Center of discussion in this paper is National Bicycle Industrial Company as a leading manufacturer of bicycles. It mass customizes bicycles, wherein it produces bicycles, which fit exactly to a customer’s weight and color preferences. Their key to success in this arena is through the use of computer-aided design and computer integrated manufacturing, along with the maintenance of a customer database. The company management had decided to use a revolutionary and innovative production system, which they named as the ‘Panasonic Order System’. This system made use of state-of-the art techniques in bicycle production through a combination of robots, computers and skilled workers. Thus, the system was an amazing blend of human skills and advanced technology. The purpose of implementing mass-customization strategy was to increase the company’s production of high-value added products. The company wanted to give customers the opportunity of ordering a bicycle according to their specific requirements by giving these requirements, directly to the factory. They wanted to implement a system which set aside their Panasonic brand from other similar brands in the market. The mass-customization strategy was first conceived by the company’s managing director. He felt that if women could custom order their clothes, why couldn’t bicycles be produced in the same way. This idea came at a time when the bicycle industry was seeing very sluggish sales, and the price that a customer was willing to pay for a bicycle was dropping. Even senior members of the company felt that implementing the idea would be a risk. Thus, this idea was brought out and implemented amidst a lot of skepticism of whether the idea would work in the first place.
However, the company's Managing Director went ahead with the idea of implementing the idea of mass-customization. This was because he wanted to increase the standard of high value added products manufactured by the company. In order to implement this, he wanted the company to produce bicycles which catered to the needs and likings of the customer.
They were faced with the problem about the implementation of their strategy of mass-customization. If they wanted to put their idea of mass-customization into effect, the requirement was to have a very efficient system of production and delivery. This system should be in a manner to clearly differentiate their high-end Panasonic brand from other brands and serve the need of bringing out a variety in product range into the market.
The mass-customization concept was initiated by the company's director by grouping together senior members of the management team, a designer, few process engineers and some highly skilled and experienced line workers. After a few weeks, they started a pilot plant in their empty warehouse and by July 1987, they converted this plant into a fully running and operational plant. The new system they had installed to handle the task of mass-customization was the Panasonic Ordering System (POS).
The main operational risk regarding the system is to make it work efficiently to capture the orders of the customers by catering to their ideas. The idea of the customer should be conveyed efficiently to the factory to produce a bicycle according to specifications of the customer.
In order to do this they placed the ordering system in every Panasonic bicycle dealer showroom. Here, a customer would walk in to place the order and the dealer would use a unique measuring instrument to capture the physical measurements of the customer such as his or her frame size, length of the seat post, the position for the handle bar and the extension of the handle bar stem. Furthermore, the customer was allowed to select the color and model type of the bicycle and other features of the bicycle. The information collected was sent by fax to the control room of the company's custom factory.