examples from the - wood productswoodproducts.sbio.vt.edu/wiwatwerc/media/download/mass... · 2012....
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Mass Customization for the Wood Products Industry
Examples from the Northeastern U.S.*
*As seen during the Regional Wood Products Consortium’s Specialized Innovation Workshops held in Spring 2011
Collin MillerDirector of Wood Products Initiatives603-229-0679foresteconomy.org
WIW at WERC
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“ Using 21st Century technology to streamline 20th Century business models is a waste of time and money. Unfortunately, that is the approach most organizations seem to take – try to make stale, old and obsolete ideas more effective through technology….21st century business demands not only a change in systems, but an enterprise-wide change to a mass customization mind-set.”
Douglas T. Hicks Cost Measurement & Management ConsultantWIW at W
ERC
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Examples from the Northeastern U.S.
- CedarWorks
- Vigilant, Inc.
- Timeless FramesWIW at W
ERC
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Mass CustomizationHow it’s done at CedarWorks
Barrett BrownPresident
CedarWorksWIW at W
ERC
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CedarWorks
In business more than 30 Years
Owned by Brown family since 1988
Offices and manufacturing located in Midcoast Maine
95% of sales outside state of Maine
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CedarWorks Business Model
Marketing company
Direct to consumer
Premium product
Premium serviceWIW at W
ERC
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Products:Premium Swingsets
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Products:Ultra-Premium Swingsets
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Products:Indoor Playsets
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Products:Playbeds
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Why Mass Customization? Part of premium strategy
Market differentiation
Avoid commodity trap No pricing power
Low customer involvement/retention
Low margin
High volume/Low reward/High risk
Downward spiral
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How mass customization:Modular design
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How mass customization:Inventory management
High volume components
Manufacture to inventory
Purchase to inventory
Low volume components
Manufacture to orderWIW at WERC
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How mass customization:Information systems
Design tool
Customers
Sales staff
Integration with customer database
Quotes and orders
Integration with manufacturing and fulfillment
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How we do it:Marketing and Sales
Design Partner
WebsiteWIW at WERC
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How we do it:Post Sales Data Flow
Design
Order
Manufacturing FulfillmentWIW at WERC
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Benefits
Wide product offering with modest inventory
Competitive marketing advantage
Faster inventory turnsWIW at WERC
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WIW at WERC
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When Custom Isn’t CustomWood Products at Vigilant, Inc.
Charles GriffithsPresident and Founder
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When Custom IS Custom!
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Shelly s Back Room
Washington, DC
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Vigilant History• Started in 1994 in a Portsmouth, NH garage• First year revenue exceeds $200K• One-product company for first two years• 1996 evidence of unique customer “needs”
appears• By 1997 expansion into multiple lines, options• 1997 revenue hits $600K with 12 products• 1999 revenue of $1.1 M with 21 products
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Vigilant Cigar Products 1998
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Early Marketing Model
Sell directly to end users and tobacconists
Cigar Aficionado magazine advertising Publish our own catalog in 1996 Telesales is critical selling tool Early signs that customizing would be
key to growth First website goes live in late 1997
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1995-2004
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Vigilant Enters Wine Storage Business
Cigar cabinet market plateaus in 1999 Enter wine cellar business in 2000
through acquisition Established competitive landscape Design/build dynamics of sales process Manufacturing process totally different Challenge of shipping a disassembled
product
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Mass Customization at Vigilant
Sport cabinet website in 2002 Build-your-own cabinet functionality Limited commercial success, but! . . . Overwhelming customer feedback Positive internal efficiencies Forced us to standardize where we
hadn’t before
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http://guncabinets.vigilantinc.com/standard‐gun‐cabinets.php
Early Java Script Web Builder
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What Makes It “Custom”? Size (internal standards, external
reasons) Shape (dimensions that make sense
with shared parts) Internal parts (same parts, different
quantities) Three to four standard colors Appearance (same box, different look) Hardware options
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Vigilant Mass Customized Products
Sport Cabinets Kit Wine Cellars Custom Wine Cellars Wine Cellar Doors
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Mass Customization and the Web
Design-your-own interface allows: 24/7 customer access Reduced burden on company resources Virtual relationship with prospects Lead generation and conversion
mechanism for sales department Infinite possibilities into standards
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http://wineracks.vigilantinc.com/wine‐cellar‐door‐builder.php
Current Door Builder
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http://winecellars.vigilantinc.com/design‐your‐own‐wine‐cellar.php
Current Design‐Your‐Own Cellar
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Obstacles to Mass Customization
Upfront costs and follow-on costs Internal and external standards must be
created Marketing messages must be in
lockstep with operational capabilities Changes can be painful! Lead times need to work toward zero Custom must appear custom
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Mass Customization and Lean
• Lean MUST be part of mass customization• Standardization of parts • Create a “pull system”
• Incorporate Kanbans• Integrate with front-of-house (e.g., sales,
marketing)• Standard parts mean standard costs• Commit to speed EVERYWHERE!
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Wine Panel Kanban
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Wine Panel Kanban
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Wine Solid Wood Kanban
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Hardwood Sorting
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Kanban labels
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Benefits of Mass Customization
Increases efficiencies Increases throughput speed Reduces lead times Simplifies internal processes Improves price and product
competitiveness Forces positive internal change In time, improves gross margin
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Conclusions Mass customization can be a powerful
competitive tool It requires hard work and planning It starts with the customer and must
work its way through the entire organization
Not everything can be mass customized, but a healthy percentage will bring profitability
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Timeless Frames/Expressions
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