58

Int. J. Mass Customisation, Vol. 3, No. 1, 2009

The effects of mass customisation on productivity

Arzu Alvan
Department of Economics
Yasar University
Bornova, Izmir, Turkey
Fax: +90 232 461 4121
E-mail: arzu.alvan@yasar.edu.tr

Ali Orhan Aydin*

Department of Industrial Engineering
Yasar University
Bornova, Izmir, Turkey
Fax: +90 232 461 4121
E-mail: aliorhanaydin@gmail.com
*Corresponding author
Abstract: In the last two decades, demanding customers put manufacturing
industries under the pressure of customised product orders. This market
condition forced manufacturers to follow and adopt a customer-oriented
philosophy. Therefore, some manufacturing industries began to change their
business processes accordingly to actualise mass customisation systems. It can
be inferred from this that such a big technical change must have a great impact
on productivity. Therefore, this study aims to analyse the effects of the Mass
Customisation (MC) concept on productivity.
To measure the productivity change in the manufacturing industries of
Turkey, the Two-Deflator Growth Accounting Approach is applied. In this
frame, MC and Mass Production (MP) industries were compared according to
their value-added, capital contribution, labour contribution and productivity.
The findings contradict the current literature and imply that the price of
customised products is higher. In this frame, to enhance productivity and lessen
the price, some suggestions that are related to human quality upgrades and
technical changes are provided.
Keywords: productivity; mass customisation; mass production; Turkey;
two-deflator growth accounting.
Reference to this paper should be made as follows: Alvan, A. and Aydin, A.O.
(2009) The effects of mass customisation on productivity, Int. J. Mass
Customisation, Vol. 3, No. 1, pp.5881.
Biographical notes: Arzu Alvan is currently working as a Lecturer at
the Department of Economics of Yasar University. She is undertaking
her PhD study at the Department of Economics at Eastern Mediterranean
University. Her research areas of interest cover productivity, growth,
inflation and development. She has several publications in both national and
international journals.

Copyright 2009 Inderscience Enterprises Ltd.

The effects of mass customisation on productivity

59

Ali Orhan Aydin is a Doctor of Philosophy student at the Department of

Computing of Macquarie University. His research areas of interest include
artificial intelligence, production planning and scheduling, mass customisation
and information communication technologies.

Introduction

The major aim of most production systems is to make profit. Therefore, they produce
goods and services while trying to solve a dual problem at an optimum point where
objective is both minimising costs and maximising profit due to competitive market
conditions (Hounshell, 1984). These conditions force manufacturing firms to apply new
management and planning approaches to survive and gain competitive advantage.
Before the 1970s, products were rather expensive; therefore, manufacturing systems
try to find ways to become mature. This quest led to the acceleration in the application of
the Mass Production (MP) concept (Pine and Davis, 1999). MP systems are able to meet
increased demand through standardised processes and affordable products in a reasonable
time period (Womack et al., 1990).
After this progress, market conditions begin to change rapidly. By the help of
emerging Information Communication Technologies (ICTs), new concepts are enabled
to be implemented. The idea behind employing the applications of ICT, is to enhance
productivity (Notaro, 2003). Further improvements in ICT led to the emergence of
Flexible Manufacturing Systems (FMSs) which integrate various technologies. FMSs
help to improve productivity and have the ability to quickly adapt to changing conditions
(Buzacott and Yao, 1986).
Next decade, markets become highly diversified and global. In response to
environmental pressures, manufacturers start applying the new concept of lean
production in the frame of MP. The major aim for following this concept is to enhance
performance further. Afterwards, markets have become increasingly characterised by
turbulence which leads to a situation in which lean practices are insufficient
(Yusuf, 2002).
Unexpected change became the key factors for remaining competitive; therefore,
survival requires adoption of new practices. The need for better methods to rapidly
and cost-effectively operate production facilities and meet demand led to the emergence
of the concept of agile manufacturing (Gunasekaran, 1998). This approach can be
defined as the capability of a manufacturing system to react quickly and effectively in a
competitive environment which is unpredictable in advance.
In the last two decades, emerging factors which include high-quality requirements
and demanding customers begin to affect market conditions (Nagalingam and Lin, 1999).
Therefore, market started to be driven by customer-designed products which increase
competition among manufacturing systems (Goldhard, 1992).
This pressure and the competitive market conditions cause manufacturing systems
to seek solutions to survive and gain competitive advantage. Due to these changes, some
manufacturing systems start supplying customised customer orders. Therefore, at the
end of the 1980s, some manufacturing systems are obliged to follow customer-oriented
philosophy (Davis, 1989).

60

A. Alvan and A.O. Aydin

As a result, Davis (1989) coins Mass Customisation (MC) concept as the ability
to provide products and services which are individually designed for each customer.
He adds that it can only be achieved through high process agility, flexibility and
integration (Davis, 1989). Da Silveria et al. (2001) explain MC as an organisational
structure which uses information technology through flexible processes to deliver a wide
range of products and/or services to meet particular customer needs.
MC enables manufacturers to satisfy specific needs of customers by customising
products (Romanowski and Nagi, 2002). To ensure meeting individually customised
demand, in recent years, the producers adopted the concept of MC. By applying this
concept, textiles, candy, automotive, aviation and medical equipment industries become
an instance of MC (Romanowski and Nagi, 2002; Bertrand et al., 2000).
While converting business processes according to the MC concept, systems
need to rebuild their information systems to handle data related with customised
products. Because of this, MC increases complexity and diversity of consumer products
(Da Silveria et al., 2001). Especially, customer orders led to an explosive number
of product variations, which not only had many commonalities but also significant
differences (Aydin and Gungor, 2005). Handling information related to materials and
components becomes a complex issue with the increasing variability (Olsen et al., 1995).
Therefore, when a manufacturing system changes its business processes to implement
the MC concept, it gives result in more complex processes. To handle complex processes,
experts utilise applications of ICT. However, current applications lack in meeting the
requirement of MC systems in the following areas (Aydin and Tunali, 2007a):

receiving customised product orders from customers

defining bills-of-materials of customised products and their variants

planning and scheduling efficiently

tracking and routing materials

managing relations with suppliers.

