Case analysis

of

Mass Customization
Mass customization allows firms to produce products their
customers want.

This approach, make-to-order, brings many benefits to

firms in terms of cost and profit because of lower
inventory levels, maximum sales, elimination of material
waste, flexible production and, most of all, customer
satisfaction.

Company Overview
Subsidiary of Japanese industrial giant Matsushita
NBIC began to manufacture and sell bicycles in 1952
In 1987, introduced Panasonic Order System(POS) to
manufacture custom-made bicycles

Japans second largest manufacturer of bicycles in 1992

Marketed under three different brand names- Panasonic,
National and Hikari

The entire process

1. Order Process
2. Manufacturing Process
Frame and Front fork production
Quality Check
Painting
Labeling and Engraving process
Final assembly and Shipping
3. Marketing and Distribution

Manufacturing Process
Step 1: Frame and Front fork
production

Computer assisted tube cutting,

front triangle assembly and
slitting and reaming machines

Time taken to cut, braze and

assemble the frame was about
25mins

Step 2: Quality Check

Completed frame and fork are

placed on a 3D automatic
measuring machine designed by
the firms parent company
engineers

Less than 1 min

Step 3: Cleaning and Painting

Immersed in special solution to

clean the frame

Cleaning process takes about 10 to

15 min

NBIC was the 1st to introduce a

robot in the painting process in
bicycles

Hard-to-reach areas painted by 2

skilled workers

Step 4: Labelling and Engraving

A skilled worker using a silk

screen process or using a name
engraving machine

Step 5: Final assembly and Shipping

Fixing different components to the

frame.

Performed in any one of the 3

main assembly stations and took
about 30 mins

The entire manufacturing and

assembly time required to
complete a single order was
approx. 150 mins

Significant trends demonstrated by the Japanese

Bicycle industry in the late 1980s

Increase in production till 1990

Decrease in exports
Increase in imports
Increase in production of light cycles, mountain
bikers, track racing vehicles, adults tricycles

Decrease in production of sports cycles, mini cycles,

roadsters

Key Factors to succeed in the Bicycle

Industry
Innovation
Compete in labor intensive segments
1. Move the production to South East Asian
countries

2. Joint ventures with parts suppliers Taiwan

and China

Target the right segment of customers

Strategy adopted by NBIC Mass

Customization
Panasonic Ordering System
1.
2.
3.
4.
5.

Customer service
Appropriate pricing
On time delivery
Extensive communication
Dealership selection

Panasonic Individual Customer System overseas markets

Impact of POS in NBIC

Employed state-of-the-art techniques to manufacture
custom-made high quality crafted bicycles within 2
weeks of the customers order

Was able to double the high value added products

sold by accommodating the individual needs of the
customer

Clearly differentiated its high-end Panasonic brand

from competitors products

Benefits of Mass customization

Substantially reduce unwanted work-in-process
inventory

Introduce products more rapidly and hence be more

responsive to market trends

Refine existing engineering and manufacturing

capabilities and develop new abilities that promote
greater strategic flexibility

Observations
Firms that pursue both mass-customization and
mass-production approaches simultaneously will tend
to outperform

First-mover advantage was critical for success

A careful blending of computer aided manufacturing
technology and highly skilled labour can provide a
viable approach to building capabilities

Future Expectations of NBIC

Development of Aggressive export strategy
Skilled labor for mass production factory
The firm will market only highend brand
Panasonic and Custom-shop to increase its
revenue

Firm increases the size of the custom-market

segment

Recommendations to MD
Do not turn Mass- production factory into
Custom-shop

Use of less expensive bicycle parts from overseas

Customized bicycles should be positioned as a
high-value Niche Market

THANK YOU !!