Integrated supply chain and product family architecture under highly customized demand

Abstract

Mass customization efforts are challenged by an unpredictable growth or shrink in the market segments and shortened product life cycles which result in an opportunity loss and reduced profitability; hence we propose a concept of sustainable mass customization to address these challenges where an economically infeasible product for a market segment is replaced by an alternative superior product variant nearly at the cost of mass production. This concept provides sufficient time to restructure the product family architecture for the inclusion of a new innovative product variant while fulfilling the market segments with the customer delight and an extended profitability. To implement the concept of sustainable mass customization we have proposed the notions of generic-bill-Of-products (GBOP: list of product variants agreed for the market segments), its interface with generic-supply-chain-structure and strategic decisions about opening or closing of a market segment as an optimization MILP (mixed integer linear program) model including logistics and GBOP constraints. Model is tested with the varying market segments demands, sales prices and production costs against 1 to 40 market segments. Simulation results provide us an optimum GBOP, its respective segments and decisions on the opening or closing of the market segments to sustain mass customization efforts. © 2012 Springer Science+Business Media, LLC.