Good Things Come in Customized Packages

Good Things Come in Customized Packages

Manufacturers have been dealing with increasing pressure from their respective customers for mass customization for a number of years.  Customers want the flexibility to specify unique characteristics that result in a custom-made product. This customization is combined with the expectation that the product will be delivered with the low unit costs associated with mass production.

Same Product Different Packages

A significant portion of this customization is not actually a change to the actual product.  The change instead involves a customized set of packaging or delivery mechanism. This customized delivery can add significant complexity to the planning and operational functions of the manufacturer.

Examples range across the entire spectrum of manufacturing. A chemical manufacturer may produce a specialized adhesive. The adhesive itself may be produced in relatively large batch sizes. However, the corresponding customer required quantities may vary greatly. Some of the customers may be manufacturers themselves that require the adhesive in bulk and it will be delivered in five-gallon pails or even barrels. Other customers of the adhesive may be service groups that use the adhesive in maintenance activities and require it in single use containers.

Another common example involves the shift of manufacturing processes along the supply chain.  A traditional manufacturer of metal pipe might produce a certain commodity pipe product in standard twenty-foot lengths. This manufacturer ships a significant percentage of this commodity product to be sold through plumbing supply distributors. Historically the pipe manufacturer would also sell the product directly to OEM manufacturers who used pipe as a component in their assemblies.  The OEM would then cut the pipe to specific lengths that matched the design requirements of their respective product. Most recently, many OEMs have made supply chain decisions to eliminate the cutting process within their internal routing. Instead they now require the pipe manufacturer to deliver “kits” of pipe segments that exactly match the needs of the assembly process. The OEM eliminates the non-value added cutting step and eliminates handling and possible wasted pipe.  The pipe manufacturer is now transformed from a supplier of bulk commodity pipe to a customized deliverer of specialized components.

The differentiating competitive value may be in the packaging and not in the commoditized product.

A Specific Supply Chain Challenge

This interrelated demand and forecast effort is poorly served by legacy spreadsheet planning.  The demand for the core product, adhesive or standard pipe, must be translated into the wide range of actual SKU’s that will ultimately appear on customer orders. In most cases the manufacturer must deliver these types of products both in bulk commoditized form through distribution channels and directly to customers in customized form.

This type of customization requires modern demand and supply chain planning tools. Modern DSCP tools provide insights into patterns of this blended demand, coordinate the varying demand types and allow manufacturers to plan and execute at optimum levels.

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