a business plans to improve its flexibility through mass customisation

The Mass Customization Business Model Explained: A Comprehensive Guide

Discover the ins and outs of the mass customization business model in this comprehensive guide.

Welcome to our comprehensive guide on the mass customization business model. In this article, we will explore the concept of mass customization, its core elements, the benefits of implementing it, and the challenges that come along with it. So, let's dive in and understand how this business model can revolutionize the way companies create and deliver products to their customers.

Understanding the Concept of Mass Customization

Mass customization is a strategy that seeks to provide customers with products tailored to their individual needs while still achieving economies of scale. It combines the efficiency of mass production with the personalization of customization, resulting in a win-win situation for both businesses and consumers.

When it comes to mass customization, the key idea is to offer a wide range of product variations or options that can be tailored to the specific preferences of each customer. This goes beyond simple personalization or customization by allowing customers to actively participate in the design and production process.

Imagine a scenario where you are shopping for a new pair of shoes. In the past, you would have been limited to the available sizes and styles offered by the manufacturer. However, with mass customization, you have the opportunity to choose the color, material, and even add personalized details such as monograms or unique patterns. This level of customization not only enhances your overall shopping experience but also ensures that the product you receive is exactly what you desire.

Defining Mass Customization

Mass customization can be defined as the ability to offer a wide range of product variations or options that can be tailored to the specific preferences of each customer. It goes beyond simple personalization or customization by allowing customers to actively participate in the design and production process.

One of the key aspects of mass customization is the use of advanced technologies such as computer-aided design (CAD) and computer-aided manufacturing (CAM). These technologies enable businesses to efficiently handle the customization process by automating certain tasks and streamlining production. By leveraging these technologies, businesses can offer a high level of customization without sacrificing efficiency or incurring excessive costs.

Furthermore, mass customization is not limited to physical products. It can also be applied to services, such as personalized travel itineraries or customized fitness programs. The underlying principle remains the same – providing customers with tailored solutions that meet their specific needs and preferences.

The Evolution of Mass Customization

Mass customization has evolved over time, driven by advances in technology and changing consumer demands. In the past, customization was limited to high-end luxury products or bespoke manufacturing, which made it expensive and inaccessible to the average consumer. However, with the advent of digital technology and automation, mass customization has become more feasible and affordable for businesses across various industries.

One of the key drivers behind the evolution of mass customization is the rise of e-commerce . Online platforms have made it easier for businesses to offer customized products and services to a wider audience. Customers can now easily access customization options through intuitive interfaces and interactive tools, making the entire process more seamless and enjoyable.

Moreover, advancements in manufacturing technologies have also played a significant role in the evolution of mass customization. 3D printing, for example, has revolutionized the way products are manufactured. It allows for the creation of highly complex and customized designs with minimal setup time and cost. This technology has opened up new possibilities for businesses to offer unique and personalized products to their customers.

As consumer expectations continue to evolve, businesses are recognizing the importance of mass customization as a competitive advantage. By offering personalized products and services, businesses can differentiate themselves from their competitors and build stronger relationships with their customers. The future of mass customization looks promising, with ongoing advancements in technology and a growing demand for personalized experiences.

The Core Elements of Mass Customization

Now that we have a better understanding of the concept, let's explore the core elements that make up the mass customization business model.

Mass customization is a business strategy that aims to provide unique and personalized products to customers on a large scale. It combines the efficiency of mass production with the individuality of customization, offering customers the opportunity to tailor products to their specific preferences and needs. This approach has gained significant popularity in recent years, as consumers increasingly seek products that reflect their own identities and values.

Customer Co-Design

In the era of mass customization, customers have the opportunity to actively participate in the design process. Businesses can engage customers through online platforms or interactive tools that allow them to customize various aspects of the product, such as color, size, features, and more. By involving customers in the design phase, businesses can ensure that the final product meets their expectations and preferences.

Customer co-design goes beyond simply offering a range of pre-determined options. It empowers customers to become co-creators, giving them the freedom to express their creativity and individuality. This collaborative approach not only enhances the overall customer experience but also fosters a sense of ownership and loyalty towards the brand.

Flexible Production Processes

To implement mass customization successfully, businesses need to have flexible production processes in place. Traditional mass production systems are not flexible enough to handle the diverse range of product variations required for customization. By leveraging advanced manufacturing technologies, like 3D printing or robotics, businesses can adapt their production processes to efficiently produce customized products at scale, reducing lead times and costs.

Flexible production processes enable businesses to respond quickly to customer demands and market trends. They allow for efficient customization without sacrificing economies of scale. By embracing technological advancements, businesses can achieve a delicate balance between customization and cost-effectiveness, creating a competitive advantage in the market.

Efficient Supply Chain Management

Another crucial element of mass customization is efficient supply chain management. With a larger variety of product options and customization requirements, businesses need to ensure that their supply chains are agile and responsive. From sourcing raw materials to delivering the finished product, businesses must streamline their supply chain operations and collaborate closely with suppliers and partners to meet customer demands efficiently.

Efficient supply chain management involves optimizing inventory management, reducing lead times, and improving coordination among various stakeholders. It requires effective communication and information sharing to ensure that the right materials are available at the right time and in the right quantities. By establishing strong relationships with suppliers and implementing robust supply chain technologies, businesses can enhance their responsiveness and flexibility, enabling them to deliver customized products in a timely manner.

In conclusion, the core elements of mass customization encompass customer co-design, flexible production processes, and efficient supply chain management. By integrating these elements into their business models, companies can unlock the full potential of mass customization, offering customers unique and personalized products while maintaining operational efficiency. As consumer preferences continue to evolve, mass customization is likely to become an increasingly important strategy for businesses seeking to differentiate themselves in a competitive market.

The Benefits of Implementing Mass Customization

Now that we understand the core elements of mass customization, let's explore the benefits it can bring to businesses that choose to adopt this model.

Enhanced Customer Satisfaction

Mass customization provides customers with products that are tailored to their specific needs and preferences. By giving them the power to design their own products, businesses can create a deeper connection with their customers, resulting in higher satisfaction levels.

Imagine a customer who is searching for a new pair of running shoes. With mass customization, they can choose the color, style, and even the level of cushioning they prefer. This level of personalization ensures that the customer gets exactly what they want, leading to a sense of satisfaction and fulfillment.

Furthermore, when customers feel valued and appreciated because their input is taken into account, they are more likely to develop a strong sense of loyalty towards the brand. This loyalty not only encourages repeat purchases but also prompts customers to recommend the business to their friends and family, generating positive word-of-mouth recommendations.

Competitive Advantage in the Market

Implementing mass customization can give businesses a competitive edge in the market. With the ability to offer a wide range of personalized products, businesses can differentiate themselves from competitors who still rely on a one-size-fits-all approach.

Consider a clothing retailer that offers customized clothing options. While other retailers may offer a limited selection of sizes and styles, this retailer stands out by allowing customers to choose their preferred fabric, color, and fit. This uniqueness attracts customers who are looking for customized solutions, allowing the business to capture a niche market segment and gain a competitive advantage.

Moreover, in a market saturated with similar products, mass customization enables businesses to stand out and be memorable. By offering products that are tailored to individual preferences, businesses can create a lasting impression on customers, making them more likely to choose their brand over others.

Increased Profit Margins

While the initial setup costs of mass customization can be significant, businesses can benefit from increased profit margins in the long run. By charging a premium for customized products, businesses can offset the higher costs associated with adapting their production processes and supply chains.

Let's take the example of a furniture manufacturer. By offering customizable furniture options, they can charge a higher price compared to mass-produced furniture. This price premium not only covers the additional expenses of customization but also contributes to higher profit margins.

Furthermore, as customer demand for personalized products continues to grow, businesses can achieve economies of scale by leveraging technology. Automated systems and advanced manufacturing techniques can streamline the customization process, reducing costs and improving efficiency. This, in turn, leads to improved profitability for businesses.

In conclusion, implementing mass customization can bring numerous benefits to businesses. Enhanced customer satisfaction, a competitive advantage in the market, and increased profit margins are just a few of the advantages that businesses can enjoy by adopting this model. By embracing mass customization, businesses can meet the evolving needs of their customers and position themselves as leaders in their respective industries.

Challenges in Mass Customization

While there are numerous benefits to implementing mass customization, businesses also face several challenges along the way. Let's explore some of the key challenges and how businesses can overcome them.

Managing Complexity

Mass customization introduces complexity into the design, production, and supply chain processes. Businesses need to invest in sophisticated systems and technologies that can handle the diverse range of product variations efficiently.

For example, a clothing company that offers personalized shirts with various fabric options, sizes, and custom embroidery needs to have a robust system in place to manage the different combinations. This includes inventory management, production scheduling, and order fulfillment.

Additionally, businesses must have robust data management systems in place to capture and analyze customer preferences accurately. By leveraging automation and advanced analytics, businesses can streamline their operations and manage complexity effectively.

Balancing Cost and Value

One of the challenges in mass customization is balancing the cost of customization with the perceived value for customers. While customization can add value and justify a higher price point, businesses need to ensure that the cost of customization does not outweigh the benefits.

Market research plays a crucial role in understanding customer preferences and willingness to pay for customization. By conducting surveys, focus groups, and analyzing purchasing patterns, businesses can gain insights into what customers are willing to pay for personalized products.

Furthermore, businesses can explore cost-effective customization options. For instance, using modular designs or pre-designed templates can reduce production costs while still offering customization options to customers.

Ensuring Quality Control

As customization increases, maintaining quality control becomes essential. With a diverse range of product variations, businesses need to establish rigorous quality control processes to ensure that each customized product meets the desired quality standards.

Implementing quality checks at every stage of the production process is crucial. This includes inspecting raw materials, monitoring production lines, and conducting final product inspections. By having strict quality control measures in place, businesses can minimize the risk of delivering subpar customized products to customers.

Additionally, actively seeking customer feedback is vital for continuously improving product quality. By encouraging customers to provide feedback on their customized products, businesses can identify areas for improvement and make necessary adjustments to enhance the overall quality of their offerings.

By addressing these challenges head-on, businesses can successfully implement mass customization strategies and provide unique, personalized products to their customers.

In Conclusion

Mass customization offers businesses a compelling way to meet the evolving needs and preferences of customers. By embracing customer co-design, leveraging flexible production processes, and streamlining supply chain operations, businesses can unlock the benefits of mass customization, such as enhanced customer satisfaction, a competitive advantage, and increased profit margins. However, businesses must also overcome challenges related to managing complexity, balancing cost and value, and ensuring quality control. Ultimately, successfully implementing mass customization can lead to long-term success and sustainable growth in today's dynamic business landscape.

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What Is Mass Customization?

• How It Works

The Growth of Mass Customization

The bottom line.

• Marketing Essentials

Mass Customization: Definition, 4 Main Types, Benefits, and Examples

Mass customization is the process of delivering market goods and services that are modified to satisfy a specific customer’s needs.

Mass customization is a marketing and manufacturing technique that combines the flexibility and personalization of custom-made products with the low unit costs associated with mass production . Other names for mass customization include made-to-order or built-to-order.

Key Takeaways

• Mass customization is a process that allows a customer to personalize certain features of a product while still keeping costs at or near mass production prices.
• Innovative manufacturing techniques help companies produce interchangeable parts that can be combined in a variety of ways to build a cost-effective product that satisfies a specific customer’s needs.
• The four primary types of mass customization are collaborative customization, adaptive customization, transparent customization, and cosmetic customization.
• Various companies employ mass customization techniques, including retail companies, software creators, financial services companies, and modular home builders.
• Companies that offer mass customization can give themselves a competitive advantage over other companies that only offer generic products.

Understanding Mass Customization

Mass customization allows a customer to design certain made-to-order features of a product while still keeping costs closer to that of mass-produced products. In some cases, the components of the product are modular. This flexibility allows the client to mix and match options to create a semi-custom final product.

Mass customization may apply to many fields, but many connect it to the retail industry . Software creators may use this method to include software-based product configurations that enable end-users to add or change specific functions of a core product. Even the financial services industry embraces mass customization through the growth of independent, fee-only advisory firms.

B. Joseph Pine II looked at the growth of the American economy due to mass production. In his book “Mass Customization: The New Frontier in Business Competition” (Harvard Business Review Press, 1992), he describes four primary types of mass customization that took the concept of mass production to a new level:

• Collaborative customization : Companies work in partnership with clients to offer products or services uniquely suited to each client.
• Adaptive customization : Companies produce standardized products that the end-user may customize.
• Transparent customization : Companies provide unique products to individual clients without overtly stating that the products are customized.
• Cosmetic customization : Companies produce standardized products but market them in different ways to various customers.

Pine focused on the concept of creating a small number of interchangeable pieces. The individual parts may be combined in a variety of ways that produce a cost-efficient production model and still allow consumers to choose how the pieces go together.