Since current applications fail in meeting these requirements, handling and processing
data require more effort. Therefore, this situation increases time requirements of all
management, planning and activities (Forman and Selly, 2001). In this manner, the cost
of these activities will most probably increase accordingly.
Production companies compete with others on five dimensions: price, quality,
flexibility, delivery and service (Kumar, 2004). It is obvious that MC provides the
manufacturers advantage over two dimensions: quality and flexibility. Besides, it is said
that MC concept has no contributions over delivery, service and price dimensions (Aydin
and Tunali, 2007b).
Bardakci and Whitelock (2004) states that customers are willing to pay more for
customised products, but Levitt (1998) emphasises that people sacrifice their preferences
to achieve quality at lower prices. Therefore, one another major aim of MC is to deliver
an increased product variety to customers in a most cost-efficient way (Jiao and Tseng,
1999). This implies that for customised product manufacturers, productivity is a vital
issue in order to be able to produce in a most cost-efficient way.

The effects of mass customisation on productivity

61

Friedrich and Blecker (2006) assert that MC allows supplying customised demand
while keeping MP cost efficiency. This view is supported by many researchers including
Fogliatto et al. (2003), Kotha (1996) and Kay (1993), all of whom emphasise that MC
enables the delivery of customised products at mass production prices.
Even though these researchers state that manufacturers that apply MC concept
achieve cost efficiency of MP systems, there is no concrete evidence on it. Moreover,
complexity related with handling and processing data should probably cause otherwise.
Pine and Davis (1999) argue that anything that can be processed through ICT can be
customised. This implies that in the near future, more and more producers start changing
their business processes according to MC concept. With this respect, cost efficiency of
MC systems becomes the focus of attention.
Cost efficiency depends on the productivity of the systems. In this frame of reference,
by analysing and comparing productivity of MC systems and MP systems, cost efficiency
of these systems can be evaluated. This is an essential issue; since, manufacturers
also compete with others on price dimension. Therefore, productivity of MC systems
must be analysed and if there are obstacles over efficiency, these obstacles must be
determined and eliminated. This is a vital requirement of MC systems to survive and
gain competition.
In the frame of these references, proposed study addresses analysing and comparing
productivity and cost efficiency of MC Systems and MP Systems. In this frame,
productivity of manufacturing industry in Turkey is analysed between 1992 and 2001.
Turkish manufacturing industry starts adopting the MC concept in the middle of the
1990s; therefore, this period is analysed. To investigate the effects of customer-oriented
philosophy, industries that apply the MC concept and other manufacturing industries
(i.e., MP systems) are analysed separately. Thus, a comparison of productivity in the MC
industries and MP industries become probable.
To evaluate productivity, the Perpetual Inventory Method (PIM) is first applied to
obtain input data related to capital. Because of its ease-of-use, in this paper Two-Deflator
Approach (TDA) is applied to measure productivity. Moreover, TDA is very useful in
analysing different industries separately which is not possible by using other growth
accounting approach.
In view of this scope, Section 2 gives brief information on PIM and literature
review on TDA. In Section 3, empirical findings are elaborated and comparison of MP
and MC industries are explained. Section 4 presents some critiques on the findings and
some suggestions. Section 5 describes further research directions. Finally, the study ends
with conclusion.

Literature review

To measure the productivity of manufacturing systems, growth accounting methodologies

can be applied. First, in 1942, the sources of economic growth methodology or growth
accounting is initiated by Tinbergen (1959). This procedure consists of attributing output
growth to increase in inputs and Total Factor Productivity (TFP) or a residual. Economic
growth, then, is explained by the analysis of the behaviour of its components including
productivity (Robles, 1997).

62

A. Alvan and A.O. Aydin

There are three main approaches used in measuring productivity in the growth
accounting literature:
1

the Traditional Approach (TA)

the Extended Traditional Approach (ETA), which is also called the

Jorgenson method

the TDA.

The TA is proposed by Solow (1956) and Kendrick (1956), and this approach
incorporates only changes in input quantities. Afterwards, Jorgenson (1988) developed
an ETA. This method is based on the theory of production and disaggregates by
several hundred classes of inputs when assessing the contribution of inputs to growth.
Jorgensons approach is much elaborated, but it does not depart a great deal from the TA
because sometimes it fails to consider all changes in the quality of human capital.
Finally, Harberger (1991) puts forward TDA which permits a more complete
assessment of the contribution of human capital quality to growth. This method has its
roots in the theory of capital and TFP is interpreted as real cost reduction which is the
element explaining economic growth (Cepeda, 2000).
TA and ETA growth accounting methodologies require intensive data to examine the
sources of growth. On the other hand, TDA requires less data and gives the same result
with the other two methodologies (Miyajima, 2004). Moreover, among these approaches,
TDA gives an opportunity to analyse each sector separately. Therefore, in the study, this
approach is applied.
One of the major input data of TDA is capital stock. To calculate capital stocks, PIM
is used. With this respect, subsequently brief information on measuring capital stock is
given. In the following subsection, a review on TDA is given.

2.1 Perpetual inventory method

Once the variables are expressed in real terms, capital stocks can be estimated by using
the PIM. This method assures that the contribution of the capital stock to Gross Domestic
Product (GDP) growth is proportional to the capital stock itself. By using this data the
capital stock at the end of any given year can be calculated by using following formula
(Robles, 1997):
K i (t ) = (1 i )K i (t 1) + I i (t )

(1)

where:

i = depreciation rate of i-th sector

I i = investment that is made at the i-th sector.

So, the end of period capital stock is equal to the beginning of period capital stock minus
the depreciation plus investment. To find the initial capital stock, it can be assumed that
in the past the capital stock grew at the same rate as the real sectoral GDP (gi). In this
respect, the following formula can be used:

The effects of mass customisation on productivity

K i (t )
= gi , t 0.
K i (t 1)

63
(2)

By using these equations, capital stock which is the input data of TDA can be obtained.

2.2 Two-deflator approach

As stated earlier, the TDA approach is based on the theory of capital. There is no
need to construct a production function explicitly. Rather, as it is given in the study of
Cho (2000) the analysis of production is viewed as a social project post-evaluation.
In the TDA method, all the nominal data are transformed into aggregated real values
by either the Consumer Price Index or the GDP Deflator. Harberger (1991) analysed
production under capital theory in his TDA methodology, in this way, as there is no need
for dividing capital into quantity and quality contributions as required under the ETA.
Here, capital is regarded as the amount of savings that remains after meeting expenditures
on consumption and production. One of the main distinguishing factors of the TDA from
other traditional methods is the analysis of the disaggregated human capital contributions
to output growth. In spite of this, labour is analysed in the TDA by taking into account
the wage bill of an industrial sector as crude input. Data for the wage bill in Turkish
aggregate manufacturing sectors for the period of 19802001 are obtained from the State
Institute of Statistics (SIS). In our formulation, the total wage equals the summation of
the wage paid to all classes of labour multiplied by the number of labour hours used in
the sector.
As it is clearly defined earlier in this paper, one of the most distinguishing
characteristics of the TDA is that there is no longer the need for formulating a production
function. Its roots are linked to capital theory. Therefore, the contribution of capital to the
growth of value added is calculated by the help of the following formula:
K it* (r + )K i* K i*
=
* .
Yit*
Yi*

Ki

(3)

In the TDA, before measuring residual, the value of output is expressed in real terms
by using a GDP deflator. Since there is no longer the need for constructing production
function, as is depicted in traditional approaches, the real value of GDP can be
divided into two components: labour income (the wage bill) and capital (property)
income. Besides, income from capital stock can be obtained by multiplying the value of
depreciated capital stock with the rate of return.
Y * = W * L* + (r* + * )K *

where:
Y* = Deflated Value Added (DVA)
r* = real rate of return

* = depreciation rate
K* = capital (deflated).

