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ME August Berger42-45 12/8/03 6:29 pm Page 42

CUSTOMERS
AS CO-DESIGNERS
CHRISTOPH BERGER AND FRANK PILLER EXPLAIN HOW
SPORTS GOODS MANUFACTURER ADIDAS SALOMON MASTERED
THE CHALLENGES OF MASS CUSTOMISATION

T
he international sports shoe industry is buyer. Consumers with increasing purchasing power
a fine example of innovative variant are increasingly attempting to express their
management. The five biggest brands – Nike, personality by means of individual product choice.
Adidas, Reebok, Asics and Puma – no longer As a result, Adidas was forced to create product
do their own manufacturing, but rely on programmes with an increasing number of
strong outsourcing, often to the same variants. This development makes forecasting and
suppliers. Their core competencies are the recognition planning for Adidas more difficult than ever. The
of market trends and the design and development of result? High overstocks, an increasing fashion risk,
new products. Extensive market research activities, an enormous supply chain complexity, and the
lean contract manufacturing systems, sound necessity to provide often large discounts to get rid of
forecasting skills, and good supply chain management unwanted products.
along with a strong brand management are seen as the Adidas realised that implementing made-to-order
preconditions for success. However, even the two manufacturing, instead of made-to-stock variant
market leaders Adidas Salomon and Nike are facing production, could become a promising option to
problems. New fashion labels are attacking their brand manage the costs of variant explosion and broad
names, and consumers are demanding high-quality product assortments. Adidas’ management board
shoes for lower prices. decided to head towards mass customisation (MC).
The programme development started in the mid-
SUPPLY CHAIN COMPLEXITY 1990s, resulting in the mass customisation product
Adidas Salomon AG (Adidas), with its wide assortment range mi Adidas. It was launched in test markets
of product lines, is challenged by an increasing in 2001, and introduced, on a wider scale, in 2002.
individualisation of demand. There is a tendency The programme provides consumers with the
towards an experience economy, a design orientation, opportunity to create unique footwear to their exact
and, most importantly, a new awareness of quality personal specifications in terms of fit, function and
and functionality that demands durable and reliable design in specialised retail stores or at selected
products corresponding exactly to the needs of the events. The shoes are offered in selected markets

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Mass customisation

world wide at a price that is about 30% above the price


MC AND MASS PRODUCTION ARE
of an in-line (standard) product. All shoes are made-to-
order at an Asian factory, and the delivery time is in the NOT CONTRADICTORY THEY ARE
region of three weeks.
MC can be seen from the Adidasperspective as an
COMPLEMENTARY
approach to improve both its operational performance
and its competitive position by providing higher place in close interaction between the customer and
customer value. From market research studies and the supplier. Here, the capabilities of the solution
customer surveys we know that consumers love the space from the first stage are turned through adequate
system, and even make appointments to buy shoes. configuration tools into a specific customer order.
Other benefits to Adidas are outlined in the box below. This process is called the elicitation of a mass
However, these benefits come at a cost, as MC also customisation system. The supplier has to interact
brings a number of challenges. with the customer to obtain specific information
to define and translate the customers needs and
BUILD YOUR OWN SYSTEM desires into a concrete product specification. However,
Selling an MC pair of shoes requires information and instead of just listening to the customer, in many
co-ordination about the customer specific product cases customers are performing this design
design. The customer and supplier need to be in direct (configuration) activity by themselves on a tool
communication to complete the two-stage process of supplied by the manufacturer. The selling process
product development. turns into a co-design process.
Product architectures and range are fixed during a Integrating customers in the elicitation process
preliminary design stage linking overall company requires a dramatic shift in our perspective of value
strategy to manufacturing capability. Here, the creation. While users and customers have no part
solution space of an MC system is set. within the traditional value chain framework, in a
The second design and development stage takes mass customisation system consumers are getting ➔