Examples of Mass Customization

Fee-only, independent financial advisors allow their clients to customize their portfolio holdings to match their unique situations. The consumer may choose products that match their investment risk tolerance, time horizon, investment style, and future goals.

Certain furniture companies offer mass customization by providing multiple options for various components or features. This flexibility may include different fabrics, furniture legs, or pieces that combine in numerous configurations. Also, modular home builders use mass customization models by allowing customers to make changes to the base home package.

Benefits of Mass Customization

Mass customization enables manufacturers to delay the step of product differentiation until the final phase of manufacturing. Rather than the manufacturer deciding on the features that make the product unique, mass customization allows the consumer to make these decisions. For some consumers, the ability to customize a product is enough to sway their buying decision in favor of one company over another.

Mass customization can then become part of a lucrative marketing strategy for a company. Companies that offer customization can give themselves a competitive advantage over their rivals. They can tout their ability to produce a semi-custom product at a reasonable price to consumers who are looking for an upgrade over a generic product. As long as the company is able to deliver a product that does not compromise on quality, they have an opportunity to increase sales, profits, and brand loyalty for their one-of-a-kind products.

Mass customization can also help a company with the costs associated with excess inventory . Implementing a just-in-time (JIT) approach to manufacturing can assist companies in minimizing inventory and increasing efficiency. Companies that take a JIT approach to mass customization will need reliable suppliers and an inventory replenishment system that notifies them exactly when new materials need to be ordered.

How Does Mass Customization Work?

A customer designs certain made-to-order features of a product but keeps costs closer to that of mass-produced products. With mass customization, the client can mix and match options to create a semi-custom final product.

What Industries Use Mass Customization?

Industries that use mass customization include:

• Financial services
• Modular homes

How Does Mass Customization Benefit a Company?

Manufacturers can delay product differentiation until the final manufacturing phase. Also, the customer can decide on the features that make the product unique, which may sway their buying decision. As a result, a company can use mass customization as a marketing strategy.

Mass customization lets a customer personalize certain features of a product while still keeping costs at or near mass production prices. The process is also known as made-to-order or built-to-order.

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Customers Want Customization, and Companies Are Giving It to Them

From start-ups to big brands, businesses are offering personalized product options to extend their product lines and increase sales.

By Aviva Freudmann

This article is part of our continuing Fast Forward series , which examines technological, economic, social and cultural shifts that happen as businesses evolve.

At a production plant in western Tennessee, about 100 3-D printers, arranged in pods for different tasks and parts, spit out hundreds of pairs of individually fitted insoles and sandals a day.

Every pair has someone’s name on it. The footwear is based on foot scans that customers make with smartphones, using the manufacturer’s app. Customers transmit the images via the app, along with their choices of colors and patterns.

The manufacturer, the Canadian-American start-up Wiivv, extracts hundreds of data points from each scan to produce a three-dimensional image of each foot and then prints footwear fitting that customer and no one else. To make the product even more personal, Wiivv adds the customer’s name; in the case of sandals, the name appears inside the arch.

Wiivv is part of a new phase in the broader trend to offer customers personalized products. The new phase involves customization that is not only aesthetic in nature — choosing the blue item instead of the red one, for example — but also based on features unique to the customer, such as the shape of feet or a silhouette of a favorite image turned into jewelry.

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Customisation: Everything Small Businesses Need to Know

When your competition is only a click away, it’s critical to offer the specific, customised offering that a prospective customer is after. but that’s easier said than done — so here’s why customisation matters and what to do about it..

Salesforce Staff

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In our 5th edition of the Small and Medium Business Trends Report , business leaders named two top challenges that remained consistent both before and during the pandemic: personalisation and bringing innovative offerings to the market. 

In other words, small and medium-sized businesses (SMBs) need to be thinking about customisation. While customers crave personalised interactions and experiences, they also want services and products that are tailored to their exact needs. The business landscape had already changed before the pandemic, but now customer expectations are even higher. 

Technology has given customers access to a greater range of products, which means they have more choice — and power — than ever before. Thirty years ago, you’d generally tell the customer what you stocked and they’d buy the thing that was the closest match to what they were after — they didn’t have many other options. Now, customers can shop online from anywhere in the world. They can compare 20 different versions of a product in minutes and decide which one is the best fit for them.

This surge in choice means that if you’re not customising your products and services to individually suit a customer’s needs, they can (and often will) go find exactly what they’re after elsewhere.

But let’s slow down for a second — almost any SMB leader can tell you that customising everything for everyone simply isn’t realistic (or profitable). So how can SMBs approach customisation in a way that’s right for their business, customers and employees?

Getting started with customisation as a small business

The best place to start on any customisation journey is to provide your customers with a voice, a direct line of communication with your business. It’s only by listening to your customers that you can get a true understanding of their wants and needs, and then decide whether you can fulfill them or not. 

Here are two steps to help you do that.

1. Deciding whether customisation is right for your small business

In certain instances, customisation might not make business sense. If you have a physical product, customisation can be very expensive — it may not be achievable.

The danger with customisation is that you can get pulled off in all different directions, so you need to be careful not to lose sight of what your business stands for, and decide early on how far you want to go. If you commit to addressing each and every customer demand, your product or service could get diluted in a way that negatively impacts the business. Plus, meeting a customer demand won’t necessarily be profitable in every instance.

Instead, you need to find ways to cut through the noise and identify the most critical or popular demands — these are often the ones that will have the biggest impact. That identification usually depends on data. Customer insights — pulled from pockets of customer experience like your website, service team, or social media channels — can be your best tool in clarifying which customisations will make the biggest difference. For instance, do sales reps frequently hear that customers would be more willing to subscribe to a service if it contained a particular option? Are customers frequently searching your website for a product variation you don’t offer? 

A customer relationship management (CRM) solution can help you thread together this type of data and ensure you’re getting a complete picture of what customers are saying, needing or wanting. 

It’s also worth looking at your competition. If you have a captive audience that can’t get your products or services elsewhere, then there may not be a need for customisation at this stage.

Also, customisation may not be the best business strategy if you’re the expert in your product category — particularly if it’s a product that you’ve brought to market. In this case, you’re in a position to educate your customers on the benefits of the product configuration the way it is and the negative impact customisation might have.

2. Mass customisation: balancing flexibility with process

One of the most critical considerations is striking the right balance between process and flexibility. You need to be flexible to deliver on your customers’ individual needs, but you also need the processes that ensure a great customer experience. Too much flexibility can put pressure on your business model, increase the cost of business and cause discontent among employees.

One of the easiest places to insert flexibility into the process is through the use of technology that enables the process to be changed without losing its core objectives and production to be easily scaled.

It’s harder to be flexible where people are involved in the delivery process. Employees typically need some level of consistency to feel comfortable and confident in doing their job. They shouldn’t be having to adapt too much, and change too much, within the process, because uncertainty in job roles can breed problems internally — which often translates to problems externally, like negative impacts to customer experience.

Ultimately, embedding the right business processes to support customisation is critical. If you customise your products and services but compromise on quality, you might find yourself back to square one. And employees need the right processes and tools to be confident about the outer boundaries of flexibility — and to ensure they aren’t spending too much time on a single process, task or customer problem.

For many SMBs, digital solutions have been instrumental in scaling these sorts of processes and digitising manual workflows that prevent employees from focusing on higher-value tasks. In fact, according to the Small and Medium Business Trends Report, more than half (57%) of SMB leaders say their businesses would not have survived the pandemic if they had been using technology from a decade ago.

Determining the right type and degree of customisation is a bit of a balancing act, especially when you need the processes and tools to support employees. Data will be one of your best tools in striking that balance. 

So what steps will your business take today to find the right flexibility and stay ahead of the curve?

Knowledge is power! See all the other insights from over 2,500 small and medium business owners and leaders worldwide.

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The Limits of Mass Customization

Is mass customization really the best way to deliver variety to consumers? Managers understand how critical variety is to adding value to their product offerings. And mass customization has been touted as the premier way of achieving that goal. But there are several ways to deliver variety, and mass customization may not always be the best.

Mass customization is the capability, realized by a few companies, to offer individually tailored products or services on a large scale. Levi Strauss, for instance, sells custom-fitted jeans. Andersen Windows can build a window to fit any house. Consumers can get their names printed or sewn or embossed on just about anything. And personalized information services for everything from financial planning to travel guidance proliferate on the Web.

The phrase “mass customization” is striking, for it seems a contradiction in terms. Mass production implies uniform products, whereas customization connotes small-scale crafts. (See “Mass Customization vs. Mass Production.”) Combining the best of both promises exciting choices for consumers and new opportunities for businesses.

Mass Customization vs. Mass Production

What exactly does a mass-customization system consist of? How does it differ from traditional mass production?

Commodities from grain to gasoline are typically manufactured under mass-production systems. The great virtue of mass production is economy of scale. Production facilities are typically expensive and inflexible, but variable production costs are low. Also, after production, the finished product is stocked in inventory, which serves to meet customer demands.

Mass-production systems can be adapted to make several different varieties of a product. Items from automobiles to toothpaste are manufactured in that way. In addition to deciding whether and when to buy, a customer selects one of the variants. The production facility must be somewhat flexible — enough to switch between variants with few delays and at a low cost, thereby retaining economies of scale.

The basic structure of mass customization is similar to that of mass production with variety, but there are important differences. Instead of selecting one variety of a product, each customer provides unique information so that the product can be tailored to his or her requirements. The production process must be very flexible in order to meet those requirements. There is no finished-goods inventory —there can’t be if the product is really customized. The lack of inventory has advantages (low carrying costs) and disadvantages (customers have to wait). It also involves a delivery capability that reaches directly to the customer.

The technological differences between mass production and mass customization, while considerable, are matters of degree: Mass customization entails richer information flows and more-stringent requirements for process flexibility.

Mass customization has its limits, however, and should be approached cautiously. Several elements have to work well — both individually and together — to make mass customization a plausible business strategy. Mass customization actually requires unique operational capabilities. The technologies that can produce custom-fitted Levis, for example, have developed over decades. The innovations needed to customize other products are likely to be just as slow in evolving. The continuing development of electronic commerce and other technologies will ease some constraints in some cases — but by no means all.

Demand for customization, moreover, is limited and likely to remain so. Current technology can support large-scale customization at reasonable prices with reasonable response times for only a few attributes of a few products. For mass customization to deliver real value, those attributes must be ones on which people’s preferences differ sharply — ones that are easy to discern. Certain industries meet those conditions: Apparel, sports equipment and building accessories are some examples. But it is clear that mass customization is not for everybody. 1

Managers should seek opportunities to add value through variety. However, they should carefully analyze the technology and the demand, the costs and the benefits, before committing their companies to a mass-customization strategy.

The Three Main Elements of Mass Customization

Mass-customization systems have three key capabilities: elicitation (a mechanism for interacting with the customer and obtaining specific information); process flexibility (production technology that fabricates the product according to the information); and logistics (subsequent processing stages and distribution that are able to maintain the identity of each item and to deliver the right one to the right customer). Those elements are connected by powerful communications links and thereby integrated into a seamless whole. 2

Examining elicitation, process flexibility and logistics more closely reveals the difficulties companies can encounter when they attempt to master the capabilities critical to mass-customization systems.

Elicitation

Elicitation is hard. Customers often have trouble deciding what they want and then communicating or acting on their decisions. That creates problems for any company aiming to serve those customers. There are situations in which customers clearly articulate their requirements. More commonly, however, customers are unsure. They are easily overwhelmed by too many selections on a store shelf or a Web page. Any elicitation process is an artful means of leading customers through the process of identifying exactly what they want. 3 And it reduces the costs associated with customers’ laborious searching. The difficulty of eliciting customer-specific information varies with the information required. To emboss a customer’s name on a wallet, the only information a company needs is the name. 4 Deeper levels of customization, however, require more information. Thus mass customization often requires an elaborate enabling mechanism (sometimes called a configurator ).

There are four kinds of elicited information in mass-customization systems: identification, such as name and address; customers’ selections from menus of alternatives; physical measurements; and reactions to prototypes. For the first two, mass customization usually employs the computer and the Internet. Advances in user interfaces now make it possible, fairly cheaply and quickly, to construct a program to guide customers or salespeople through an array of choices. Even so, the process remains frustrating for many customers. People often just give up without buying anything. It is still a very new way for people to shop, and developers continue to refine their methods to make the process smoother. It is fair to say that electronic elicitation has yet to achieve the skill of the average barber.

Improvements will no doubt be aided by progress in customer-relationship management (CRM). CRM collects information about customers, aims to predict their individual desires and behaviors, and targets marketing messages accordingly. Although a targeted marketing message is different from a physical product or a customized service, the goals and technologies of CRM are somewhat similar to those of mass customization. 5

Many mass-customization systems also elicit information about physical measurements — for example, to fit a garment to a body or a window to a house. But nearly all of those systems still use expensive manual methods. For example, to get custom-made pants from Levi Strauss, the first step is to visit a store. There, customers choose from various styles and fabrics. After an employee takes their measurements, customers try on one or more sample garments. The employee then enters the information into a computer. A relatively new competitor in the custom-apparel business, IC3D, uses a different but still manual system. Its Web site guides customers through the process of taking 11 measurements and then typing the numbers into the computer themselves.