(4)

64

A. Alvan and A.O. Aydin

Here, Y is the real value of output rather than the quantum (Q), and is equal to the
output at the national level. Under the ETA, Qi is measured by applying different indices
corresponding to different types of inputs. Hence, at the firm or industry level, Yi is
different than Qi because it is calculated by a GDP deflator. K*, r* and * are the capital
stock, the rate of return and the depreciation rate of the capital stock series respectively.
By a little manipulation of the Equation (4), the growth of output can be obtained by the
following formula:
Y = W * L* + (r * + * )K * + R*

(5)

where:
R* = Real Cost Reduction (RCR).
Therefore, the residual as a percentage of output under the TDA is obtained by the
following formula (Harberger, 1998):
Ri* Yi
L*
K i*
=
W * i ri* + i*
Yi
Yi
Yi
Yi

(6)

or
*
*
Ri* Yi W * L* L*i *
* K i K i

.
r
=

i
Yi
Yi Yi Yi
Yi K i

(7)

Every class of labour Li is clearly specified under the TDA. There are two main
differences between the traditional approaches and the TDA. First, human capital quality
effect on labours contribution to growth is clearly defined in the TDA. Second, an
analysis of the relative price effect is feasible under TDA, because all the quantities are
expressed in real terms by aggregate price indices as opposed to quantum in traditional
approaches. Hence, the residual in the TDA is also expressed in real terms rather than in
quantum. The only difference between the two equations seems to be the measures of
human capital quality effects on labours contributions to output growth (Robles, 2000).
Unlike in other traditional approaches, there are two deflators that are used in the
TDA: value added (Y) and Net Capital Stock (K) are deflated by a GDP Deflator and
labour income is deflated by a wage deflator which is taken as 2/3 of RGDP per capita. In
order to deflate the output and capital, the following procedure is followed:
Yi*,t =

Yi*,t
Pt*

and K i*,t =

i , k ,t

Pt*

(8)

where:
i = different manufacturing branches
k = different types of capital
P = GDP deflator.
In the TDA method, the total wage bill in sector i, is at the same time equal to the basic
wage (W*) which is multiplied by the number of basic labour units (L*).

The effects of mass customisation on productivity

mj =1Wij Lij = W * Lij

(i = 1,2, n) (j = 1,2, m)

65
(9)

where:
WijLij = wage bill
W*
L

= basic wage
= number of basic labour units

= sector

= labour classes.

Here, L* is a measure expressed in basic units of labour such that a worker who is
represented as L* is attributed with a specified level of human capital skills. For example,
the basic labour units of a doorkeeper at a firm or industrial sector is attributed as 10,
while it is 15 for a blue colour production worker, twenty for a white colour labour
and 50 for an engineer.
W* (basic wage) is the payment made to this basic unit of labour and it is considered
as the second deflator, which is taken as two-thirds of Real GDP per capita in this study.
After defining the basic wage rate W* basic labour units L* can be measured with the help
of following formula:
L*i =

mj=1Wij Lij
W*

(i = 1,2, n) (j = 1,2, m).

(10)

Since disaggregated data are not required for the application of the TDA, the wage bill
here is the aggregated number. Total wage bill for each industrial sector can be divided
into two main segments as the compensation to raw (basic) labour and the compensation
to human capital.
mj =1Wij Lij = W * Li + W * (L*i Li ) = W * L*

(11)

where:
W*Li

= raw (basic) labour

W * (L*i Li ) = human capital.

Change in raw labour would change the total wage bill as shown in the
following formula:
W * L*i = W * L*i + W * (L*i Li ).

(12)

Total wage bill changes due to either change in raw labour or human capital. Human
capital can be divided into two parts as the maintenance component of human capital
(that is, endowing new workers with the existing average human capital in the industry)
and the change in the quality of human capital.
W * L*i = RLC + HCC

(13)

66

A. Alvan and A.O. Aydin

where:
RLC = raw labour contribution
HCC = human capital contribution.
RLC = W * Li

(14)

HCC = HCM + HCQU

(15)

where:
HCM = human capital maintenance
HCQU = human capital quality upgrade.
HCM = (wt w*t )Li

(16)

HCQU = (w*t L*t wt Lt ).

(17)

With the help of these equations, following equilibrium can be obtained:

W * Li = W * Li + (wt w*t )Li + (w*t L*t wt Lt ).

(18)

Traditional approaches to growth measures do not provide sufficient analysis of human

capital quality changes as part of labours contributions to growth. Any change in
human capital quality is attributed to changes in residual in the TA. For instance, if
human capital quality improves residual enlarges.
On the other hand, a change in human capital quality is analysed under several labour
classes in the ETA. By Equation (8), the compensations to different labour classes and
their contributions to output growth can be analysed. The TDA allows us to analyse the
contributions of all types of labour either raw labour or human capital to output growth
after determining the basic labour units L*i . Therefore, effects of human capital quality
improvements can be subtracted from the residual. Labours contribution to growth can
be expressed as the following:
wit* L*it wit* L*it wit* (L*it Lit ) W * L*i L*i
=
+
= * *
Yit*
Yit*
Yit*
Yi Li

(19)

where:
GLC = growth of total labour contribution
GRLC = growth of raw labour contribution
GHCC = growth of human capital contribution,
and
GLC =

Wit* L*it W * L*i Li

= * *
Yit*
Yi Li

GRLC =

Wit* Lit W * L*i L*i

= * *
Yit*
Yi Li

(20)

(21)

The effects of mass customisation on productivity

GHCC =

Wit* (L*it Lit )

.
Yit*

67

(22)

The Human Capital Contribution to Growth (GHCC) can be divided into two
subcomponents. These are formulised as follows:
GHCM =

