite terms of mass production and customization used
to appear virtually impossible; however, today it is not an
oxymoron but a clear reality. Several major Brms including
Dell, Motorola, General Motors, Toyota, Hewlett-Packard
and others are actively using mass customization in their
production. Models to show the operational strategies that
facilitate the mass customization process and the overall
organizational strategies to enable e8ective mass cus-
tomization have been presented. Due to its widespread
use among many major production companies and the
strong contribution it makes toward a Brm’s overall per-
formance and success, this unique production trend—mass
customization—would certainly continue to dominate pro-
duction and operations management in the future.
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