In certain cases, automation is replacing such manual methods. For example, following years of experimentation, Levi Strauss is trying an optical body scanner at one store. 6 The device was developed by the Textile/Clothing Technology Corp., a Cary, North Carolina–based nonprofit organization supporting the apparel industry. 7 Tecmath, located near Mannheim, Germany, is developing a rival system. Automated body measurement, nevertheless, remains at the experimental stage, and its development is turning out to be demanding and slow. Automated measurements in other industries, too, are likely to require long, expensive development efforts.

The use of prototypes is not yet a common method for eliciting customer-specific information. To date, there are few examples of product prototypes, computerized or otherwise, in mass customization. Architects and building contractors use them fruitfully, as do some furniture makers. For example, Simply Together provides online 3-D views of its sofas and chairs. Similarly, Streif ’s Web site invites consumers to “Build your house with the mouse.” The technology is developing rapidly and will probably be used more in the future. 8

In sum, elicitation is both essential and difficult. To give customers exactly what they want, you first have to learn what that is. It sounds simple, but it’s not.

Process Flexibility

The next element of a mass-customization system is process flexibility. A high-volume but flexible process translates information into the physical product. Some processes, however, are more flexible and easy to digitize than others.

Considerable effort has been devoted to developing such capabilities for conventional mass-production systems. Flexibility-enhancing innovations range from modular design and lean operations to the increasing use of digital-information technology for controlling manufacturing equipment. In metal fabrication, for instance, numerically controlled machine tools introduced in the 1950s subsequently led to robots and CAD/CAM systems, which in turn led to today’s computer-integrated manufacturing systems. In the apparel industry, innovations began in the early 19th century with the Jacquard loom. More recently, technology providers such as Gerber Scientific have learned how to digitize cutting operations and other tasks. Levi Strauss has benefited from Gerber Scientific’s research and uses a numerically controlled cutting machine to cut the fabric to each customer’s pattern. The machine is capable of cutting virtually any pattern and can switch patterns almost instantly.

The most flexible operations today are those that process information, which partly explains the explosion of mass-customized information services, such as the personalized news providers CyberScan and eNow.

Unfortunately, not all industries have enjoyed the same intensity of innovation. In every industry, moreover, only certain processing stages are sufficiently flexible, and so only certain product attributes can be customized. Levi Strauss, for example, does not offer customized colors because technologies haven’t yet developed that can customize fabric dyeing on a large scale. Bicycle companies have similar limitations. In a 1998 study, each of four bicycle makers offered considerable variety, but for different attributes — partly because the companies had different expertise in process technology. 9 The kinds of variety offered depended on the technologies available.

To assess the potential for mass customization of a particular process, a good starting point is to determine how many spatial dimensions are involved in each step. Processes that involve only one dimension are naturally easier to customize than three-dimensional ones.

Consider some one-dimensional processes. To make the shaft of a golf club, you cut a metal rod at the right point — a simple task, requiring a simple tool, a saw. To get the right length, you position a guide that holds the rod. Then, you slide the rod across the cutting blade. The tool is quite flexible in the one dimension of interest and can be easily adapted to digital control. Voilà — customized golf clubs.

Bicycle frames are custom-made in a similar fashion. They may not look one-dimensional, but they are merely several metal tubes welded together. To customize the size of the bicycle, just customize the lengths of the tubes. 10 In these cases, a zero-dimensional pattern (the cutting point) is imposed on a one-dimensional medium (the rod or the tube). Virtually any such process can be made highly flexible, and so virtually any product constructed that way is easy to customize. Cutting glass to make a rectangular window of any given size is a bit more difficult. It requires several straight cuts, one for each edge. But each cut is a one-dimensional operation, like cutting a metal rod or tube.

Next in complexity is two-dimensional printing and printing-like technologies. Paper is a flat, two-dimensional medium. The printer imposes a pattern consisting of objects of zero dimension (dots), one dimension (lines) and two dimensions (shapes). Johannes Gutenberg, as we know, made the printing process much more flexible than it had been before, and laser and digital technologies in recent years have made it still more flexible. (Software is as important as hardware to that flexibility. Today’s printers gain some of their power and flexibility from scalable fonts and page-description languages.) We no longer even think of the setup time required to print one very different page after another. The computer takes care of it all, and the process seems almost instantaneous. Cutting fabric according to a pattern is a similar operation (the cutting tool essentially “prints” the pattern on the fabric) and also has become very flexible.

Most three-dimensional fabrication processes are less flexible, and those that work typically have reduced dimensions. For example, a numerically controlled lathe makes three-dimensional objects, but only those with rotational symmetry, such as baseball bats and the legs of fancy tables. Robots are flexible in all three dimensions, but they are expensive, slow and hard to operate. (High-level languages for robots, analogous to the printing and imaging standard called PostScript, are under development but not yet available.) It is unlikely, therefore, that we will see customized auto-body parts in the near future, because they are three-dimensional objects.

After the product is fabricated to include customer-specific information, there may be additional processing and transportation tasks. All such tasks may be encompassed by the term “logistics.”

At Levi Strauss, cutting is only one stage of a multistage process; subsequent steps include sewing, washing, packaging and shipping. It is necessary that some information (at least the customer’s identity) move along with the physical product through all the stages so that the right product ultimately reaches each customer. Levi Strauss tracks a garment by attaching a bar-coded cloth tag. The tag allows garments to be washed in bulk, an operation with substantial economy of scale. (A washable bar code, in fact, was the only really new technology that Levi Strauss had to invent. Still, inventing it took several years.)

Next companies face distribution — always tricky. Upon emerging from the high-volume production process, each individual product must be sent to the right person. Such direct-to-customer distribution is quite different from the conventional kind, and switching from one to the other has proved difficult. Moreover, the problem has plagued all of business-to-consumer e-commerce, not just mass customization. 11 For example, during the 1999 Christmas season, even Toys “R” Us (a company that is good at conventional distribution) experienced a distribution debacle that was essentially a failure to make the transition to e-commerce.

Still, as the technologies underlying e-commerce logistics (including the Internet, automated warehouses and package-delivery services) continue to develop, they will help bring mass-customization systems to fruition. Today’s problems are opportunities for such companies as Federal Express and United Parcel Service (UPS).

For a mass-customization system to work, the three elements — elicitation, process flexibility and logistics — don’t just have to function well individually. They also must be linked tightly to form a coherent, integrated whole. Mass-customization systems cross traditional organizational boundaries, particularly those between sales and production. Thus, companies must have organizational agility in addition to technical agility to enable cooperation across those boundaries.

The Demand for Mass Customization

There are mass markets for some customized products — the emergence of mass-customized apparel demonstrates that. But how broad will the phenomenon be in the future? There has been little research addressing that question, and there are good reasons to be cautious about predicting future demand for mass customization.

Who Wants It?

Customization enthusiasts proclaim that everybody wants it, everywhere, all the time. The evidence supporting that belief is, however, anecdotal. One story about a customer who cheerfully customizes a car online does not portend a mass market. It is worth asking, then, what kinds of custom products have mass appeal today — and why.

Many custom products are essentially novelties. Their appeal is precisely their entertainment value or surprise value. Examples of such products include soap stamped with your name and cookies glazed with your picture. The value of such products is by nature transitory.

Customers also demand variety when they differ sharply in their preferences for certain attributes of a product. In such a case — for example, when products require matching different physical dimensions — customization may truly add value. Clothing is a good example. People have different shapes, and they care deeply about a garment’s fit. Similarly, a window either fits or doesn’t fit a particular house, and if it doesn’t, it’s useless.

Beyond that, we enter the realm of taste. Tastes differ, but it is an empirical question in each case how much and how sharply. A mass market requires many people willing to pay for special, unique features. The burden of proof should lie, I think, with those who prophesy universal customization. It is a mistake to assume that every product will sell better with more customized features. There are now several flavors of bottled water, but will we see customized water? Maybe, maybe not. 12 (See “Alternatives to Mass Customization.”)

Alternatives to Mass Customization

Mass customization is only one way to satisfy demand for variety. Traditional mass production, adapted to make a few variants of a product, remains viable. An entirely different way is through a flexible or configurable product, which customers can adapt to suit their individual needs. In that case, the potential for variety is built into a single, uniform product, which can be made and distributed by a conventional mass-production system. *

The elicitation process, however, can still be problematic. Everyone has experience with a VCR with too many buttons or software with too many options. Building flexibility into such products requires artful design.

For instance, Gymboree offers only a few sizes of children’s clothes, but those sizes now come with “grow cuffs” so parents can make adjustments for better fit. † For adults, few modern Western garments are configurable, but the sari and the kimono are. A computer is highly configurable. A belt has multiple holes, and flour can be made into breads or cakes. Instruction manuals in several languages obviate the need for separate manuals for different countries.

Configurable products can be a direct substitute for and competitor to mass customization. For example, a few years ago, there was talk of customizing car seats. Toyota even set up a prototype of a seat-measurement device at its visitor center in Toyota City. It never happened. Instead, adjustable seats developed rapidly. It is cheaper to construct adjustable seats than to customize. Moreover, unlike a seat customized for one person, an adjustable seat can accommodate multiple drivers. Another example is office furniture. Some desk chairs allow dozens of different adjustments and come with user’s manuals to explain them. Desks often include large screws that allow for multiple height adjustments.

The case of Hallmark Cards, one of the early pioneers of mass customization, is also instructive. In the early 1990s, the company installed kiosks in stationery stores with special computers that guided users through the process of designing their own greeting cards, which they could then print. Those kiosks disappeared. What happened? Technologies advanced, and as a result consumers were able to buy color printers, simple software and high-quality paper to create their own cards using their home computers. Today technology has advanced still further with the e-card, a mass-customized information service provided by Hallmark among others.

* Called “adaptive customization” in J. Gilmore and B.J. Pine, “The Four Faces of Mass Customization,” Harvard Business Review 75 (January–February 1997): 91–101. † T. Agins, “Go Figure: Same Shopper Wears Size 6, 8, 10, 12,” Wall Street Journal, Nov. 11, 1994, Sec. B, p. 1.

Who Sells It Now?

We can get some indication of candidates for mass-customization from the customized (but not mass-customized) products available today. I know of no mass-customized product that was not previously customized on a small scale. There is little research currently on the subject, but I recently conducted a small, informal search of three sources: Yahoo, the online Yellow Pages for Raleigh, North Carolina, and a few Web sites dedicated to custom goods.

Searching for “custom” in Yahoo’s business section yielded the following categories: apparel, construction and home furnishings, computers (many companies in each category), sports equipment (predominantly golf clubs), publishing and printing, balloons, and adult videos. There are no major surprises: A golf club works better when it fits the golfer, and balloons are novelties that are often decorated for a particular occasion.

The Raleigh Yellow Pages turned up similar items, plus signs and auto paint and body shops. Some segments of the sign business — such as standard street signs — could be mass-customized, and perhaps they are already, but most will more likely remain small-scale crafts. The same is true for painting designs on cars.

An Internet company called digiCHOICE boasts thousands of custom products in hundreds of categories. The major categories, with examples of subcategories, are as follows: apparel (clothing, footwear, jewelry, accessories), home and office (furniture, artwork, computers, carpets), media (music, television, books, photographs), personal care (cosmetics, vitamins, soap, bath items), services (vacations, training, mortgages, parties), sports (golf, baseball, soccer, bicycles, skis) and other (vehicles, gifts, food, pet items, boats). The list may seem long, but again, there are no major surprises. Many of the items are customizable along physical dimensions. Others are information services or novelties. Several items (such as parties) are inconceivable as candidates for mass customization. Only a couple — custom cosmetics and jewelry — are items now made on a small scale that could perhaps appeal to larger markets.

In sum, the limited evidence available to date suggests a rather modest range of products with the potential for large-scale customization demand.

• It requires a highly flexible production technology. Developing such technologies can be expensive and time-consuming. Some processes, moreover, are more flexible and easier to digitize than others. Examples include information processing, printing, and cutting metal rods and tubes.
• It requires an elaborate system for eliciting customers’ wants and needs. To make something unique for someone requires unique information. Eliciting such information entails, for instance, asking the right questions and taking the right physical measurements — and that’s more difficult than it appears.
• It requires a strong direct-to-customer logistics system. Fulfillment is the weak link in much of e-commerce, and the same is true of mass customization.
• People are not willing to pay to have everything customized. In every case, companies must determine whether there is a potential mass market for custom features. Customers demand variety when they differ sharply in their preferences for certain attributes of a product. Under such circumstances, customization may truly add value. Products that require matching different physical dimensions fall into that category.