(wit wit* )Lit (Wt Wt* )Lt Li

=

Yit*
Yt*
Li

GHCQU =

(wit* Lit wit Lit ) W * L*i L*i WLi LI

= * * *
Yit*
Yt
Li
Yi
LI

(23)

(24)

where:
GHCM = growth of human capital maintenance
GHCQU = growth of human capital quality upgrade.
That is, the contribution of Human Capital to the growth of value added is:
(wit* L*it Lit ) (wit wit* )Lit (wit* Lit wit Lit )
=
+
Yit*
Yit*
Yit*
=

(Wt Wt* ) Lt Li W * L*i L*i WLi LI

+ * * *
.
Yt*
Li
Yt
Li
Yi
LI

(25)

As Harberger (1998) mentions in his study on the growth process, growth is not
a homogenous phenomenon. That is, the TFP growth is not occurring at every
manufacturing branch at the same time. Most of the time, it is concentrating in some
manufacturing branches taking positive numbers which are called by Harberger as the
winners and the rest are losers. This statement contradicts the view of Solow who
states that technological progress which is an attribute to growth, is evenly distributed in
all sectors of the industry (Solow, 1957). Solow assumes that the change in technological
progress shifts the production function Y = A(t)f (K, L), A(t) to an upper level. Thus, the
cumulative effect of technical change occurs evenly in every sector of the industry
(Harberger, 1998).

Comparing productivity of mass production and mass customisation

In this section of the study, empirical findings are elaborated and by analysing those
findings MP systems and MC systems are compared according to their productivity.
To measure capital stock sectoral investment, data in every period is used. This data is
obtained from the SIS of Turkey (SIS, 2001).
After calculating capital stocks by using PIM, the TDA is applied. To measure
productivity, other required data is gathered from the SIS of the Turkish Republic
(SIS, 2001). Gross National Product (GNP) is obtained from the Central Bank Republic
of Turkey (CBRT, 2006).

68

A. Alvan and A.O. Aydin

Capital data is categorised under six types and these are:

machinery and equipment

transportation vehicles

building construction

land amelioration and the construction of nonbuildings

land

office furniture and equipment.

The corresponding depreciation rates for each type of capital at each sector are obtained
from the Ministry of Finance of Turkey (MoF, 2006). Labour data is analysed under two
types: manufacturing workers and managerial and administrative workers.
Manufacturing industries are classified according to International Standards of
Industrial Codes (SIS, 2001). These codes and descriptions are given at the appendix part
of the study. Moreover, to analyse the effect of MC, industries are categorised in two
groups: MC industries and MP industries. MC industries are explained previously. In the
frame of this reference, the following are the instances of MC:

textiles, wearing apparel and leather (321)

wearing apparel except foot wear (322)

leather products (323)

fabricated metal products (381)

professional and scientific equipment (385).

In this frame, TDA is applied for manufacturing industry of Turkey between the years of
1992 and 2001; since, the MC concept starts effecting Turkish manufacturing industry
between these years. Calculations are made separately for MC industries and the other
manufacturing industries to compare the productivity and analyse how the MC concept
affects it.
After applying TDA, TFP growth rates of industries can be found as it is shown
in Tables 1 and 2. In the first table, the data of industries that follow customer-oriented
philosophy are shown. In the second one, other manufacturing industries TFP growth
rates are given.
Table 1

TFP growth at mass customised industries

Mass customised industries

Industries 1992(%) 1993(%) 1994(%) 1995(%)

1996(%)

1997(%)

1998(%)

1999(%)

2000(%)

2001(%)

321

22,17

14,04

1,62

26,42

33,68

17,47

9,25

20,09

2,08

17,77

322

31,80

51,43

70,08

87,35

107,25

94,27

68,67

112,77

102,69

16,10

323

26,77

912,97 1895,57 2033,95

2412,92

2119,36

1443,32

2015,97

3922,02

2224,38

381

20,91

102,06 852,08 5032,70 16964,34 52420,34 112108,89 310778,98

385

59,80 1065,20 8088,58 54238,77 177372,10 744437,38 2065296,04 4134761,67 22360436,13 32685960,38

Average

32,29

836286,15 1838786,52

429,14 2181,59 12283,84 39378,06 159810,78 435785,23 889537,90 4640148,98 6905393,92

The effects of mass customisation on productivity

Table 2

69

TFP growth at mass production industries

Other manufacturing industries

Industries 1992(%) 1993(%)

1994(%)

1995(%)

1996(%)

1997(%)

1998(%)

1999(%)

2000(%)

2001(%)

12,11

9,08

2,79

9,66

4,53

15,78

3,38

5,81

9,03

8,21

311

13,45

16,09

7,99

12,86

1,35

13,48

5,91

5,14

3,34

0,79

312

9,93

63,79

25,69

7,78

8,59

41,02

18,90

3,17

2,12

14,00

313

1,74

96,89

81,92

38,09

11,93

0,41

50,97

11,16

2,63

32,79

314

4,17

69,46

109,94

91,07

54,95

28,03

32,68

9,70

47,08

29,85

324

7,19

869,30

2088,20

4384,68

5679,33

5855,44

4299,50

5523,71

7846,12

7238,00

331

33,68

275,88

797,11

2170,18

3052,88

3866,12

4347,27

6505,79

8738,72

7113,07

332

57,44

774,14

2178,77

5809,23

8673,76

8459,96

11183,04

15127,65

16755,89

17067,65

341

7,50

161,08

572,82

1246,04

1900,76

4694,49

7302,93

10947,31

16004,31

13853,14

342

29,34

138,86

540,94

1726,24

4522,62

4993,44

6272,77

18806,71

22673,56

25273,73

351

7,75

66,18

296,25

818,21

1712,19

3674,93

5838,80

13191,50

20902,61

21352,12

352

8,17

53,22

275,66

842,22

1880,63

3799,02

5543,74

10908,14

16213,84

22438,27

9260,84

14669,37

18952,73

96757,20 4074690,78

184766,65

353

4,47

33,34

157,24

535,56

1378,57

2505,60

4103,12

354

11,50

181,51

1235,10

4583,60

10902,14

26543,54

44237,86

355

19,71

203,15

1203,83

4377,00

11386,50

28924,37

51660,14

130563,98

291186,72

424536,66

356

18,35

205,53

1229,98

4403,46

10313,87

24186,08

47661,75

100159,70

204865,98

300259,52

361

8,97

399,82

2374,25

8315,56

31863,86

94618,54 347103,58

654345,76 1510098,08 2404987,96

362

18,52

286,43

2013,25

9259,93

27193,14

80730,41 149134,74

366085,95

878955,23 1355385,19

369

19,68

75,09

616,70

3081,41

11574,60

29840,65

58399,26

147272,86

336830,09

678105,74

371

4,21

21,65

266,80

1238,48

4824,39

17458,74

32331,08

106180,23

265947,27

496613,46

372

2,81

246,50

1801,66

8884,09

28842,48

120150,74 220050,76

673256,21 1630124,69 2804560,26

382

8,14

70,43

578,99

3546,63

13343,62

45309,04 110174,33

317511,18 1119696,38 2064314,80

383

5,03

67,87

573,83

3788,89

15222,54

51323,99 124832,91

303699,25

856155,56 1962912,92

384

25,19

19,48

350,34

2905,00

10612,86

36122,24

300357,23

929909,62 1484730,64

390
Average

86801,13

9,96 1892,65 15645,41 95493,51 444932,54 1393996,02 2828665,97 10462490,23 22292537,87 36262088,05
11,85

