Growth market of individualization, batch size 1 and mass customization in Germany

12.Jan 2021

Individualization is a trending topic. But what is it about the approach that everything gets better with increasing individualization? For companies, for consumers, for the environment? Which industries use configurators to offer their products in a way that can be customized? And what does the market for customizable products look like in Germany? We have created a brief overview of this!

Growth market product individualization, lot size 1

What does "individualization" mean for companies?

It is clear that customization in production is the future. Only in this way can the industry respond to the special wishes of consumers. And this focus requires a high degree of product differentiation with constant scaling effects of mass production. Mass customization, in other words, “customer-specific mass production” means serving individual customer needs at costs that are only slightly higher than those of a standard product.

Batch size 1 - magic word or old hat?

Batch size 1 or individual production has long been a reality in the automotive industry. Even in the construction of special systems, each component is actually a universal one-off, in medical technology the same applies in many areas. So why the euphoria? Quite simply: New technologies (keyword IoT technologies, additive manufacturing) move the production of small batches into the economic zone for other industries as well. This means that “batch size 1” is gaining in importance in traditional mass production.

Production in batch size 1 or mass customization is an essential goal of Industry 4.0. Digitized production processes deliver live data in real time and ensure that all companies involved in production can work together seamlessly and efficiently. The result: extremely high adaptability and flexibility along the entire value chain.

Manufacturing principles for customized production

There are different principles according to which "individualized" manufacturing can be carried out:
 
Assemble to Order
In the areas of development, construction, procurement and production, production is based on forecasts. The specific variant is only completed when individual customer requests are received in production. This means that from final assembly and distribution, production is customer-specific, i.e. order-driven.

Build to Order / Make to Order
Production is triggered by customer orders. The customer order is forecast-driven in the areas of development and construction. Procurement, production, final assembly and distribution are order-driven. This means that the fulfillment of customer requirements is associated with longer delivery times.

Engineer to Order
The development and construction process is only triggered after a customer order has been received. The areas of construction, procurement, production, final assembly and distribution are all order-driven at Engineer to Order.

The basic requirement for all concepts is that the processes between suppliers, producers and customers run without interruption and error-free in order to achieve cost, time, quality, flexibility and service advantages.

When and how are customers involved?

“The customer is king” takes on a completely new dimension when it comes to customization. Ideally, products are designed, ordered and commissioned by the customer himself with the help of a configurator. Product configurators, CPQ configurators or variant configurators are digital applications that are extremely important as customer touch points. Even if accompanying sales discussions take place (mainly in the B2B area), the usability of the configurator is crucial for the entire buying, ordering and manufacturing process. Because the configurator ensures that the functionality of the end product is guaranteed and that the technical feasibility in production is also taken into account. For this reason, configurators for commercial end products always offer a clearly defined solution space that is mapped using product logic.

Today configurators are highly efficient sales tools. In the B2B area, the terms offer or CPQ configurator (Configure Price Quote) or Guided Selling Tool have established themselves. Thanks to 3D rendering in real time, they deliver perfect models of the individualized products with all product specifications for a wide variety of ERP and CRM systems.

But what about the environment?

Sustainability, environmental protection and climate change are no longer niche topics. The realignment of conventional consumption patterns will literally be vital for survival in the coming decade. Companies that want to remain fit for the future have to recognize ecological potential and act today.

The advantages of customer-specific and individualized production are primarily the efficient use of resources:

  • Suppliers ideally produce for specific needs; customization leads to reduced returns, reduced stocks and reduced overproduction.
  • Recycling, repair and reuse are made easier because products are easier to locate at the end of their service life (via stored customer data).
  • A modular product architecture also improves the recyclability of products
  • Customers have the opportunity to configure the most sustainable variant of a product

In addition, a wealth of customer data and information about customer needs can be obtained that are difficult to determine using traditional market research methods. This gives companies an additional instrument for anticipating market developments at an early stage. If mass customization is not viewed as a mere goal, but as a process of approaching the wishes of customers, new and environmentally friendly business models can be developed.

The free publication “A Sustainability Assessment of Smart Innovations for Mass Production, Mass Customization and Direct Digital Manufacturing” provides more extensive information on the sustainability of different production processes in connection with Industry 4.0.

Mass customization and the use of product configurators in Germany

German industry shows a clear trend towards individualization. In the German Industry 4.0 Index from 2018, 20 percent of 400 companies surveyed stated that they had realized lot size 1. In the next few years, almost 50 percent wanted to implement custom-made products at the cost of series production. Six out of ten of the companies surveyed at the time considered batch size 1 to be an important factor for the economic success of their company.

In the consumer goods sector, Germany leads the world in offering customized solutions. As the largest online collection of digital product configurators, the Configurator Database provides the following figures for the use of product configurators in global comparison:

Der Einsatz von Produktkonfiguratoren im weltweiten Vergleich

If you look at the industries in Germany that use product configurators in sales, the "Home & Garden" industry leads here:

Produktkonfiguratoren in Deutschland nach Branchen

For the products that are offered online via a product configurator, cars come first:

Produktkonfiguratoren in Deutschland nach Produkten

 

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