One of Many Routes to Variety

Companies should not be seduced by the gaudy banner of mass customization. (See “The Limits of Mass Customization.”) Any company considering a mass-customization strategy should carefully analyze its ability to deliver on the three elements of such a strategy — elicitation, process flexibility and logistics — and to integrate them. Investors should insist on a fully developed business plan, including specifics on process technology, market research, and actual and potential competition.

However, companies should investigate the potential for variety enhancements, including customization. For which product attributes might a broader array of choices deliver real value to customers? To what key processes are those attributes tied? How flexible are those processes now, and what can be done to make them more so? How might products be redesigned to be more modular or configurable? What new opportunities for variety do new information technologies enable?

Answering those questions does not require novel methods. Standard market research and product and process engineering are sufficient. What is new, however, is posing the questions and applying the methods in an integrated way. Furthermore, because markets and technologies are changing constantly, such investigations should be conducted continuously. In short, companies must understand their markets, their operations, their environment, their strengths and their weaknesses — conventional wisdom, perhaps, but following it today requires new modes of thought and action.

About the Author

Paul Zipkin is a professor of business at Duke University’s Fuqua School of Business. Contact him at [email protected].

1. Even those conditions are not sufficient for success. Reichwald et al. discuss the demise of Custom Foot, whose business model seemed promising. See R. Reichwald, F. Piller and K. Möslein, “Information as a Critical Success Factor for Mass Customization, or Why Even a Customized Shoe Does Not Always Fit” (paper presented at ASAC-IFSAM Conference, Montréal, July 10, 2000).

2. For an alternative depiction of mass customization, ibid.

3. S. Shugan, “The Cost of Thinking,” Journal of Consumer Research 7 (September 1980): 99–111; and C. Huffman and B. Kahn, “Variety for Sale: Mass Customization or Mass Confusion?” Journal of Retailing 74, no. 4 (1998): 491–513.

4. Gilmore and Pine call that “cosmetic” customization. J. Gilmore and B.J. Pine, “The Four Faces of Mass Customization,” Harvard Business Review 75 (January–February 1997): 91–101.

5. “Database Marketing,” Business Week, Sept. 5, 1994, 56–62;

D. Peppers and M. Rogers, “Enterprise One to One” (New York: Doubleday, 1997); and S. Brown, “Customer Relationship Management” (New York: Wiley, 2000).

6. “Custom-Made, Direct from the Plant,” Business Week Special Issue: 21st Century Capitalism, 1994, 158–160.

7. “Distribution Dilemmas,” The Economist, Feb. 26, 2000, 27–38.

8. M. Tseng, J. Jiao and C. Su, “Virtual Prototyping for Customized Product Development,” Integrated Manufacturing Systems 9, no. 6 (1998): 334–343.

9. K. Ulrich, T. Randall, M. Fisher and D. Reibstein, “Managing Product Variety,” in “Product Variety Management: Research Advances,” eds. T. Ho and C. Tang (Dordrecht, Netherlands: Kluwer, 1998), 177–205.

10. S. Kotha, “From Mass Production to Mass Customization: The Case of the National Industrial Bicycle Company of Japan,” European Journal of Management 14, no. 5 (1996), 442–450.

11. “Sweatshops to Body Scans,” The Economist, April 29, 2000, 60–61.

12. The limited research on demand for variety gives no clear indication whether such demand is increasing. See for example, B. Kahn, “Variety: From the Consumer’s Perspective,” in “Product Variety Management: Research Advances,” eds. T. Ho and C. Tang (Dordrecht, Netherlands: Kluwer, 1998), 19–37.

ADDITIONAL RESOURCES

Readers interested in learning more about mass customization will enjoy J. Gilmore and B.J. Pine’s book “Markets of One: Creating Customer-Unique Value Through Mass Customization,” published in 2000. B.J. Pine and colleagues’ Harvard Business Review article “Making Mass Customization Work,” from September–October 1993, also is recommended. Another helpful article is S. Kotha’s 1995 Strategic Management Journal article “Mass Customization: Implementing the Emerging Paradigm for Competitive Advantage.” A good Web site is www.mass-customization.de.

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Opportunities and Risks: The Impact of Mass Customization

Updated: July 28, 2017

Published: June 16, 2014

The most intriguing example might be Google’s Project Ara . It's more of a project than an actual phone at this moment, but with a super-ambitious two-year timeline and a projected early-2015 launch, it could soon have a big impact. Especially considering a price tag that starts at $50.

With Project Ara, Google is trying to develop two things: an economical “skeleton” that will contain the antenna and hold all the hardware components or “modules” that make up the phone and a super-efficient 3D printer that will create and print the colorful, personalized magnetic “backs” for your modules.

So Google’s aim is to control the production of the “container” for the device and let thousands of other companies compete to create a huge array of modules that fill it up and make it a smartphone .

Consumers would choose modules to suit their performance preferences and needs. Modules would include essentials like the screen and wi -fi technology but also specialty functions like receipt printers or medical devices – whatever there’s a market for.

If the battery wears out or you want a higher-resolution camera, you simply buy a new module on the open market. Unlike an Apple iPhone or a Samsung Galaxy, there would be literally countless “versions” of the phone in operation at one time, not just a few. Your phone could be unlike any other phone on earth.

The project’s leader, Paul Eremenko, recently called it “the most custom mass produced product ever created by mankind” except for “Chipotle burritos.” Google’s stated aim is eventually to get this phone into the hands of 5 billion people.

The concept is breathtaking in many ways, but it also dovetails with significant social and economic questions. Project Ara would “ disintermediate ” original equipment manufacturers, bypassing their role – and presumably many of the people they now employ to make the world’s cell phones.

The independent developers of Ara modules would presumably pick up the hiring slack, but by how much – especially if Project Ara’s 3D printers are doing work that humans previously did?

This is one component of a worldwide debate – all the way up to the governmental level – about the health of economies that already are struggling to find work for lower - and medium-skilled workers.

We’ve seen this at play in ecommerce already. Sites like Amazon and Alibaba are a classic case of mass customization: Amazon’s computers automatically generate a “store” for you in a matter of seconds. You’re shown products, offered deals, and can make transactions. Brick-and-mortar – and the people it employs – is “ disintermediated ” in favor of highly skilled marketers and developers, warehouse employees, and the delivery drivers who bring your orders to your door.

This is a simplification, but it gets at the heart of the issue and its concrete outcomes. The rapidly decreasing price of 3D printers will make them available in many homes and businesses by early 2016. What does this mean for retailers and their inventory? Does it go away? You need to consider how this could chip away at business in a few years and how to protect market share.

The current battle to create a superior shopping experience around products that can be sourced from multiple places will intensify. If you’re simply selling a customizable 3D file, how do you differentiate? By price? By add-on? By coupon?

There’s also the question of whether today’s retailers will be agile enough to lead the way. Today’s blockbuster media properties – Google, Yahoo, Facebook, Tumblr, for example – are not owned by yesterday’s media giants. They’re the result of visionary, agile startups that grew at the expense of established media companies. Presumably The Washington Post could have created Google, Yelp, or Craigslist. But today it’s Jeff Bezos, the founder of Amazon, that owns The Washington Post.

Six or seven years ago, everything in the web space was making things specialized and tailored to the individual. Now we expect that, and soon we’ll expect it of individual items. But I haven’t seen any mass merchants doing their own intensive personalization of products. Instead we see manufacturers like Nike and Adidas offering customization, and smaller companies like MixMyOwn.com (cereal) and @60" (artwork). But I suspect we will soon. And time is of the essence — if media properties are any precedent. If mass customization creates opportunities and challenges for economies and large companies, it creates analogous challenges in more abstract realms, like design. Social websites like Facebook and Tumblr operate on mass customization principles, as does SquareSpace, for example, which helps you create your own website. Its designers have created templates that guarantee a visually pleasing result, but broadly speaking, there’s a risk. The process for the user is unique and new, but the result isn’t necessarily as unique as you think. There’s still some ‘mass’ to the ‘customization’. After a while, when it’s more familiar, all the end-products start to look the same.

So in many ways, mass customization creates tension – between technology and stability, between efficiency and creativity. As it evolves, brands, shoppers and even governments, will need to keep all this in mind.

• “Google’s Future Phone, the Modular Project Ara,” CNN.com, April 16, 2014, http://www.cnn.com/2014/04/16/tech/mobile/google-project-ara/index.html
• “Building Blocks: How Project Ara Is Reinventing the Smartphone,” TheVerge.com, April 15, 2014, http://www.theverge.com/2014/4/15/5615880/building-blocks-how-project-ara-is-reinventing-the-smartphone

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Home » How Industry 4.0 Supports Flexibility and Mass Customisation

How Industry 4.0 Supports Flexibility and Mass Customisation

“Any customer can have a car painted any colour that he wants so long as it is black.”

That’s a quote from Henry Ford , the founder of the Ford Motor Company. It’s a famous quote, but what does it have to do with flexible manufacturing and mass customisation? Does it have any relevance in the era of Industry 4.0 as we look towards the next industrial revolution, Industry 5.0? Is there anything we can learn from an idea that appears so outdated?

According to his autobiography , Ford made the famous comment in a meeting with his team in 1909. The comment was part of an announcement that the Ford Motor Company would, from then on, only be making one model of car – the Model T.

Ford’s thinking at the time was clear. In another part of his autobiography, Ford writes:

“No business can improve unless it pays the closest possible attention to complaints and suggestions. If there is any defect in service then that must be instantly and rigorously investigated, but when the suggestion is only as to style, one has to make sure whether it is not merely a personal whim that is being voiced.”

So, Ford’s approach was to get the design of the product right and then manufacture that product and that product alone at a massive scale.

It was a successful approach, too. When he made the famous “any colour so long as it’s black” quote, Ford was producing just over 10,000 cars a year . Ten years later, the company had produced half-a-million Model T Fords, and five years after that, it was producing two million.

100+ Years On

Industry 4.0 technologies are changing the reality from Ford’s era unlike any other technologies that have come before. Today, for example, it is now possible to meet the demands of customers for product customisation while also getting the design right.

In the life sciences sector, that means customised medicines, therapies, and medical devices that meet quality standards and regulatory requirements, while also being economical to produce.

It’s also possible to have a flexible production process where different products with different tools and moulds can be produced on the same production line.

For example, dynamically programmed robots with interchangeable tooling enable manufacturers to quickly and effectively switch between models manufactured with negligible efficiency loss.

Industry 4.0 technologies, processes, and ways of thinking make this possible.

Crucially, it’s also possible to do all the above while maintaining productivity and operational efficiency. As a result, new profit-making opportunities become a reality.

What is Mass Customisation?

Mass customisation is the ability to manufacture what the customer wants profitably and with no loss of productivity. The aim is to make the manufacturing process more customer oriented.

What is Flexible Manufacturing?

Flexible manufacturing is a manufacturing strategy involving production lines that can quickly and easily change the type of product being produced. The process of switching between product types is automated.

The Technologies Driving Change

Back in Ford’s day, designers designed products with minimal input from consumers. Engineers then worked on refining the design and getting the production processes right, in addition to making sure the production process was as effective and efficient as possible.

The product then left the production line and entered the distribution chain, with little connection between it and the factory floor.

In other words, the connection between the customer, the manufacturing process, and the design process, was minimal. The supply chain was also disconnected and disjointed.

Industry 4.0 turns this completely on its head . Sensors and communication technologies mean machines in the production line can interact, collect data, and issue instructions autonomously. These processes can be integrated with the supply and distribution chains , connecting other business units, and driving efficiency savings even further. Supply chain collaboration and oversight, product traceability, OEE optimisation , and more happen in real-time.

However, the real gamechanger when it comes to flexibility and mass customisation is the use of sensors in end products. With this technology, manufacturers can create digital twins of products that are being used by customers in the real world, with the digital twin receiving real-time updates from sensors on the physical products.

Non-Linear Product Lifecycle

Digital twin and simulation technologies offer a number of benefits to manufacturers, including predictive maintenance and making faults easier and faster to repair.

One of the biggest benefits, however, is how the use of sensors and digital twin technologies can influence the design process. Product designers no longer have to rely on gut instinct, limited research, or outdated usage data.

With Industry 4.0 technologies like digital twins, designers can use real-time data to produce products that customers really want.

In other words, the product lifecycle becomes non-linear.

A non-linear product lifecycle makes it possible to customise products for different customer segments, improving customer relations and the customer experience. Even single-unit production runs are possible, i.e., true product personalisation.

Mass Customisation Gets You Closer to Your Customers

Remaining competitive and relevant to your customers is essential, as is improving the customer experience, from the service they receive to shipping lead times to product quality.

Arguably, however, the most eye-catching benefit of mass customisation and manufacturing flexibility has to do with the relationship you have with customers. Industry 4.0 technologies, as well as mass customisation and flexible manufacturing strategies, get you closer to customers.