251,17

1400,16

6700,35

25994,03

79480,46 165993,58

549957,79 1380589,98 2022258,60

According to these data, a line graph with marks is drawn as shown in Figure 1. As it is
seen in the graph until 1996, there is no difference in growth in TFP between MC and
other manufacturing industries. After 1996, there is a slight decline in growth of other
manufacturing industries. On the other hand, decline in growth of MC manufacturing
industries is very sharp.
After 1995, textiles, wearing apparel and leather (321), wearing apparel except foot
wear (322), leather products (323), fabricated metal products (381) and professional and
scientific equipment (385) manufacturers begin to follow customer-oriented philosophy.
Day after day more of these manufacturers start converting their business processes
according to MC concept.

70

A. Alvan and A.O. Aydin

Figure 1

Growth in TFP of manufacturing industries (see online version for colours)

0,00%
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01

Growth in Total Factor Productivity

1000000,00%

-1000000,00%
-2000000,00%
-3000000,00%

Mass Customised Industries

-4000000,00%

Mass Production Industries

-5000000,00%
-6000000,00%
-7000000,00%
-8000000,00%
Years

From Figure 1, it can be inferred that decline in productivity of Turkish manufacturers is

the result of the 1994 and 1999 economic and financial crises in Turkey. On the other
hand, the severe decline in productivity growth of MC systems is because of the MC
concept itself. As it is stated before, MC increases complexity of all activities and
requires more processing time and effort. As a result, MC reduces productivity.
Tables 3 and 4 provide data on growth in capital of all manufacturing industries.
Table 3 shows data of industries that start applying MC concept. Data on growth in
capital of other manufacturing industries are given in Table 4.
Table 3

Capital growth at mass customised industries

Mass customised industries

Industries 1992(%) 1993(%) 1994(%) 1995(%)

15,87

30,16

28,59

1996(%)
26,24

1997(%)
15,32

1998(%)
5,25

1999(%)
9,01

2000(%)

0,00

322

0,00

53,89

87,84

104,85

99,99

80,17

68,95

96,56

102,62

37,78

323

0,00

910,07

1946,12

2041,77

2421,00

2155,15

1444,27

1967,88

3933,52

2252,56

381

0,00

105,97

844,53

5055,26

385

0,00

1075,87

Average

0,00

432,33

16964,35 52446,38 112110,15 310770,68

6,81

2001(%)

321

2,39

836282,87 1838788,13

8082,37 54281,53 177357,32 744449,59 2065353,15 4134714,64 22360498,70 32685938,81

2198,20 12302,40

39373,78 159829,32 435796,35 889511,75 4640164,90 6905402,98

By using growth in capital data, line graph can be drawn as shown in Figure 2.
It is obvious that there is no difference in growth in capital investment until 1995.
Afterwards, capital investments of textiles, wearing apparel and leather (321), wearing
apparel except foot wear (322), leather products (323), fabricated metal products
(381) and professional and scientific equipment (385) manufacturers rapidly increase.
Because, these manufacturers start converting their business processes into MC systems.
Therefore, these manufacturers invest money to change their processes.

The effects of mass customisation on productivity

Table 4

71

Capital growth at mass production industries

Other manufacturing industries

Industries 1992(%) 1993(%) 1994(%) 1995(%) 1996(%)

1997(%)

1998(%)

1999(%)

2000(%)

2001(%)

0,00

0,99

1,04

0,36

0,23

0,28

0,20

0,10

0,06

0,05

311

0,00

20,44

3,39

4,24

2,93

2,46

1,80

0,58

0,39

0,89

312

0,00

71,71

21,51

1,07

10,61

15,78

11,87

6,32

5,43

5,78

313

0,00

106,85

71,35

43,89

11,20

18,61

28,19

13,34

13,32

21,54

314

0,00

78,71

86,60

324

0,00

874,20

331

0,00

332

0,00

341
342

98,62

63,80

10,55

15,07

2,96

4,84

14,86

2080,07 4398,97

5680,87

5896,91

4311,24

5502,26

7833,98

7231,35

285,59

771,39 2190,65

3050,09

3870,76

4346,83

6496,06

8752,20

7099,70

795,44

2165,85 5830,59

8711,27

8458,03

11198,25

15143,95

16756,28

17042,97

0,00

174,84

589,72 1281,66

1861,43

4685,17

7313,22

10940,88

16032,07

13853,28

0,00

193,12

526,77 1707,34

4569,65

5014,63

6230,86

18828,18

22681,05

25244,89

351

0,00

63,01

308,48

832,50

1693,83

3677,16

5818,94

13189,56

20927,99

21369,55

352

0,00

66,45

283,72

855,14

1872,99

3817,31

5540,63

10919,48

16212,32

22450,73

353

0,00

29,28

160,88

537,32

1389,24

2517,46

4091,22

9270,38

14680,62

18970,81

354

0,00

148,57

1233,59 4602,50 10889,18

26558,88

44232,97

96663,44 4077901,02

185039,85

355

0,00

204,37

1211,83 4390,61 11376,96

28936,82

51645,59

130548,37

291197,37

424533,42

356

0,00

216,89

1245,10 4436,68 10314,14

24193,19

47668,87

100156,20

204879,37

300255,32

361

0,00

415,38

2401,56 8301,16 31848,43

94582,45 347126,51

654332,09 1510110,72 2404984,28

362

0,00

291,46

2014,42 9276,62 27180,36

80755,58 149134,41

366075,14

878972,68 1355390,46

369

0,00

88,99

612,92 3077,70 11580,90

29864,26

58399,51

147270,32

336824,51

678102,09

371

0,00

46,45

283,18 1237,33

17495,83

32311,53

106172,26

265952,18

496615,18

372

0,00

252,12

382

0,00

81,21

570,83 3560,55 13338,56

45324,07 110175,10

317484,95 1119714,07 2064313,59

383

0,00

72,85

561,21 3798,59 15221,33

51343,82 124855,25

303692,47

856154,23 1962920,80

384

0,00

49,16

316,87 2930,91 10614,66

36148,54

300345,45

929954,73 1484699,31

390

0,00

Average

0,00

Figure 2

4803,04

1810,42 8906,55 28814,80 120193,28 220039,74

86790,45

673255,62 1630142,75 2804557,40

1898,75 15651,54 95498,32 444949,14 1394052,98 2828655,10 10462525,94 22292589,90 36262116,69