BENEFITS OF MASS CUSTOMISATION

● Postponement/negative cash flow: Integrating the they (may), want, through market research, customer
customer offers the opportunity to postpone some integration can lead to open innovation – the
activities until an exact order is placed. The result: a integration of customers into the actively taking part in
negative cash flow. In mass production days, the innovation activities. Co-design platforms allow
company made the product and then the customer consumers to create their own products by themselves,
paid for it. In mass customisation (MC) days, the minimising the fashion risk.
customer pays for the product first and then the ● Innovation leadership: On a global scale, Adidas is
company makes it. Also, made-to-order manufacturing still a mass producer. However, the mi Adidas
instead of made-to-stock largely minimises the risk of programme serves as a main brand building tool for the
forecasting, eliminates distribution stocks, and whole brand. The MC initiative successfully supports the
decreases the fashion risk. performance leadership Adidas has against its
● Increase in flexibility and scalability: Integrating competitors and the flexible system and technologies
customers early into product definition increases the used in the MC system serve as a ‘learning factory’ for
flexibility of a company to react fast to changing market the whole enterprise. New technologies are tested first
trends. Combined with postponement effects, firms can in the innovative and open MC environment before
substitute traditional fashion cycles by a continuous being introduced company wide. In fact MC and
flow of new products and models. mass production are not contradictory, but benefit
● Open Innovation: Instead of asking customers what each other.

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INTERACTION SYSTEMS FOR MI ADIDAS: HOW DOES IT WORK?

Buying MC shoes is quite different from buying colour elements and selects the
standard shoes. First, by means of a foot-scanning preferred material. Customers
system, the customers’ feet are scanned to determine can create an individual
the exact length, width and pressure distribution of embroidered monogram on
each foot. Together with trained fitting experts the each pair of shoes.
clients review the result of the scan. This information, All these steps are performed
combined with personal fit preferences, is entered into with the help of a configuration system, a PC-based
a computer to determine the best-fitting shoe. sales kiosk leading the customer and the sales clerk
Once customers have chosen personalised function through the whole customisation process. The system
and fit, they can test the shoes before heading into the also visualises the results and connects the point of
final design phase. The customer then designs the sale with the fulfilment systems

a new role – they are integrated into the process of availability of adequate manufacturing systems, and
value co-creation. Customer integration is defined as the late implementation of MC approaches in practice
an economic process in which consumers take part in during the late 1990s.
activities and processes that used to be seen as the Initially Adidas focused on getting a customised
domain of the company. Mi Adidas’s customers are pair of shoes produced and delivered, but the
becoming – at least partly – co-designers of their perspective has now turned on communicating and
personal pair of shoes. interacting with the customer. The best and most
advanced fulfilment system is worthless if it cannot
COVER FOR INTERACTION COSTS express its added value to the customer. This is exactly
The elicitation stage has to be performed for every the challenge that mi Adidas and other pioneering
customer and every order, so sufficient information companies of MC are currently facing. While the
systems have to be available to cover the arising following points may appear to be primarily marketing
interaction costs of MC. In consumer markets this related, they are also linked closely with product
interaction often has to be carried out over the development and supply-chain planning.
Internet. However, in the mi Adidas system a scanning Many MC approaches implemented in practice are
process is involved, so a retail-based based on offering a tremendous amount
system is needed for the first pair of CUSTOMERS COULD of variety and choice. But there is still
shoes. Re-orders can be placed easily
via the Internet, saving money for the
EVEN BE ABLE TO only very little understanding about
the perception of choice and the joy or
company, and time and effort for the SUBSCRIBE TO NEW burden of co-design or configuration
consumer. One future option may be experienced by customers, who often
that customers using their shoes
SHOES AT REGULAR have no clear knowledge of what
regularly for sports could even be able INTERVALS solution might correspond to their
to subscribe to new pairs of their needs. At times these needs are not
personalised shoes. even apparent to the customers. As a
Whether the elicitation stage is performed in a result, customers may experience uncertainty or even
retail setting, or solely on the Internet, efficient perplexity during the design process. Uneasiness could
information handling systems are the pin-points also be spawned by the behaviour of the supplier too.
leveraging MC. While flexible manufacturing The newer and more complex the individualisation
machinery has been accessible in many industries for possibilities are, the more information gaps increase.
several decades, systems that can handle the A customer orders from the supplier and often pays in
increasing intensity of information and interaction advance for a product she can only evaluate in a virtual
with consumers have only been available since the form and has to wait days, or even weeks, to receive it.
advent of the Internet. This discrepancy may also These uncertainties can attribute additional, and most
explain the time lag between the long discussion of MC likely hidden, transaction costs. One of the most
starting in the 1970s, that continued alongside the important tasks of the supplier is to ensure that the