As a result, you can establish a more robust direct link with customers, strengthening your brand, building customer loyalty, improving customer and marketplace knowledge, and ensuring you stay out in front of emerging trends, changing values, and evolving expectations.

What Can We Learn from Ford’s Famous Quote?

There is a connection between Ford’s approach in the early 1900s and the opportunities presented by Industry 4.0 today. Specifically, two of the biggest things that Ford got right back in 1909 was to:

• Focus on the customer – he understood that the vast majority of his customers preferred to have a reliable car they could afford rather than one where they could specify a particular colour.
• Focus on profitability – Ford also understood he had to deliver on the above expectations of his customers in a way that was profitable for his company.

Hence, the get-it-right-and-then-make-them-all-the-same approach.

Manufacturers need to follow Ford’s lead, albeit with a 21st-century twist.

• Focus on the customer – customers still want products that work, and they want those products to be affordable, but they also want products tailored to their needs, i.e., they want customised products.
• Focus on profitability – manufacturers need to offer flexibility and customisation to remain competitive, but they must do so profitably.

Industry 4.0 technologies make both the above possible: sensors, automation, robotics, machine learning, data analysis (particularly anomaly detection), digital twins, equipment integration, and more.

It is manufacturing’s next evolutionary step, as Industry 4.0 technologies, processes, and systems become the norm, and we start moving towards Industry 5.0.

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Leveraging supply integration, mass customization and manufacturing flexibility capabilities and the contingency of innovation orientation

Supply Chain Management

ISSN : 1359-8546

Article publication date: 28 November 2022

Issue publication date: 19 December 2022

This paper aims to examine the relationship between supply integration and firm performance by first, investigating the mediating effects of manufacturing flexibility and mass customization; and second, exploring the moderating role of innovation orientation on the link between internal capabilities and performance.

Design/methodology/approach

Resource orchestration and contingency theories are used to address the mediating and moderating effects. A cross-sectional data set on 242 Swedish manufacturers is used to test for the hypotheses using structural equation modeling.

The findings provide support for the mediating roles of manufacturing flexibility and mass customization in the relationship between supply integration and firm performance. However, the results point to contrasting contingent effects of innovation orientation. While innovation orientation positively moderates the association between mass customization and firm performance, it shows a negative impact on the link between flexibility and performance.

Research limitations/implications

The study contributes to the literature on the integrative activities with upstream supply chain actors. Specifically, the authors highlight how specific capability configurations comprising of supply integration, manufacturing flexibility and mass customization lead to firm performance. Moreover, the authors provide insights on the contingency role of innovation, especially if firms consider flexibility or customization capabilities.

Originality/value

While the individual impacts of flexibility and customization on performance have been addressed previously, there is a paucity of research on how these two capabilities are integrated with supply integration. Moreover, there is little known regarding the role of innovation orientation on these integrated relationships.

• Supply integration
• Manufacturing flexibility
• Mass customization
• Innovation orientation
• Resource orchestration

Jafari, H. , Ghaderi, H. , Eslami, M.H. and Malik, M. (2022), "Leveraging supply integration, mass customization and manufacturing flexibility capabilities and the contingency of innovation orientation", Supply Chain Management , Vol. 27 No. 7, pp. 194-210. https://doi.org/10.1108/SCM-05-2022-0177

Emerald Publishing Limited

Copyright © 2022, Hamid Jafari, Hadi Ghaderi, Mohammad H. Eslami and Mohsin Malik.

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1. Introduction

Why and how some firms are more successful than others is the ongoing focus of research in the operations and supply chain (SC) literature. The resource-based view (RBV) has been an influential theoretical lens to explain “why the performance across firms vary” from a resource heterogeneity perspective ( D’Oria et al. , 2021 ), but it does not answer “how some firms outperform others” ( Malik et al. , 2021 ). The RBV suggests a direct relationship between the possession of strategic resources and competitive advantage, which has been criticized as a “black box” conceptualization because it ignores the managerial actions that are needed to translate the possession of strategic resources into performance ( Gligor et al. , 2022a ). The resource orchestration theory (ROT) addresses this shortcoming of RBV by “looking into the black box” to explain how managers structure and bundle resources to create unique capabilities and the specific ways in which the combinations or configurations of complementary capabilities are leveraged to create a sustained competitive advantage ( Sirmon et al. , 2007 ). The notion of capability configurations is central to the ROT because it describes the specific ways in which the complementary capabilities are coordinated and deployed to create value ( Malik et al. , 2021 ). The ROT is specifically relevant to the SC literature because of its ability to explain how a firm’s internal capabilities are integrated with supplier facing capabilities to leverage competitive advantage ( Chavez et al. , 2021 ). Integrating resources to create capability configurations comprising of internal capabilities and supplier facing capabilities is rather complex ( Adams et al. , 2014 ) but essential for a competitive advantage ( Wiengarten et al. , 2019 ). We contribute to this stream of literature by suggesting the specific ways (a capability configuration) in which internal and supplier facing capabilities are coordinated and deployed to gain competitive advantage. In doing so, we delineate how managers orchestrate strategic resources into idiosyncratic capabilities that are difficult to replicate and hence, provide competitive advantage ( Carnes et al. , 2022 ).

internal production related capabilities (manufacturing flexibility [MF] and mass customization [MC]);

supplier facing capability (supply integration [SI]); and

the strategic orientation of firm toward innovation (innovation orientation [IO]).

This conceptualization is consistent with the resource advantage leveraging strategy for the manufacturing sector to produce incremental product improvements for expansion of existing markets ( Carnes et al. , 2022 ). In this research, we posit that MF is a key internal capability to produce incremental product improvements ( Ramos et al. , 2021 ) and MC enables the product improvements to be expanded to the existing market ( Liu et al. , 2021 ). Thus, our thesis in this study is that in conjunction with SI, MF and MC capabilities leverage a resource-based advantage for a manufacturing sector. MF is defined as the ability of a system to efficiently respond to both internal and external uncertainties with minimum resource compromise ( Ramos et al. , 2021 ). Firms with high MF are more efficient to change output volumes and adjust their production system to accommodate for a different mix of products demanded by customers ( Nawanir et al. , 2020 ). MC is another internal production related capability that refers to the ability of a manufacturing system to allow its customer to personalize and/or customize the features of products at a cost and timeframe comparable to mass production ( Qi et al. , 2020 ). MC allows manufacturing firms to differentiate their products, create customer value, and, therefore, outperform competition ( Salvador et al. , 2020 ). The SC literature, however, suggests integration of internal capabilities with suppliers to stay competitive ( Chen and Paulraj, 2004 ). SI capability represents the ability of a firm to seamlessly integrate the logistics functions with upstream end of the value chain ( Stock et al. , 2000 , p. 535). The literature has addressed the individual effects of the MF and MC on firm performance (FP), but how these two internal capabilities are integrated with SI and if these integrated relationships are affected by the IO of a firm is unknown.

Do MF and MC mediate the relationship between SI and FP?

Does IO moderate the effects of MF and MC on FP?

In Section 2, we provide further details on the theoretical underpinnings for this research, while in Section 3, we develop support for the conceptualized mediating and moderating hypotheses. Section 4 describes the research methodology, and the results. A discussion on the results in terms of theoretical contributions and managerial implications is carried out in Section 5. We conclude the paper with limitations and directions for future research in Section 6.

2. Theoretical foundations

2.1 resource orchestration theory.

ROT, the theoretical lens to answer RQ1 , is in the intellectual lineage of the resource-based inquiry to explain “why and how some firms outperform others” ( D’Oria et al. , 2021 ). The genesis of this line of inquiry is the RBV which suggests that the firms possessing strategic resources that are valuable, rare, inimitable and nonsubstitutable would have a competitive advantage ( Kraaijenbrink et al. , 2010 ). The RBV, however, gave a partial explanation because its focus is on why firms outperform others, and it does not provide enough details on how the strategic resources enable a competitive advantage ( Gligor et al. , 2022a ). The augmentation of the RBV to more adequately answer the variations in FP began with the inquiries on how strategic resources are transformed into idiosyncratic firm capabilities ( Sirmon et al. , 2011 ). Resources in the resource-based inquiry refer to both tangible and intangible assets that a firm has access to, whereas a firm’s capability is derived from using the strategic resources to perform a set of tasks to achieve an outcome ( Malik et al. , 2021 ). This shift of focus in the resource-based inquiry from “resource possession” to “resource usage” led to the emergence of the dynamic capabilities (DCs) and the ROT – both DC’s and ROT provide a complementary logic to enhance our understanding of how some firms outperform others. Dynamic Capabilities theory doesn’t sufficiently differentiate between the “resources that are inputs to the firm and the capabilities that enable the firm to select, deploy and organize such inputs” ( Kraaijenbrink et al. , 2010 ). Thus, despite acknowledging the value of organizational responses to the rapidly changing external environment, DC’s fall short of examining the key managerial actions to integrate and apply idiosyncratic capabilities for a competitive advantage ( D’Oria et al. , 2021 ). The ROT, on the other hand, establishes managerial actions firmly in the nomological network to explain the “black box” of resource possession and competitive advantage ( Sirmon et al. , 2007 ).

Specifically, ROT identifies managerial roles to create competitive advantage along three interdependent processes of structuring, bundling and leveraging ( Sirmon et al. , 2011 ). Structuring process describes how managers create a portfolio of strategic resources either through acquisition, accumulation or/and divestment. The bundling process puts the spotlight on how managers combine resources to create capabilities which are then used by the leveraging process, as complementary capability configurations, to meet specific market needs ( Malik et al. , 2021 ). This capability-market-need fit then translates into competitive advantage ( Sirmon et al. , 2007 ). We specifically draw on the “leveraging” process of the ROT as the theoretical framework because leveraging actions are the missing link in connecting “structured and bundled resources” to performance ( Carnes et al. , 2022 ). For effective leveraging, the three managerial actions of mobilization, coordination and deployment need to be synchronized. Mobilization refers to the identification of capabilities needed for a specific market and the design of a leveraging strategy to establish the capabilities-market fit ( Sirmon et al. , 2011 ).

A ROT leveraging strategy appropriate for a manufacturing context (our study sample) is the “resource advantage” to produce incremental product improvements for expansion of existing markets to strengthen the market advantage ( Carnes et al. , 2022 ). Consistent with the resource advantage leveraging strategy for the manufacturing sector, we conceptualize MF as a key internal capability to produce incremental product improvements and MC as an internal capability to expand the existing market. MF is the ability of a firm to efficiently respond to both internal and external uncertainties (MF) ( Ramos et al. , 2021 ) and MC is the ability of a manufacturing system to mass-customize ( Liu et al. , 2021 ; Qi et al. , 2020 ). Further details on how the two internal capabilities contribute to competitive advantage have been identified in Section 3. Effective leveraging also requires the internal production capabilities of a firm to be integrated with the ability of a firm to integrate its operations with its suppliers (SI) ( Boone et al. , 2018 ). The specific ways (capability configuration) in which MF, MC and SI are integrated is determined by the “coordinating” action of the leveraging process of ROT. Coordinating internal capabilities with SC partners is challenging because of conflicting objectives, differences in resource base and core competencies, cultural differences and commitment issues ( Adams et al. , 2014 ). The resource orchestration actions relevance to answer RQ1 is accentuated here because the managerial relational skills to build a social capital (within and across firms in SC’s) plays an important role in effective capability coordination ( Sirmon et al. , 2007 ). The physical deployment of capability configuration is the third and the final managerial action within the leveraging process of the ROT. The deployment actions heavily draw on the explicit and tacit managerial knowledge and skills to build and maintain the resource base advantage that translates into a competitive advantage ( Sirmon et al. , 2011 ; Gligor et al. , 2022a ). Taken together, mobilization, coordination and deployment are the three sets of orchestration actions representing managerial knowledge and experience that explain how firms may perform differently despite have similar resource base.

2.2 Contingency theory

To address RQ2 , we draw on the theoretical lens of CT, which suggests that the relationship between the explanatory variables and the outcome is affected by contingencies such as national context, organization factors (e.g. firm size, age, industry type) and the strategic context of a firm ( Sousa and Voss, 2008 ). Recently, more attention has been directed toward elucidating and explaining how strategic context or orientation of a firm can influence the effectiveness of its practices ( Schweiger et al. , 2019 ; Baker et al. , 2022 ). In line with CT, we suggest that a strategic orientation toward innovation acts as a moderating force on the relationships between internal capabilities and FP. Often, when change or improvement is introduced in similar ways across multiple firms, the performance is variable ( Chavez et al. , 2021 ), and thus, the benefits are not being fully materialized. Such phenomena can be explained by the lack of innovation culture or orientation in organizations ( Simpson et al. , 2006 ; Hughes et al. , 2019 ). According to Wei and Wang (2011) , firms with higher IO tend to be quicker and more efficient in materializing new ideas in response to market requirements. Therefore, in such firms, innovative ideas and processes are being spread at a faster rate and wider acceptance ( Chen et al. , 2009 ). Hence, we advance the proposition that firms with higher IO could capitalize on their MF and MC capabilities toward achieving a more competitive position ( Stock and Zacharias, 2011 ).