260,99

1399,02 6711,54 25992,90

79494,44 165993,18

549951,83 1380729,85 2022269,94

Growth in capital of manufacturing industries (see online version for colours)

8000000,00%
7000000,00%

5000000,00%
Mass Customised Industries

4000000,00%

Mass Production Industries

3000000,00%
2000000,00%
1000000,00%
0,00%
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01

Growth in Capital

6000000,00%

Years

72

A. Alvan and A.O. Aydin

This investment period and productivity decrease period falls in between the same
years (i.e., after 1995). It can only be explained by MC. After 1995, more and more
manufacturers began applying the MC concept in their systems and make investments for
this purpose.
Tables 5 and 6 show calculation results on growth in labour rate of manufacturing
industries. Using these data, a line graph is given in Figure 3. As it can be seen in the
figure, there is no significant difference between the growths of manufacturing industries
in labour rate except for the year 2000.
Table 5

Labour growth at mass customised industries

Mass customised industries

Industries 1992(%) 1993(%) 1994(%) 1995(%) 1996(%) 1997(%) 1998(%) 1999(%) 2000(%) 2001(%)
321
322
323
381
385
Average

Table 6

0,00
0,00
0,00
0,00
0,00
0,00

0,18
0,09
0,40
0,08
0,73
0,30

2,05
0,63
4,48
1,44
3,02
0,53

0,13
0,62
1,39
1,05
1,21
0,41

0,91
0,70
2,97
0,57
0,58
0,04

1,32
0,29
0,98
2,95
0,32
0,93

0,18
0,07
0,42
0,63
3,59
0,95

0,94
0,47
1,11
1,71
1,10
0,18

0,49
0,50
0,82
1,03
2,48
0,13

0,36
0,48
0,62
0,11
1,24
0,27

Labour growth at mass production industries

Other manufacturing industries

Industries 1992(%) 1993(%) 1994(%) 1995(%) 1996(%) 1997(%) 1998(%) 1999(%) 2000(%) 2001(%)
3
311
312
313
314
324
331
332
341
342
351
352
353
354
355
356
361
362
369
371
372
382
383
384
390
Average

0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00
0,00

0,54
0,93
0,46
0,21
0,85
0,19
0,58
2,07
0,66
1,74
1,26
0,29
0,05
0,47
0,75
0,30
0,66
4,71
1,61
1,79
0,83
0,60
0,22
0,67
0,47
0,63

1,40
1,01
1,71
1,33
0,69
5,81
2,04
2,54
1,31
0,92
0,84
1,22
0,05
0,32
0,07
1,14
1,40
2,25
1,72
1,59
3,09
1,77
2,67
1,98
2,52
1,66

0,64
0,79
1,29
0,74
4,17
1,28
3,50
0,42
0,16
1,26
1,35
0,21
0,24
0,34
0,28
0,64
0,48
1,42
0,89
2,08
1,44
0,59
0,09
0,23
0,49
0,82

0,04
0,06
0,71
0,88
2,24
4,59
0,53
3,98
1,40
2,06
0,74
0,33
0,38
0,48
2,56
0,85
0,92
0,25
0,23
0,17
1,06
0,08
0,42
0,38
1,80
0,06

0,65
0,23
0,55
0,33
0,87
2,74
0,22
0,84
0,76
0,33
0,06
0,74
0,25
0,40
0,90
1,04
3,82
1,97
1,12
0,18
0,83
1,83
1,34
0,27
3,31
0,56

0,51
0,51
0,56
1,70
1,05
0,30
0,45
1,15
0,76
0,52
0,22
0,75
0,00
1,15
0,84
0,97
2,12
0,34
0,79
0,10
1,85
0,91
2,06
0,52
0,38
0,76

1,00
1,17
1,82
0,86
2,09
0,89
0,15
2,63
2,14
2,42
1,53
1,38
0,28
4,69
1,61
1,29
4,86
1,17
0,83
1,11
0,30
0,39
1,30
0,77
1,20
1,11

0,05
0,05
0,70
0,90
0,04
2,25
0,62
0,10
1,02
0,63
0,65
0,30
0,11
103,55
2,19
0,49
4,76
0,02
0,70
0,42
0,70
0,65
0,00
0,76
0,21
3,82

0,39
0,28
0,52
0,03
0,88
1,07
0,60
0,31
0,23
1,17
0,60
0,58
0,02
1,36
0,17
0,63
3,54
1,43
0,50
0,61
0,52
1,46
1,06
0,34
0,43
0,56

The effects of mass customisation on productivity

Figure 3

73

Growth in labour of manufacturing industries (see online version for colours)

5,00%

3,00%
2,00%

Mass Customised Industries

Mass Production Industries

1,00%
0,00%
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01

Growth in Labour

4,00%

-1,00%
-2,00%

Years

After calculating the contribution of labour, contribution of capital and total factor
productivity by applying TDA, VA growth rates can be calculated. Growth in VA is
shown in Tables 7 and 8 for MC and MP industries. According to these data, a line graph
can be illustrated as shown in Figure 4.
As it is seen in Figure 4, there is no significant difference between those industries in
given time period except for the year 2000. This difference is the result of contribution of
labour growth rate in MP industries in this year.
While capital investments growth rate of MC industries is rapidly increasing,
total factor productivity growth rate of MC industries is severely decreasing. Therefore,
VA growth rate is in between 20%. In the frame of this reference, it is obvious that
contribution of labour in VA is very low in MC industries.
Table 7

VA growth at mass customised industries

Mass customised industries

Industries

1992
(%)

1993
(%)

1994
(%)

1995
(%)

1996
(%)

1997
(%)

1998
(%)

1999
(%)

2000
(%)

2001
(%)

