Supply chain integration in mass customization

Abstract

AbstractNew technology such as 3D printing, robotic manufacturing, and the Internet of things can shorten the production time of mass customization (MC) products, enhance the self-design fun of consumers, and improve channel integration connectivity. In this study, we examine the impact of MC waiting time and self-design fun from the purchase of MC products on supply chain integration. We consider a supply chain consisting of one manufacturer, one retailer, and one customizer. The manufacturer produces and sells standardized products through the retailer, whereas the customizer sells customized products to consumers directly. The customizer can decide whether to integrate with the manufacturer (i.e., manufacturer–customizer integration) or with the retailer (i.e., retailer–customizer integration). We find that manufacturer–customizer integration can achieve a win–win–win outcome for all three supply chain members when the MC waiting time is within a moderate range and the probability of consumers being satisfied with the product quality is high, but retailer–customizer integration cannot achieve such an outcome, as the manufacturer will not be benefited if it does not participate in the integration. Furthermore, integration reduces the customizer’s investment in the level of self-design fun, which implies that the negative effect owing to the low level of self-design fun in the supply chain integration can be compensated by the competition mitigation effect owing to supply chain integration. With endogenized self-design fun, the achievability of a win–win–win outcome for all three supply chain members in the manufacturer–customizer integration will remain unchanged.