3. Literature review and hypothesis development

3.1 supply integration.

With the developments of supply chain management (SCM), firms have realized the importance of reaching out to SC actors to combine, coordinate, collaborate and align their objectives, resources and capabilities to stay competitive and spread risks ( Soosay and Hyland, 2015 ). Nevertheless, attempts to integrate resources with external parties is a rather complex process due to the heterogeneity of resources, cultural differences, resistance and commitment issues ( Adams et al. , 2014 ); to an extent that often an external party is often used to “orchestrate” the interorganizational resources ( Zacharia et al. , 2011 ).

Logistics integration is defined as the “specific logistics practices – operational activities that coordinate the flow of materials from suppliers to customers throughout the value stream” ( Stock et al. , 2000 , p. 535). External integration typically involves extensive information sharing, collaborative planning, IT capability and logistics assets, which is highly dependent on the resources and capabilities of the firm and those of the respective SC actors ( Chavez et al. , 2021 ). Often in SCM research and practice, closely working with a select number of key suppliers is preferred to arms-length relationships with large number of actors in achieving integration ( Paulraj and Chen, 2007 ). Lack of a strategic view on integration among SC actors could lead to complexities and conflicts, whereas integration with suppliers has proven to streamline risk management initiatives ( Munir et al. , 2020 ). Therefore, SC orientation is often considered as necessary philosophy in achieving integration ( Boone et al. , 2018 ). Seamless SI results in configuring the interorganizational boundaries, and avoiding logistics challenges, including the bullwhip effect ( Prajogo and Olhager, 2012 ).

3.2 Manufacturing flexibility

Upton (1994) defines flexibility as the ability of a manufacturing system to respond to change with minimum resource compromise. Since the early introduction of computers and advanced automation, flexibility has become a desirable attribute of manufacturing systems and a key capability to efficiently respond to both internal and external uncertainties ( Chaudhuri et al. , 2018 ). MF is conceptualized as the ability of a firm to manage production resources against such uncertainties to meet various customer requests ( Zhang et al. , 2003 ). A major portion of the literature has a central focus on characterizing different types of flexibility and developing taxonomies, while more recent studies aim at conceptual and empirical examination of its performance implications ( Nawanir et al. , 2020 ; Chaudhuri et al. , 2018 ).

Particularly, earlier studies on MF have distinguished between two types of flexibility: resource and manufacturing system flexibilities. Resource or lower-order or internal flexibility refers to the specific instruments and techniques applied to achieve flexible attributes, including those related to processes, workforce and equipment ( Pérez-Pérez et al. , 2018 ). On the other hand, high-order or external flexibility types are those that directly influence the competitive position of a firm, with volume and mix known as the most prominent types. Volume flexibility is defined as the ability of a firm to adjust volumes to varying changing demands by operating at a variety of batch sizes and/or different production output levels with minimum disruption ( Scherrer-Rathje et al. , 2014 ). Mix flexibility, on the other hand, is associated with the ability to manufacture various combinations of products economically and effectively ( Nawanir et al. , 2020 ). Through the lens of DCs, Zhang et al. (2003) provide a unique conceptualization for such interaction, by formulating internal-external flexibilities as competence-capability mechanism. They argue that internally facing flexible competences are fundamental to support the development of flexible manufacturing capability, desired by and visible to the customer. Considering the competitiveness implications of flexibility as a capability that influence firm’s position in the market ( Mishra and Mishra, 2019 ), volume and mix flexibility types are the main emphasis of this study.

3.3 Mass customization

MC has emerged as the new manufacturing paradigm in practice to blend the advantages of tailored manufacturing and economies of scale from mass production. As a manufacturing capability, MC refers to the ability to meet heterogeneous customer requirements by offering a high volume of customized product options ( Liu et al. , 2021 ). Hence, central to MC capability are cost efficiency, high volume production, product quality and reliable customer service-levels characterized by on-time delivery ( Qi et al. , 2020 ; Huang et al. , 2008 ). Therefore, several trade-offs should be taken into account by a manufacturing organization when selecting and implementing the right manufacturing strategy – standardization vs MC – depending on the products type, market segment and costs ( Shao, 2020 ). Nevertheless, generally, capitalizing on MC has been stressed to outperform competition in the long tail and creating customer value ( Salvador et al. , 2020 ; Pérez-Pérez et al. , 2018 ). A variety of MC typologies have been presented depending on industries, level of customer involvement, product modularity and SC complexity ( Swaminathan, 2001 ; Suzić et al. , 2018 ). In leveraging and realizing MC, managing the upstream SC is often cited as a major challenge ( Pérez-Pérez et al. , 2018 ).

The popularity of MC should be considered in relation to the technological and informational developments, as well as intensified competition, shortened product life cycles and increasingly varying customer demand ( Kim and Lee, 2022 ). The literature proposes several mechanisms to achieve MC. For example, modularity facilitates MC by decreasing complexities and operational challenges in processes and components ( Wang and Zhang, 2020 ). Similarly, postponement strategies have a contributing role to this process ( Purohit et al. , 2016 ). Digital technologies, as well as lean and agile practices, have been regarded as other enablers of MC ( Purohit et al. , 2016 ; Wang and Zhang, 2020 ; Tu et al. , 2004 ).

3.4 Innovation orientation

IO reflects a firm’s culture encouraging its members to create, contribute to and experiment new ideas ( Hurley and Hult, 1998 ; Chen et al. , 2009 ). As a strategic orientation, it is defined as “the capacity to introduce some new process, product or idea in the organization” ( Hult et al. , 2004 , p. 430). Siguaw et al. (2006) describe IO as a complex knowledge structure which involves a “learning philosophy, strategic direction, and transfunctional beliefs.” Stock and Zacharias (2011) conceptualize IO in relation to a set of internal arrangements, including strategy, structures and processes, human resource systems, organizational culture and leadership. Firms are adopting IO foster a philosophy which reflects the deep-rootedness of innovation and creativity to challenge the status-quo ( Lii and Kuo, 2016 ). IO is preceded by learning orientation, and other organizational and cultural factors, such as power sharing and communication, participative decision-making, tolerance for conflict and risk, as well as support and collaboration ( Hurley and Hult, 1998 ). IO, which is sometimes used interchangeably with or in strong connection to product or technology orientation, has shown to have associations with market orientation of the firm ( Grinstein, 2008 ). In fact, Berthon et al. (2004) maintain that customer (or market) and innovation (or product/technology) orientations are not mutually exclusive.

With such capacity, firms can be more responsive, develop new capabilities; and hence, have a higher chance for developing competitive advantage ( Hurley and Hult, 1998 ; Chen et al. , 2009 ). Hult et al. (2004) found support for innovativeness to be the outcome of market, learning and entrepreneurial orientation of firms. On the other hand, scholars have drawn attention to balancing the benefits and potential pitfalls of innovativeness in the short- and long-run (see also Yu et al. , 2020 ). For instance, Simpson et al. (2006) underlined both positive and negative outcomes of IO in terms of market, employees and operations. As such, while IO could lead to outperforming competition or higher customer and employees job satisfaction, it may result in product failures, job stress or increased costs. Empirical and conceptual contributions regarding IO in SCM research are scant; even so, the limited studies have different approaches in positioning IO in the overall SC or capability building framework. Hult et al. (2002) conceptualize innovativeness, along with learning and entrepreneurship, as an indicator of cultural competitiveness in SC’s. A few studies have focused on the nexus of IO and manufacturing or SC-related capabilities ( Clauss and Spieth, 2016 ; Chen et al. , 2022 ). For instance, Lii and Kuo (2016) found that IO positively influences integration along the SC by fostering cooperation and trust among SC partners, especially in new products and meeting customer demand.

3.5 Firm performance

Measuring FP is a well debated topic in the SCM literature due to its multidimensionality implications for both internal and external decision-making. Generally, metrics are verifiable measures, which are “defined with respect to a reference point” ( Melnyk et al. , 2004 , p. 3). Thereby, FP has been widely measured relative to the performance of competitors or the industry average. Predominantly, in the operations and SCM literature, FP is measured quantitatively, both in objective and subjective forms. The most prevalent operationalizations of FP are operations-related – reflecting customer service levels in terms of on-time and accurate delivery, product quality and competitive position, as well as business-related – reflecting financial performance ( Flynn et al. , 2010 ; Wisner, 2003 ; Gu et al. , 2017 ). Other studies suggest including relational performance as another dimension of FP in regard to interorganizational performance of firms in the SC context ( Gligor et al. , 2022b ). While prior research has documented the sequential relationships among the dimensions of FP, some studies opt for a unified and comprehensive approach of measurement. For instance, Green et al. (2008) provide support for operational and logistics performance resulting in financial performance via market-facing performance. Yet, to capture FP, Green et al. (2019) use a single construct composed of several indicators. Widely agreed in the literature, FP is impacted by the competencies and capabilities of firms ( Hüseyinoğlu et al. , 2020 ). Following this line of reasoning and based on ROT, we seek to investigate the mediated effects of SI on FP via MC and MF capabilities.

3.6 Research hypotheses

3.6.1 the mediated effects of supply integration on firm performance.

The performance outcomes of integration are nonconclusive. Several contributions have suggested indirect effects of SI on FP. For instance, SI could have benefits for both parties in dyadic relationships, ranging from supplier development to delivery performance and overall cost reduction ( Devaraj et al. , 2007 ). The early configurational study by Frohlich and Westbrook (2001) revealed that “outward” integration appears to have the strongest association with performance among all types within the “arcs of integration.” On the other hand, given that SI is a long-term exercise, requiring significant investments in resources and mutual trust, it can incur high costs. For instance, Flynn et al. (2010) found no support for the impact of SI on operational or business performance.

Drawing on ROT, we maintain that the competitive advantage from SI can be realized once SI is translated or materialized into other capabilities. This is in line with prior research, which suggests that the effect of SI on market or competitive performance is channeled through competitive capabilities ( Rosenzweig et al. , 2003 ; Swink et al. , 2007 ). In this regard, supplier relationships can influence operational and competitive strategies ( Prajogo and Olhager, 2012 ). Since logistics has a coordinating mechanism within firms and along the SC’s, SI plays a significant role in facilitating time-based competitive capabilities and strategies such as JIT, especially in globally spread SC’s ( Paulraj and Chen, 2007 ). Nowadays, manufacturing firms are facing extreme demand volatility and rapid changes in channel requirements, which generally requires adjustments to product volume and mix (MF). Furthermore, driven by recent technological advancements, MC is increasingly becoming a key capability for manufacturing firms to produce large scale product variety without increasing costs or sacrificing quality ( Qi et al. , 2020 ; Liu et al. , 2021 ). We argue that since both MF and MC have a direct interface with the upstream facing integration and capabilities (SI), they could act as transformative and intermediary mechanisms between SI and FP in markets characterized by demand volatility.

Several theoretical lenses are used to explain this mediated relationship, including the dynamic capability perspective ( Vanpoucke et al. , 2014 ) and strategic fit theory ( Swink et al. , 2007 ). In this regard, we argue that ROT provides a more suitable lens for explaining how the performance outcomes resulting from SI are channeled via the intermediary competitive capabilities of MF and MC . In this regard, leveraging capabilities involves resource configuration for exploiting market opportunities and value creation ( Sirmon et al. , 2007 ). We test the indirect effects of SI (independent variable) on FP (dependent variable) via MF and MC (mediating variables). The ROT perspective allows for explaining how orchestrating resources and/or resource flows with suppliers can be bundled and leveraged with internal capabilities such as MF and MC ( Hitt, 2011 ).

3.6.2 The role of MF

SI has been widely discussed as a main contributor to increasing flexibility. Integration facilitates matching resources with demand, and supports flexibility in uncertain markets by seamless communication and complexity reduction ( Swink et al. , 2007 ). Sharing critical information regarding inventory planning and forecasting enables manufacturers to improve their decision-making regarding capacity allocation and planning ( Vanpoucke et al. , 2014 ). Therefore, SI is influential in shaping different SC configurations, which results in volume and mix flexibility ( McKone-Sweet and Lee, 2009 ). Supplier-facing logistics integration (e.g. use of common logistics resources, equipment or third-party logistics providers, as well as delivery coordination) could also have benefits in terms of changeover times, lead-times and labor productivity ( Frohlich and Westbrook, 2001 ). Therefore, via SI, manufacturers are in a better position to quickly change production volumes and/or change over to other products in response to demand variations ( Liu et al. , 2018 ). As a result, integration facilitates smooth operations and delivery processes and supports dynamic processes ( Vanpoucke et al. , 2014 ).

MF mediates the relationship between SI and FP.