321

22,17

1,80

26,75

1,93

6,66

33,71

3,93

10,30

8,61

15,02

322

31,80

2,36

17,31

17,79

6,62

14,39

0,22

15,84

0,16

21,31

323

26,77

3,01

53,96

9,67

4,95

36,84

1,28

49,08

10,74

28,47

381

20,91

4,04

8,72

21,74

0,40

28,04

1,78

7,22

3,88

1,31

385

59,80

10,43

7,89

43,78

14,79

12,92

59,19

47,73

64,19

22,62

Average

32,29

3,13

16,28

18,98

4,54

19,42

11,71

26,04

15,97

8,70

74

A. Alvan and A.O. Aydin

Table 8

VA growth at mass production industries

Other manufacturing industries

Industries

1992(%) 1993(%) 1994(%) 1995(%) 1996(%) 1997(%) 1998(%) 1999(%) 2000(%) 2001(%)

12,11

7,59

0,76

8,70

4,32

16,52

2,94

5,03

9,10

7,64

311

13,45

312

9,93

3,77

3,91

7,87

1,62

11,10

4,37

4,87

3,63

0,51

7,28

5,02

5,57

2,67

25,54

7,60

8,52

7,95

313

7,88

1,74

9,74

11,08

5,12

22,59

18,94

23,56

1,66

10,93

11,17

314

4,17

7,80

23,53

3,62

7,75

16,80

18,16

14,34

41,91

14,34

324

7,19

5,50

13,08

14,06

4,98

44,47

11,87

21,15

14,05

7,15

331

33,68

9,35

27,20

17,72

3,03

4,97

0,00

9,65

12,74

13,85

332

57,44

22,78

14,82

20,89

40,62

2,37

16,14

18,24

0,12

24,76

341

7,50

11,58

16,32

35,93

40,41

9,98

10,59

4,53

28,68

0,63

342

29,34

52,94

14,61

19,92

48,47

21,92

42,44

23,43

7,88

29,84

351

7,75

4,02

11,70

13,32

19,08

2,33

19,45

0,85

25,74

16,71

352

8,17

13,13

7,27

12,84

7,61

18,72

2,91

11,71

1,45

12,36

353

4,47

4,06

3,56

1,64

10,38

12,04

11,89

9,75

11,28

18,14

354

11,50

33,32

1,73

17,91

12,91

15,50

4,53

95,68

3240,31

273,25

355

19,71

0,93

7,40

13,82

11,69

13,42

13,94

14,57

9,12

3,29

356

18,35

11,21

14,11

33,76

0,84

7,75

7,71

2,87

13,53

4,62

361

8,97

16,48

25,54

14,62

16,05

39,25

25,13

10,08

9,43

6,52

362

18,52

0,85

0,92

17,27

12,03

26,14

0,23

10,12

17,78

3,98

369

19,68

12,74

4,97

4,34

6,08

24,30

0,76

1,97

6,11

4,13

371

4,21

22,61

15,45

2,98

21,41

37,34

19,74

6,98

5,38

0,47

372

2,81

4,31

6,36

21,48

28,40

44,18

10,71

0,23

18,75

3,43

382

8,14

10,28

9,56

13,25

5,11

16,73

1,12

26,84

18,60

2,42

383

5,03

4,91

14,03

9,57

1,05

20,59

23,39

5,67

1,65

7,13

384

25,19

30,07

34,98

25,49

1,53

26,31

10,59

11,41

45,79

31,66

390

9,96

5,41

4,31

4,07

17,94

59,31

11,33

36,58

52,00

28,74

11,85

9,19

2,35

10,48

1,05

14,47

0,01

5,15

140,89

10,72

Growth in value added of manufacturing industries (see online version for colours)
160,00%
140,00%
120,00%
100,00%
80,00%
Mass Customised Industries

60,00%

Mass Production Industries

40,00%
20,00%
0,00%
-20,00%

19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01

Figure 4

Growth in Value Added

Average

-40,00%
Years

The effects of mass customisation on productivity

75

Critique on the findings

Actually, after 1995 there is a decline in growth in productivity of all Turkish

manufacturing industries due to two economic crises. But, productivity decrease is more
severe in the industries that are classified as MC industries.
The effects of 1994 and 1999 financial crises on the growth process must also be
highlighted. Since the financial crises adversely affects all the economic activities, their
effects can be seen in several ways such as decline in output growth, capacity usage and
TFP growth.
Although 1994 and 1999 economic and financial crises cause decline in capital at
every sector of the Turkish economy, the capitals contribution to VA growth at all
manufacturing industries is significantly positive at almost all branches.
From this point of view, it can be deduced that severe productivity decrease in MC
industries due to the concept itself. The difference observed in Figure 1 after 1995 can
only be explained as a result of technical change related to adopting MC concept. In the
mean time, results show that following customer-oriented philosophy requires capital or
in other words physical investment.
It can be stated that this severe productivity decrease increases costs and it
certainly leads to a serious increase in price. To elaborate this finding, productivity can
be explained as a ratio of output and input whereas there is a positive correlation
between output and productivity and there is a negative correlation between input
and productivity.
According to this information decrease in the productivity can occur only under
diseconomies of scale condition. In such a case, there is decreasing returns to scale where
percentage change in input is greater than percentage change in output.
In case of diseconomies of scale while production volume increases average cost per
product increases as well. This leads to decrease in profit. To overcome this problem,
there are two alternatives: one provides long-term solution and the other one provides
short-term solution. In the long-run physical investment can be made to increase their
capacity. In the short-run to get over this obstacle price can be increased.
It is obvious that increase in price results in loosing their competitive advantage in
the market. On the other hand, physical investment is included to fixed cost and it can be
expected that this cost to diminish in due course. Therefore, manufacturers expect to
make profit in the long-run.
Current investments are aiming to reach the point where economies of scale is
realised. But it must be emphasised that these investments are unable to improve the
way in which complex MC processes are handled. Adopting MC concept results
in complexity in all management, planning and controlling activities. Moreover, these
activities begin to entail more time and effort in gathering, analysing and processing
related information which cannot be solved by only buying new machines and
establishing new facilities.
Normally, it could have been expected that after the coverage of investment cost,
productivity can improve. But when characteristics of MC are evaluated, it is
meaningless to expect such an improvement. It is because of the complexity related
with management, planning and controlling activities. As a result, it can be stated that
to increase productivity investment option becomes useless for MC industries with
high probability.

