Mass customization, in marketing, manufacturing, and management, is the use of flexible computer-aided manufacturing systems to produce custom output. Those systems combine the low unit costs of mass production processes with the flexibility of individual customization.
The concept of mass customization is attributed to Stan Davis in Future Perfect[1] and was defined by Tseng and Jiao (2001, p. 685) as "producing goods and services to meet individual customer's needs with near mass production efficiency". Kaplan and Haenlein (2006, pp. 168–182) concurred, calling it "a strategy that creates value by some form of company-customer interaction at the fabrication / assembly stage of the operations level to create customized products with production cost and monetary price similar to those of mass-produced products".
Just as mass production was crucial to manufacturing in the 20th century, mass customization (MC) will be the key to economic growth in the 21st century. MC is the ability to design and manufacture customized products tailored to meet a customers needs at mass production costs and speed (see Figure 1). While organizations continue to outsource for economical reasons, managing the interfaces between suppliers has become expensive and inefficient. By dispersing engineering and production geographically, manufacturers have increased the number of places their knowledge interfaces and multi-tier supply chains can breakdown. This amasses hidden costs, increases lead times, and reduces control. This is especially true for customized products that have tight deadlines.
Significant reduction in inventory costs and lower obsolescence will also occur in a manufacture-to-order environment. The survival and growth of all companies, small to large alike will then be dictated by their ability to cater to this emerging market trend. Companies such as Dell, 80/20 Inc., and Lutron have clearly proven that customers prefer this type of sales model.

Much more than Mass Production or Mass Personalisation
Mass Customisation is far more than making efficiency improvements through automated production processes, integrated supply and delivery chains and the like, though these mass production techniques are still important. In mass production models, Research and Development design new products or services, that manufacturing then make in quantity for marketing to then promote in order to stimulate consumer demand. Customers are then directed to the various sales channels to purchase one of these pre-built products.
It is also more than mass personalisation where the customer is involved at the final assembly stage, typically selecting additional options from a standard base product or service. Nether-the-less, mass personalisation can be an important step onward from mass production towards mass customisation.

Variants
Joseph Pine II (1992) described four types of mass customization:
• Collaborative customization - firms talk to individual customers to determine the precise product offering that best serves the customer's needs (see personalized marketing and personal marketing orientation). This information is then used to specify and manufacture a product that suits that specific customer. For example, some clothing companies will manufacture blue jeans to fit an individual customer.
• Adaptive customization - firms produce a standardized product, but this product is customizable in the hands of the end-user (the customers alter the product themselves)
• Transparent customization - firms provide individual customers with unique products, without explicitly telling them that the products are customized. In this case there is a need to accurately assess customer needs.
• Cosmetic customization - firms produce a standardized physical product, but market it to different customers in unique ways.
He suggested a business model, "the 8.5-figure-path", a process going from invention to mass production to continuous improvement to mass customization and back to invention.
Implementation
Many implementations of mass customization are operational today, such as software-based product configurators which make it possible to add and/or change functionalities of a core product or to build fully custom enclosures from scratch. This degree of mass customization has only seen limited adoption, however. If an enterprise's marketing department offers individual products (atomic market fragmentation) it doesn't often mean that a product is produced individually, but rather that similar variants of the same mass produced item are available.
Companies which have succeeded with mass-customization business models tend to supply purely electronic products. However, these are not true "mass customizers" in the original sense, since they do not offer an alternative to mass production of material goods.
Companies in which the production of tangible goods and services is immediately directed by consumer demand include:
• Dell's "build-to-order" model facilitated its rise to dominance in the PC direct-purchase industry.
• The Architectural Skylight Company is a Maine firm that uses CAD to automate the production of windows to architects' specifications.[2]
• TreasureKnit.com is a company that sells customized woven and knitted photo products. A Customer submits a photograph when they place an order and TreasureKnit.com weaves or knits the photo into a blanket, tapestry, pillow or towel.
• Companies throughout the tourism industry have been offering package holiday alternatives through mass customization.
• Brooklyn-based customized clothing company Neighborhoodies offers hand-stitched or industrially heat-pressed text and images on a variety of apparel through their website and is frequently credited with spawning the customized clothing trend of the early 2000s.
[edit] Notable failures
Many industries have found that lengthy supply-chains, and the economics of configurability do not allow them to economically offer mass customization. Famously, some of the early businesses attempting mass customization (e.g. in bicycle production) went out of business. In 1999 boosters of the mass customization trend proffered Cannondale as the exemplar of the new model. For instance, a 1999 report[3] touted Cannondale's ability to mass customize:
"Cannondale [...] for example can configure over 8 million different frame and colour variations in its bicycles."
Although the company's subsequent bankruptcy in 2003 was blamed on other causes (including a failed attempt to enter the motorsports [4]) the mass customization "revolution" certainly failed to save it, and it was dropped as a role model by some business gurus. Other business consultants used the company's business model as an example whilst it was out of business; see "The Dilbert Future" for a satirical reference.
Benefits of Mass Customisation
Higher Profits
• By providing tailored products to meet particular needs, you make comparative shopping difficult and you shift the focus from price to benefits.
• Whilst it is possible to manufacture at a mass produced price, you have the option to charge a premium whilst still retailing below the price of a custom product. This in turn will open your product to a wider market.
Lower Costs
• Mass customisation allows the ordinary man or women in the street to acquire a product that has been produced to meet their own particular needs yet at a competitive price - thus providing exceptional value for money.
Market Exploitation
• Personalised and customised products and services will differentiate against commodity type products. With their similar cost they will be doublely attractive.
• Lead customers will provide a rich source of new ideas that can also be exploited with other customers or with new prospects. As a result, NPD has lower risk of failure and a higher chance of beating the competition.
• On-going service can be adapted throughout the customer's life because it can be linked to the unique product.
• Companies will forge a close relationships with their suppliers, distributors and customers as they return time and time again for further unique products.
• Satisfied and loyal customers provide excellent references and referrals.