3.6.3 The role of mass customization

To ensure raw materials, components, modules, resources and information are available to meet MC requirements, a seamless coordination with SC partners is essential. While the research on internal competencies, tools and techniques for successful MC implementation is ample ( Suzić et al. , 2018 ), we draw further attention to the boundary-spanning of SC initiatives beyond the firm. We maintain that MC requires orchestrating activities and sharing information with SC actors. SI supports leveraging MC capability in better capturing, forecasting and processing demand to more effectively procuring components, and developing products and processes ( Liu et al. , 2018 ). For instance, information-sharing not only supports synchronized decision-making but also can act as a monitor mechanism to observe the dynamics in operations and along SC’s ( Jin et al. , 2014 ). Therefore, SI is crucial to enable MC ( Fogliatto et al. , 2012 ). Nevertheless, despite the costs associated with leveraging MC, several operational and strategic benefits result from MC ( Wang and Zhang, 2020 ), including cost efficiency, customer value, product quality, delivery and product innovation ( Zhang et al. , 2019 ; Qi et al. , 2020 ).

MC mediates the relationship between SI and FP.

3.6.4 The moderating effects of innovation orientation

Strategic orientations are manifested in organizations’ culture, and IO has attracted scholarly attention as a relevant contextual factor. IO becomes even more relevant in environments associated with turbulence since uncertainty necessities adopting innovations to stay competitive ( Mishra and Mishra, 2019 ). According to Berthon et al. (2004 , p. 1068), IO has the potential to even “create markets” by “determining the nature of demand.” Therefore, IO can act as a catalyzer in how capabilities are mobilized to address demand dynamics. Innovation-oriented firms support using and developing new resources, enabling them to overcome complications in implementing new idea, products, processes or systems ( Hurley and Hult, 1998 ; Chen et al. , 2022 ). Moreover, in meeting disruptions and challenges, an IO atmosphere allows firms to develop creative recognition of resources and capabilities at their disposal ( Chen et al. , 2011 ).

Strategic orientations play significant roles in shaping business strategies. Meanwhile, matching capabilities with firm strategies is critical in achieving competitive advantage, mainly because capabilities per se may not guarantee success. Chang et al. (2003) underlined that MF does not necessarily lead to improved performance under all circumstances and that the resulting FP is contingent on firm’s strategies. In this regard, the role of contingencies in attaining FP from flexibility has been widely stressed by prior research ( Vokurka and O’Leary-Kelly, 2000 ). Based on CT, we argue that an innovation culture within the firm fosters creativity in combining and leveraging resources, as well as seeking for alternatives in production system. For instance, if innovative ideas are supported by management and proposed by production teams, they can effectively support multitasking or reduce changeover times in production lines to meet customer demand quicker ( Yu et al. , 2020 ). Also, in addressing production challenges, IO serves as a culture supportive of creativity in providing solutions. Therefore, one can expect more efficient and profitable production operations, and hence competitive position. According to Mishra and Mishra (2019) , IO helps predict requirements and grasp opportunities in the market, and as a result, supports how flexibility leads to better FP. Hence, IO supports how the performance outcomes of flexibility in manufacturing systems and processes are manifested.

Strategic orientations, including IO, lead to competitive advantage, specifically, in terms of both incremental and disruptive product and/or process innovations ( Baker et al. , 2022 ). “Pro-innovation” firms have higher inclination to better information exchange internally and externally, as well as using knowledge regarding products or markets. For instance, if the firm culture supports information sharing regarding product development and customization with key suppliers, timeliness and quality in the delivery of mass customized products is nurtured, which translates into improved FP. Wang et al. (2015) shed light on the nexus of IO and MC delineating how an innovation culture cultivates MC. While we maintain that strategic orientations of firms generally have a role in materializing capabilities (see also Lii and Kuo, 2016 ), our contention is more in line with that of Chen et al. (2011) , which rather stress on their contingent role. Innovativeness supports addressing customer requirements, but also exceeding them, in a SC context ( Hult et al. , 2002 ). This implies that IO helps firms to prioritize MC capabilities to go beyond simply meeting customer requirements, by harvesting the potential outcomes of such capability to its utmost extent. For instance, if the top management supports innovation, firms will have a higher propensity to capitalize on creative solutions by their employees in product development, and hence improving their overall competitive position ( Stock et al. , 2014 ; Chen et al. , 2009 ).

IO moderates the relationships between (a) MF, (b) MC and (c) FP.

Figure 1 illustrates the conceptual model of this study that draws on the ROT and CT to suggest two mediating and two moderating relationships.

4. Methods and results

4.1 data collection.

Data was collected using a cross-section survey on manufacturing firms in Sweden (NACE codes 10 to 31). This sample frame is believed to represent firms with fair understanding and implementation of the research constructs tested in this study, therefore, suitable for our analysis ( Pashaei and Olhager, 2019 ). To extract a list of 9,000 manufacturers in Sweden, the BvD Amadeus database was used. Then, a random sample frame of 714 manufacturers were contacted via telephone to determine their interest in participation. Data collection was undertaken professionally by a market research firm with extensive experience in similar survey research in the Swedish language. When required, follow-up calls were made to engage with the relevant informant executive. A total of 242 useable responses were returned primarily filled in by knowledgeable executives within logistics and SCM, purchasing, operations and production (33.8% actual response rate), followed by CEO’s and owners (29.7% and 17.7%, respectively). To assess the nonresponse bias in the survey, we conducted “the extrapolation technique,” which is commonly used in SCM research ( Clottey and Grawe, 2014 ) to test whether the nonrespondents differ from respondents in a way that would impact the results of the study. This technique assumes that late respondents are more similar to nonrespondents ( Armstrong and Overton, 1977 ). In this regard, t -tests were carried out to compare the early (94) and late responses (148), by comparing the variances in ten randomly selected variables from the survey. As no significant differences were found between the two groups, nonresponse bias did not appear to be a concern. Table 1 summarizes the characteristics of the respondent firms, including the industry classification ( Eurostat, 2008 ), and technology intensity. Since almost half of the respondents are either CEO’s or owner of the firms, the risk for key informant bias is minimized. Moreover, the majority of the sample consists of small and medium enterprises (SMEs), according to their reported annual turnover and number of employees ( European Commission, E, 2020 ), which is in line with the profile of the Swedish manufacturing sector ( Statistics Sweden, 2022 ). Furthermore, none of the firms participating in the study were publicly quoted.

4.2 Measurement instrument

The survey was designed using established and valid scales (seven-point Likert) and was then translated into Swedish by an SCM researcher. Since this study was part of a university-industry collaboration project, it provided access to six large industrial manufacturers to carry out a pilot study for refining the questionnaire. SI was measured using Chen and Paulraj (2004) . MC was adopted from Huang et al. (2008) and IO from Chen et al. (2009) . Various operationalization of flexibility has been used in the literature, which mainly either focus on internal competencies and/or wider SC capabilities ( D'Souza and Williams, 2000 ; Sáenz et al. , 2018 ; Jafari et al. , 2022b ). For instance, Chaudhuri et al. (2018) use two single items for capturing volume and mix flexibility. For measuring MF, and acknowledging the lack of consensus in operationalization of MF ( Pérez-Pérez et al. , 2018 ), we adopted Zhang et al. (2003) ’s conceptualization since it captures various dimensions of volume and mix flexibility.

To capture FP, items related to overall product quality , competitive position and customer service levels were adopted from Wisner (2003) . These items have proven to rank high among the relevant reflective items of FP ( Tan et al. , 1998 ) and have been widely used in the literature ( Jafari et al. , 2022a ; Hüseyinoğlu et al. , 2020 ). Overall customer service levels primarily indicates the relative productivity of the firm’s logistics operations in on-time and accurate delivery, and service provision ( Murfield et al. , 2017 ; Mentzer et al. , 2001 ). Overall product quality , as an operational performance, measures the relative level of meeting the specifications, and conformance to standards in manufactured products ( Gu et al. , 2017 ). Overall competitive position represents competitiveness in the marketplace, and can be associated with market share and performance ( Wisner, 2003 ; Tracey et al. , 2005 ; Chahal et al. , 2020 ; Zhang et al. , 2019 ). We used number of employees, annual sales, total assets and technological intensity ( Eurostat, 2008 ) as control variables, in line with prior research indicating their relevance for SC and manufacturing capabilities and performance ( Wang and Sarkis, 2017 ).

4.3 Data analysis

4.3.1 confirmatory factor analysis.

To assess model fit, we conducted a confirmatory factor analysis (CFA) in AMOS 27. The measurement model fit was acceptable as χ 2 /df = 1.96, comparative fit index (CFI) = 0.912, Tucker–Lewis Index (TLI) = 0.900, incremental fit index (IFI) = 0.913, root mean square error of approximation (RMSEA) = 0.061 since all measures met the recommended thresholds ( Hair et al. , 2018 ). The factor loadings for all constructs were close to 0.7 ( Table 2 ).

In addition, we adopted different procedures to assess the convergent validity of the results, as reported in Table 3 . The values for average variance extracted (AVE) was greater than 0.50 cutoff for all constructs (with the exception of FP , which scored a close 0.47). As for internal consistency, the composite reliability (CR) values ranged from 0.72 to 0.85, which is considered a satisfactory level ( Hair et al. , 2018 ). Altogether, convergent validity was established. Also, discriminant validity was supported since the square roots of the AVE’s for the constructs were larger than the respective correlation coefficients, as suggested by Fornell and Larcker (1981) .

4.3.2 Common method bias assessment

To assess the potential problems in relation to common method bias, we conducted two methods of procedural and statistical analysis. First, following Podsakoff et al. (2003) , in designing the questionnaire and after the pilot study, we took measures to reduce social desirability and ambiguity. We also assured the respondents about anonymity and voluntary participation. Furthermore, we employed “proximal separation” between independent, mediating and dependent variables to reduce the risk of common method bias ( Chavez et al. , 2021 ; Krause et al. , 2018 ).

Second, we adopted Harman’s one-factor statistical test. The exploratory factor analysis results confirmed that five factors had eigenvalues exceeding 1 following the conceptual model. The percentage of variance that corresponded to all five factors was 62.56%, whereas as the highest loading factor accounted for only 31.3% of variance. In addition, we conducted CFA by connecting all items of all constructs into a single factor. The model fit result was poor: χ 2 = 1,120.70, df = 166, χ 2 /df = 6.751, CFI = 0.437, TLI = 0.356, IFI = 0.445, RMSEA = 0.154. Also, we carried out a further test by adding a common latent factor to the constructs of the research model. The CFA model fit was slightly changed (ΔCFI = 0.006, ΔTLI and ΔIFI = 0.007). The marginal difference indicates that common method bias is not a concern in our data ( Chavez et al. , 2021 ). Based on the results of both procedural and statistical analysis, we confirmed that common method bias was not an issue in our research data.

4.4 Results

We used structural equation modeling (SEM) to test our hypotheses in AMOS 27, and the overall fit was acceptable (χ 2 = 314.995, df = 297,83 χ 2 /df = 1.850, CFI = 0.916, TLI = 0.902, IFI = 0.918, RMSEA = 0.059). We tested the mediation paths by using a boot strapping approach, including 5,000 bootstrapped samples and 95% confidence intervals ( Wang and Sarkis, 2017 ). The findings show that the path from SI to MF (PC = 0.387, p < 0.01) and MC (PC = 0.326, p < 0.01) is positive and significant. Also, the paths from MF to FP (PC = 0.190, p < 0.05) and from MC to FP are both positive and significant (PC = 0.179, p < 0.05). The indirect effect of SI on FP through the mediation roles of MF (PC = 0.071, p < 0.05) and MC (PC = 0.060, p < 0.05) were significant. The relevant p -values and path coefficients indicate that the indirect effects from SI to FP through MF and MC are significant, while the direct effect from SI to FP is not significant. Thus, the relationship between SI and FP is fully mediated by MC and FP. Accordingly, the findings support the two mediation hypotheses of H1 and H2 ( Table 4 ). The mediation test results reveal that the effect of SI on FP is channeled through the internal capabilities of MF and MC. Hence, to improve FP, manufacturing firms cannot solely rely on increasing integrative activities with their key upstream suppliers (SI), but they should also consider increasing their internal capabilities (MF and MC). Furthermore, to test the moderating effects of IO, we considered the interaction of IO with MF and MC, respectively. Interestingly, the results show that the interaction effect of MF and IO is negatively significant (PC = –0.161, p < 0.05); hence, H3a is not supported. Therefore, IO negatively moderates the relationship between MF and FP. On the other hand, considering that the standardized beta coefficient is significant and positive (PC = 0.146, p < 0.05), H3b is supported ( Table 5 ). Hence, IO positively moderates the path from MC to FP.

5. Discussion

5.1 theoretical implications.