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Mass customisation

customer’s expenditure is kept as low as possible, while setting the customisation options and in many cases,
the benefit/value perceived by the customers has to be both steps are performed separately. However, a
clearly delineated. configurator is the premier instrument to balance the
For example, a shop large enough to display all possibilities and the burden of choice in MC. Setting
variants of Cmax.com sport shoes (circa 3.5*1021), an the customisation options has to accompanied by
Adidas competitor, would need 7000 planets the size intense tests of how these options are perceived in
of the Earth, each completely covered with a shop. different configuration systems. Research has shown
But all this choice may lead to information overload, that the perceived quality of a product itself, and that
resulting from the limitations of human capacity to of the entire shopping experience, are closely related.
process information. So what is the optimal degree of Adidas therefore strives for shelf space in high-level
variety and extent of customisation possibilities? outlets for its inline products. In an MC system, the
There is plenty of research and knowledge in the physical store is often dominated by the virtual
industry of developing a modular product architecture environment (of either an Internet configuration
and product families with regard to manufacturing system or the configuration kiosk in a retail-based
and inventory management issues. However, the system), so the individual product is the direct result
perspective of the customer as a co-designer that has to of the process. A mass customiser is offering a solution
be able to use this product architecture is, in most capability, not a product. A felicitous and successful
cases, not considered. There is also limited research on configuration process will therefore have an impact
how to define the optimal extent of customisation. on both process and product satisfaction. Much
attention is needed here to define a corresponding
STEPS TO CUSTOMISATION communication and marketing strategy when
Adidas followed a three-step method to set its implementing MC.
customisation options: Adidas performed intense trial-and-error processes
● Fit: All customisable products are based on to achieve a balanced system (see Panel). In the end,
existing inline products setting the basic product Adidas co-designed the interaction systems together
architecture, which is defined in the case of footwear with its customers by continuously learning
by a ‘last’. The last is responsible for the fit of a shoe. and feedback.
Adidas decided that matching a customer’s feet to an Implementing mass customisation at Adidas
existing library of lasts, insoles and soles with a much showed that mass customisation carries crucial
higher granularity than in the current implications for the design of the whole
mass production system can offer CUSTOMERS OFTEN value creating system. The design of
sufficient fit options. This option is less product-service bundles are most
complex to implement, both in
DO NOT KNOW effective if they fit the customers’ use
manufacturing and sales, than a full WHAT SOLUTION logic, while the design of a business
customisation approach based on a strategy calls for a business logic
customised last. MIGHT MEET adapted to new value constellations.
● Functionality Adidas decided to THEIR NEEDS Organisational structures, through
base its programme on the which strategies are constructed and
performance a sports shoe delivers, so implemented, and the design of tools
being able to offer customisation with regard to and competencies are essential to the performance of
functionality was important. For each shoe, a set of these activities.
insoles, cushioning, and sole patterns was defined and Mastering the challenges of MC will become – and
matched to typical use situations. already is – a key source of competitive advantage
● Aesthetic design options are rather limited as for many companies. Installing the right processes
selecting between hundreds of colours was not and tools for customer interaction has to become one
regarded as beneficial for either the consumer or the of the major capabilities and core competencies of
company. From a brand management perspective the company. Doing so in the course of introducing MC
Adidas’ design department was not in favour of systems may be a good opportunity to counterbalance
offering rather unusual colour definitions which the expenditures and implementation costs by offering
may spoil the brand image (just think of a pink football more value for consumers through customised
boot). So consumers can decide between a few style products and services.
options only. To increase the emotional value of the
product, however, it is possible to ‘sign’ each shoe with Christoph Berger is director of mass customisation at
a self-selected name, word or number. Adidas Salomon AG, Herzogenaurach, Germany.
A very important development process, when Dr Frank T. Piller is head of the TUM Research Centre
defining the product architecture, is the design of the on Mass Customisation and Integration, TUM Business
interaction system. It has to go hand in hand with School, Munich, Germany

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