Identifying potential contributions of lean production to

business model evolution towards mass customization in the wood furniture industry

Matheus Pinotti Moreira – Ph.D. CandidateSophie D’Amours – Research DirectorRobert Beauregard – Research Co-directorRiadh Azouzi – Research Co-director

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MCPC 2007Boston, USA, October 07-09, 2007

The Furniture Industry In Quebec

• Important manufacturing sector;

• Current situation is very difficult;

• Furniture manufacturers believe that mass

customization is a promising alternative to regain

competitiveness.

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MCPC 2007Boston, USA, October 07-09, 2007

Retailing Distribution Packaging Finishing Componentmanuf.

Assembling Supply

Sale-2O

Ship-2O

Pack-2O

Finish-2O

Assembly-2O

Make-2O

Supply-2O

Popularizing

Engineering Design

Engineer-2O

Design-2O

Configuring MonitoringAdjustingServicingTailoringAccessorizingVarietizing

The challenge of mass customization for the wood furniture sector in Quebec (Lihra et al., 2005; Poulin et al., 2006)

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MCPC 2007Boston, USA, October 07-09, 2007

Why Toyota as a reference?

• Similar radical complex change

Jan. 2005J.D. Power Customer Satisfaction Alemagne 2005

OEM-Supplier Relationship Survey 2005 Automotive News Europe/SupplierBusiness.com

20001940 1950 1980 19901960 1970

Popularizing Varietizing + Accessorizing + Configuring

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MCPC 2007Boston, USA, October 07-09, 2007

Research questions

1. What are the common competencies of lean production and mass customization?

2. What are the specific competencies needed for mass customization in the wood furniture industry?

3. What are the opportunities and barriers for the development of these competencies using lean production as a reference?

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MCPC 2007Boston, USA, October 07-09, 2007

Competencies for mass customization01. Employment of product modularity

02. Integration of client information

03. Application of product configuration systems

04. Information and communication management aligned with IT systems

05. Management of product variety costs

06. Flexible production scheduling

07. Sales & Marketing integration with other functions

08. Efficient supply chain management

09. Efficient development of new products

10. Efficient fabrication and assembly

11. Coordination with retailing network

12. Flexible logistics and handling of final products

13. Utilization of a structured problem solving methodology

14. Continuous learning and retention of employees

Moser (2005)

Anderson (2004)

Muda & Hendry (2002)

Da Silveira et al. (2001)

Alford et al. (2000)

Feitzinger & Lee (1997)

Kotha (1996)

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MCPC 2007Boston, USA, October 07-09, 2007

Lean production & Mass customization01. Employment of product modularity

02. Integration of client information

03. Application of product configuration systems

04. Information and communication management aligned with IT systems

05. Management of product variety costs

06. Flexible production scheduling

07. Sales & Marketing integration with other functions

08. Efficient supply chain management

09. Efficient development of new products

10. Efficient fabrication and assembly

11. Coordination with retailing network

12. Flexible logistics and handling of final products

13. Utilization of a structured problem solving methodology

14. Continuous learning and retention of employees

Correspondent on lean productionLiker (2004)

Shimizu (1999) Fujimoto (1999)

Shimokawa (1987)...

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MCPC 2007Boston, USA, October 07-09, 2007

Selection of participants

1) What is the competitive advantage of

the competencies?

2) What is their development level in the

industry?

Researchers

Participants

Answers and commentsFinal report

Analysis & synthesis

Analysis & synthesis

1st round 2nd round

Delphi Technique

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MCPC 2007Boston, USA, October 07-09, 2007

Is the competence… Consequences on competitiveness

Rare? Hard to imitate?

Hard to substitute?

No - - Competitive parity

Yes No -Temporary competitive advantage

Yes Yes No Competitive parity

Yes Yes YesDurable competitive advantage

Median for each question:> 3 yes< 3 no

= 3 verify μ

Perceived competitive advatange

Adapted from: Barney (1992)

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MCPC 2007Boston, USA, October 07-09, 2007

R1 R2 R1 R2 R1 R21. Employment of product modularity 0.35 0.272. Integration of client information 0.27 0.363. Application of product configuration systems 0.35 0.284. Information and communication mgmt. aligned with IT systems 0.36 0.355. Management of product variety costs 0.19 0.176. Flexible production scheduling 0.40 0.297. Sales and Marketing integration with other functions 0.32 0.208. Efficient supply chain management 0.52 0.399. Efficient development of new products 0.20 0.2010. Efficient fabrication and assembly 0.31 0.2511. Coordination with retailing network 0.26 0.2012. Flexible logistics and handling of final products 0.24 0.2013. Utilization of a structured problem solving methodology 0.34 0.1814. Continuous learning and retention of employees 0.29 0.19

Temporary ParityCompetitive advantage

Durable

Ratio Σσ/Σμ

If < 0.3, acceptable consensus

Perceived competitive advatange

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MCPC 2007Boston, USA, October 07-09, 2007

Perceived competitive advantage

Durable advantage

Temporary advantage

Competitive parity

Current level of developmentWeak

developmentAverage

developmentElevated

development

7. Sales & Marketing integration with other functions

9. Efficient development of new products

12. Flexible logistics and handling of final products

2. Integration of client information

11. Coordination with retailing network

10. Efficient fabrication & assembly

1. Employment of product modularity

4. Information and communication mgmt.

13. Utilization of a structured problem

solving methodology

14. Continuous learning & retention

of employees

6. Flexible production scheduling

8. Efficient supply chain management

3. Product configuration system

5. Management of product variety costs

Commercialization & Marketing

New production & management technologies

Furniture enterprise of the future project

Human capital

Business models

Perceived competitive advantage

Durable advantage

Temporary advantage

Competitive parity

Current level of developmentWeak

developmentAverage

developmentElevated

development

7. Sales & Marketing integration with other functions

9. Efficient development of new products

12. Flexible logistics and handling of final products

2. Integration of client information

11. Coordination with retailing network

10. Efficient fabrication & assembly

1. Employment of product modularity

4. Information and communication mgmt.

13. Utilization of a structured problem

solving methodology

14. Continuous learning & retention

of employees

6. Flexible production scheduling

8. Efficient supply chain management

3. Product configuration system

5. Management of product variety costs

Commercialization & Marketing

New production & management technologies

Furniture enterprise of the future project

Human capital

Business models

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MCPC 2007Boston, USA, October 07-09, 2007

New competencies suggested

• Cooperative network

• Development of new markets and offers

• Change management

• Reverse logistics

• Polyvalent employees

• Management of individual competence profiles

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MCPC 2007Boston, USA, October 07-09, 2007

Conclusion and further questions

• Lean production can contribute much more to mass customization:• From order to delivery From concept to commercialization

• Knowledge front-loading, heavy-weight product manager, revenue cost management, set-based CE,...

• Complementary references needed: • Delivery services• Product configuration systems

• Limits: Researchers’ point of view vs. Industry point of view

• Is a structured problem-solving methodology important for mass customization ?

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MCPC 2007Boston, USA, October 07-09, 2007

THANKS FOR YOUR ATTENTION!

QUESTIONS?