Our theoretical contributions are multifold. First, by taking an ROT perspective, we delineate how leveraging bundled resources, and capabilities could lead to competitive advantage ( Sirmon et al. , 2011 ). In this regard, we conceptualized and empirically tested the specific capability configurations of SI with MF and MC for competitive advantage. Theoretically, we have contributed to the literature by proposing a unique configuration of three types of capabilities of internal production related capabilities, supplier facing capability, the strategic orientation of firm toward embracing innovation, and how firms could develop competitive advantage by orchestrating such configuration. The empirical support for the full mediation effects show that the positive impact of SI on FP is only realized if manufacturing firms also have internal manufacturing capabilities such as MF and MC. This finding provides new insights to the literature because the prior work, such as Swink et al. (2007) with apparently contradictory findings, may have suffered from a narrow theoretical conceptualization. The ROT perspective has brought the focus on how the strategic resources can be configured into a complementary combination of capabilities. For instance, integrating inbound and outbound flows of goods with suppliers, allows firms to improve their capability to adapt production volumes, range and variety, which, in turn, could contribute to superior competitive position or customer service levels. In fact, bundling and synchronizing interorganizational capabilities allow firms to create value for customers by problem-solving or need satisfaction ( Sirmon et al. , 2007 ; Zacharia et al. , 2011 ).

Second, at a broader scale, we contribute to the extant literature on integration in contemporary SC’s. Specifically, we highlight the strategic importance of integrative practices with suppliers in achieving superior performance ( Droge et al. , 2004 ). We engage in the overall debate in the SCM literature regarding the positive and negative performance impacts of integration ( Prajogo and Olhager, 2012 ). Our findings indicate a mediated relationship between SI and FP, which is in line with a noticeable body of literature ( Amoako-Gyampah et al. , 2020 ). Our results further underline the significant role SI plays in enhancing internal and customer-facing capabilities of MF and MC. Also, SI may involve facilities in distribution, transportation or warehousing ( Chen and Paulraj, 2004 ). From an ROT point of view, pooling or establishing a portfolio of such resources with key suppliers could be crucial in explaining how they lead to competitive advantage ( Malik et al. , 2021 ). In fact, suppliers have a critical role in bundling and leveraging resources, and, in turn, how firms implement their strategies to gain sustainable competitive advantage ( Hitt, 2011 ). In line with prior research ( Prajogo and Olhager, 2012 ), we further stress that seamless integration with suppliers and acting as a unified entity in logistics processes or resources, equips firms to have higher MF and improve their MC capability; both key contributors to FP ( Olhager, 1993 ).

Third, we reflect upon the notable, yet relatively under-researched, role the strategic orientation of firms plays in realizing and capitalizing on capabilities in the SCM literature ( Baker et al. , 2022 ). We use CT to explain how IO can moderate the way MF and MC translate into FP. Interestingly, our results indicate the dual and contrasting impact of IO, accordingly. On the one hand, we found that the effect of MC on FP is contingent on the IO of firms. This implies that fostering a supportive culture for innovative ideas, strengthens the ability of manufacturing firms in realizing the benefits expected from MC initiatives. We argue that this may be due to the natural complementarity between IO and MC. Since firms with higher IO have a better inclination in succeeding in developing and implementing new ideas, products, processes or systems ( Hurley and Hult, 1998 ), presumably, they can expect superior success in capitalizing on MC. For instance, firms with higher IO may be more inclined to applying digital technologies and tools – including those within the Industry 4.0 framework – which support MC. The developments in digital technologies, and the resulting transformation, are believed to further contribute to the “paradigm shift” in MC ( Kim and Lee, 2022 ). The ample literature suggests that digital tools are extremely valuable in connecting with customers, particularly with involving them in the processes, offering further variety and increasing the sense of belonging and attachment, and hence increasing satisfaction ( Jafari et al. , 2015 ).

On the other hand, contrary to our initial expectation, IO negatively moderates the MF–FP relationship. Therefore, it appears that higher IO is counterproductive in firms prioritizing MF. In other words, cultivating a culture which is overly receptive to new ideas ( Hurley and Hult, 1998 ; Chen et al. , 2009 ), apparently could incur higher complexity. Meanwhile, there is consensus in the literature that simplicity and discipline are key to flexibility ( Fogliatto et al. , 2012 ), which may juxtapose the notion of IO, especially in its extreme. From a different angle, IO is highly associated with the market orientation of firms ( Grinstein, 2008 ). Following the lines of Salvador et al. (2020) , we argue that new ideas must be aligned with the solution designed to serve customers, especially given that any flexible system has a threshold beyond which its performance deteriorates. Based on this, we posit that under circumstances of high IO, MF begins to lose its effectiveness and efficiency. For instance, since IO may involve seeking new resource development and deployment ( Hurley and Hult, 1998 ), it may impair the performance of flexible systems in the way that the alignment with market requirements would diminish (e.g. due to higher costs, lower quality or longer lead-times). This could be further supported in accordance with the findings of Simpson et al. (2006) , who underline the possible negative role of IO in relation to product failures, job stress or increased costs. From a different perspective, our moderated model may imply that manufacturers operate separate organizational units focusing on flexible production operations, and innovation/R&D, which may increase operational and coordination costs ( Yu et al. , 2020 ). Therefore, based on the CT, we maintain that firms should find a fit between their strategic orientation and capabilities to achieve competitive advantage (see also Aslam et al. , 2020 ; Baker et al. , 2022 ). This contributes by highlighting the contexts in which best practices in SCM research can be expected ( Sousa and Voss, 2008 ). Specifically, we further engage in the call to elaborate on the contingent factors in flexibility research ( Ketokivi, 2006 ). Moreover, we draw attention to addressing the interplay of the strengths and weaknesses of capabilities in achieving competitive advantage ( Sirmon et al. , 2010 ).

5.2 Managerial implications

The above theoretical contributions also have strong managerial implications. Most importantly, we draw the attention of managers on how to bundle firm capabilities into complementary configurations to create a sustained competitive advantage and to consider the contingencies of the relevant organizational factors ( Hughes et al. , 2019 ). Manufacturing firms pursue different strategies to remain profitable and competitive. Some capitalize on integrating processes with suppliers through establishing shared understanding and investment in both physical and cyber systems, which is regarded as a desirable attribute for cost reduction, quality improvement and new product development. On the other hand, some invest heavily in manufacturing systems that are capable to respond quickly and efficiently to market dynamism, including variations in volume and mix of products, but also increasing customer demand for MC. While both are essential, the literature highlights the isolated operationalization of such efforts as the result of asynchronistic nature of manufacturing and procurement functional roles ( Wiengarten et al. , 2019 ; Won Lee et al. , 2007 ). We emphasize that the investment in developing both internal and supplier facing capabilities (SI) should not be absorbed independently; rather, an orchestrated effort across functional areas is required to maximize the expected outcomes. Recognizing the link between SI and internal manufacturing capabilities could also overcome “silo mentality,” a well-known issue within manufacturing environments. With the emergence of SCM, firms are recognizing the value of streamlining and aligning upstream logistics processes with their internal production activities to develop competitive advantage. We stress the harmonizing role of SC managers to convene and leverage SI to manufacturing capabilities and the consequential performance outcomes.

Furthermore, we investigated how the relationship between internal manufacturing capabilities and FP is contingent upon the existence of innovation culture and supporting environment. Promoting innovative thinking and creativity has become a key practice within manufacturing ecosystems. Specifically, IO is known as an indicator of firm behavior toward the development of innovation-enabling competencies related to resource allocation, technology, employees, operations and markets ( Siguaw et al. , 2006 ). In resource-constrained environments, IO is known as a desirable organizational attribute that promotes creativity, leading to new forms of resource mobilization and solutions. Relevant to the context of this research, IO could act as an effective catalyzer for the transformation of internal manufacturing capabilities into FP. For example, innovative manufacturers may identify new methods to minimize machine setup and down times when accommodating for a different volume and mix of products demanded by customers, which could be a source of reduced labor and machine-related expenses. Similarly, to address the operational challenges of MC, creative manufacturing workforce could observe and seize opportunities in minimizing the required efforts by identifying the right configurations between product design, manufacturing processes and systems functionalities. From a managerial perspective, however, management support accompanied with appropriate incentive and risk sharing mechanisms are prerequisites to create such innovation-enabled culture.

Previous studies have highlighted that innovation could act as a “double-edge sword”. Manufacturing environments are known for their deadline-oriented and process-intense attributes. Therefore, to create a change culture in an industry where productivity gains were traditionally defined through standardization, innovation must be defined through a synchronized people-process-technology approach.

Finally, with the development of modern technologies, especially those within the framework of Industry 4.0, MC can be achieved by involving other downstream SC actors, including the consumers (e.g. via 3D printing or artificial intelligence). For instance, machine learning could have high potential for tackling the major challenges in MC, namely, production planning and scheduling. As such, sophisticated demand forecasting and marker estimation techniques could be applied to plan even without knowing future customer requirements ( Kim and Lee, 2022 ). Moreover, our study could have implications for managers in making a strategic choice between MF or MC capabilities in achieving competitive advantage, especially, if they are considering fostering an innovative culture within their firm. This could be notably beneficial for SMEs, which have relatively limited resources to invest, as opposed to their larger counterparts. Therefore, given the complexity in contemporary global SC’s, such indications could be valuable in practice to tackle “causal ambiguity” and formulate decisions ( Sirmon and Hitt, 2009 ).

6. Concluding remarks

In this research, we used ROT to explain the mediating effects of MF and MC on the SI–FP relationship. As we found support for full mediation in both cases, we contend that to effectively leverage integrative activities with upstream suppliers, manufacturers may consider capitalizing on MF or MC capabilities. Hence, our study addresses the mixed results from prior research regarding the performance outcomes of SI. Furthermore, we applied CT to shed light on the contingent effects of IO on the MF–FP and MC–FP relationships. Our findings reveal that while IO positively moderates the latter relationship, it appears to negatively impact the former. Therefore, we contribute to the literature on the role of strategic orientations of firms in configuring and leveraging capabilities ( Aslam et al. , 2020 ; Baker et al. , 2022 ). The results of our study provide insightful implications for decision-makers regarding prioritizing capabilities and fostering an innovative culture in their organizations.

Despite this, we believe there are still promising directions for future research which were not covered within the scope of this study. First, our conceptualization only considered integrative capabilities with upstream SC actors. Future studies could consider other dimensions of SC integration (i.e. customer or internal) to investigate whether the findings remain true regarding orchestrating these capabilities with MF and MC. Second, we acknowledge the importance of the trade-offs in optimizing manufacturing capabilities and strategizing. For instance, customer value is intrinsically influential in whether or not standardization or MC should be considered ( Shao, 2020 ). In this regard, we encourage complementary studies to explore the discrepancies related to the mis-fit of MF and/or MC considering the product type or other determining factors. Third, future studies could consider other mediating capabilities (e.g. responsiveness and agility) or their synergetic effects, in the SI-FP relationship. This could be of interest given the recent technological developments in contemporary manufacturing. As digital technologies evolve, the resulting transformation would be an attractive research area in manufacturing capabilities, especially in relation to enablers such as human-robot interaction, virtual reality and machine learning ( Kim and Lee, 2022 ; Suzić et al. , 2018 ). Fourth, other dimensions of FP (e.g. financial performance) can be incorporated into the conceptual model to provide a different picture of competitive advantage. Fifth, future studies could consider more specificity in the type of innovation performance (e.g. incremental/disruptive, product/process) could further delineate the role of other strategic orientations of firms and to capture their complementarity effects. According to Chavez et al. (2021) , the strategic orientations of a firm can lead to superior synergetic effects on realizing competitive advantage. For instance, the role of SC orientation as a facilitating mechanism to support resource orchestration can be an interesting arena for investigation. On a different note, the possible negative role of strategic orientations is worthy of further exploration. Based on our findings and the work of Simpson et al. (2006) , firms should not always expect positive outcomes from IO. Also, while we used firm as our unit of analysis, the role of SC managers for resource orchestration comes with research value in future. Moreover, we acknowledge the importance and relevance of digital technologies in supporting and enabling innovative SC and manufacturing capabilities. Hence, we suggest future studies explore the symbiosis interplay between digital orientation and IO within manufacturing organizations. Furthermore, such digital advancements along with the blurring of boundaries among SC actors, could provide opportunities for downstream players, such as retailers, to consider flexibility and MC ( Jafari et al. , 2022a ). Moreover, there exists great potential in exploring the leveraging aspect of MF and MC capabilities in specific sectors within the manufacturing industry via in-depth qualitative case studies. Also, the lack of consensus in operationalizing manufacturing capabilities, underscores the potential for purifying or further developing the measures ( Pérez-Pérez et al. , 2018 ; Liu et al. , 2021 ). Finally, our research did not include external contingent factors. Given the current developments resulting from the pandemic, we encourage future studies to investigate the moderating effects of turbulence, disruption and complexity along SC’s.

Research model

Sample characteristics

Constructs, items and loadings

Reliability and validity tests