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A. Alvan and A.O. Aydin

In this frame of references, it can be asserted that inevitably MC industries must

increase price, even in case of economies of scale. In the second figure, it can be
observed that MC industries already begun to make physical investments. In the
short-term they probably increased their price and even in the long-term they will
increase the price of the customised products due to severe increase in cost which is the
result of the complexity.
These findings support the ideas of Steger-Jensen and Svensson (2004) who state
that bidding costs are distributed on fewer orders. On the other hand, these findings
contradict the ideas of other researchers including Friedrich and Blecker (2006),
Fogliatto et al. (2003), Kotha (1996) and Kay (1993). Since these researchers was
asserting that MC concept enables the meeting customised product demand while
keeping MP cost efficiency.
In the frame of these references, it can be stated that MC concept has disadvantage
over price dimension. Even tough customers are willing to pay more for customised
products; they may sacrifice their preferences in case of such severe cost augmentation.
Moreover, it is underlined that anything that can be processed through ICT can be
customised. On the other hand, to motivate final consumers to buy customised products,
costs of MC production must be reduced.
According to these findings, it can be put forward that this decline in productivity will
continue until all textiles, wearing apparel and leather (321), wearing apparel except foot
wear (322), leather products (323), fabricated metal products (381) and professional and
scientific equipment (385) manufacturers become an instance of MC. Afterwards, it can
be expected that productivity growth will become at a stable rate. But the productivity
will still be lower than the MP industries due to MC concept.
Moreover, it must be emphasised that Figure 4 shows that there is no additional value
added in adopting the MC concept. Actually, it could have been expected that meeting
higher quality requirements of demanding customers should increase value added. But
due to productivity decrease this benefit is not obtained.
There are two alternatives to enhance productivity under these conditions. The first
alternative is to make investments on human quality upgrade. The second alternative is
technical change which expresses any kind of shift in the production function.

Future directions

Findings suggest that productivity of systems that adopt MC concept must be improved
to remain competitive in price dimension. As stated there are two alternatives to achieve
this objective:
1

making investment on human quality upgrade

adopting new technical changes to shift production function.

To elaborate the first alternative, results given in the Figure 3 can be analysed. These
results show that there is no significant growth in contributions of labour. Moreover,
there is no investment of enhancing knowledge level of the labours. It can be expressed
that it could have been possible to prevent productivity decline by making investment on

The effects of mass customisation on productivity

77

human quality upgrade. By employing more qualified workers or by training workers,

they can handle complex activities more efficiently and processing times can be reduced.
In this manner, productivity can be enhanced.
In the frame of this reference, in MC domain specifically what kind of human quality
upgrade is required must be researched. Especially, needed qualifications must be
analysed. If this can be determined then qualified workers can be employed or current
workers can be trained.
Besides, this decline in the productivity of MC industries can also be prevented by
new technical changes. Today, there are no suitable applications of ICT to be used
by MC systems; since, most of the current applications are based on the MP concept.
Existing applications are unable to meet requirements of MC systems.
In these fronts, many manufacturers benefit from diverse Enterprise Resource
Planning (ERP) software applications and advanced applications of ERP like Supply
Chain Management, Customer Relationship Management and E-Procurement. But
current applications are not appropriate for the needs of MC systems.
If appropriate applications of ERP can be developed productivity can be improved
in MC industries by helping them to handle complex inbound activities and reduce
processing times of management, planning and controlling activities. Moreover,
outbound activities of MC industries can be enhanced by adopting advanced applications
of ERP.
Not only ERP software and its advanced applications, but also intelligent agent
technologies can be very beneficial to MC industries. By the help of the intelligent
agent technologies, the way in which business processes of MC are handled can be
further enhanced.
Therefore, research on applications of ICTs is needed. These research activities can
help in developing new software applications specifically designed to meet the needs of
MC systems. To do so, each sector must be analysed separately at company level.
Actually, this study can also be performed at company level. This method,
comparison sector against sector does not provide whole details of productivity decline
in MC systems. It is because of the fact that not all the companies operate in MC
industries (i.e., textiles, wearing apparel and leather, wearing apparel except foot wear,
leather products, fabricated metal products and professional and scientific equipment
manufacturers) might not adopt MC concept.
Therefore, the findings in this paper must be further analysed at company level.
This study proves productivity decline which is caused by MC concept by providing
evidences at sectoral level. It is due to the fact that the industries which are classified
as MC systems started adopting this concept after 1995. Day after day, more and
more manufacturers changed their business processes according to customer-oriented
philosophy. Therefore, productivity decline becomes more severe accordingly which
gives opportunity to deduce the findings.
In general it can be stated that the relationship between GNP down to firm level
contains uncertainty. Therefore, further analysis is required at company level separately.
Such a research can be very beneficial in determining obstacles over success of MC in
more depth. In this manner, suggestions provided in this study can be better applied.

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A. Alvan and A.O. Aydin

Conclusion

MC concept, which is based on converting business processes to meet customised

demand, requires broad changes in business processes of the whole system. It is
inevitable to expect such a technical change to affect productivity and, in turn, cost and
profit. With this respect, in this paper this effect is analysed in the Turkish manufacturing
industry by applying TDA which enables one to analyse each sector separately.
Findings show that adopting MC concept leads to decrease in productivity and
inevitably this leads to increase in price while there is no additional value. In this frame,
some suggestions are presented to overcome the obstacles due to complexity of MC
concept. For this purpose, investment on human quality upgrade and new technical
changes are recommended.
Moreover, by this study, we are suggesting further research. This study provides
overview for the economic situation of the MC industries. To understand the differences
between MP industries and MC systems, we suggest undertaking further research on
industrial level.

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The effects of mass customisation on productivity

Appendix
Codes of manufacturing sectors
Sector code

ISIC code
3

Sector descriptions
Total Manufacturing Industry

FOD

311

Food products

BEV

313

Beverages

TOB

314

Tobacco

TEX

321

Textiles, wearing apparel and leather industries

APP

322

Wearing apparel, except foot wear

LEA

323

Leather products

FOT

324

Footwear, except rubber or plastic

WOD

331

Wood products, except furniture

FUR

332

Furniture, except metal

PAP

341

Paper and paper products

PRT

342

Printing and publishing

ICH

351

Industrial chemicals

CHE

352

Other chemicals

PET

353

Petroleum refineries

COL

354

Miscellaneous petroleum and coal products

RUB

355

Rubber products

PLA

356

Plastic products

POT

361

Pottery, china and earthenware

GLS

362

Glass and glass products

NMM

369

Other nonmetallic mineral products

STL

371

Iron and steel

NFM

372

Nonferrous metals

FMP

381

Fabricated metal products

MCH

382

Machinery, except electrical

EMC

383

Electrical machinery

TRN

384

Transportation equipment

SCI

385

Professional and scientific equipment

MOT

390

Other manufactured products

81