Implications of personalization offers on demand and supply network design: A case from the golf club industry

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Abstract

Competitive, open and global markets render the consumer more demanding towards manufacturers’ offers. In the past, firms could be competitive by providing value in quality, price and quick delivery. In the new economy, with the coming of e-business, the personalization of products becomes a key competitive factor. Manufacturers need to develop capabilities to fulfill these personalization needs while still respecting price, quality and service. This is an enormous challenge since there are many possible personalization offers that a firm could propose, up to the extreme of delivering a distinct product to each client. An initial step towards developing the appropriate personalization offers and capabilities is the identification of the potential personalization offers and how they affect the key processes within the demand and supply network. The paper presents a framework comprising of eight personalization options that can be combined to form a complete personalized offer. It then contrasts their impact on the demand and supply network. It exploits the industry of golf irons for illustration purposes.

Introduction

In several markets today, competitive advantage lies in the ability to offer comprehensive personalized offers. Many firms have the ability to customize products but rarely with competitive pricing, delivery delay and quality. It is even rarer to find firms able to offer several customization levels simultaneously. The main objective of this paper is to demonstrate the various personalization levels valued by customers, and how each has a particular impact on a firm’s key processes throughout its demand and supply chain.

The golf industry provides a suitable context to illustrate the variety of personalization levels. The relative simplicity of the manufacturing processes in making golf clubs makes it accessible, while being complex enough to illustrate the impact of personalized offers. Although sales of golf equipment has doubled to 2.4 billion US$ (SRI International, 2002) since 1990, the number of golfers grew about 5% to about 30 million golfers, hence supporting the demand for personalization. This has largely been explained by the advances in technology which provide customized products highly valued by customers (May, 2002).

The paper first reviews the literature to contrast personalization as addressed in this paper from the conventional mass customization concept. We then present the golf club industry which serves as the context in which to demonstrate our personalization framework. The eight levels of personalization are then illustrated for the offer of iron golf clubs. The paper then shows how the personalization offers affect key processes in the demand and supply network. It ends by illustrating how offers can influence resource requirements and concludes with research avenues.

Section snippets

Personalization offer framework

Prior to the mid-1980s, most manufacturers were custom producers with long lead times or mass producers of low cost products with short lead times (Duray, 2002). Due to the evolution of management practices and technology, on one hand custom products have been made more efficiently and, on the other hand, mass producers began to offer more variety. In the late 1980s, Davis (1987) suggested manufacturers would be able to offer the best of both worlds through “mass customization” (MC). In fact,

Demand and supply network of golf club industry

To illustrate the Personalization Framework and its implication on the demand and supply network framework, we apply in section four the framework to the iron golf club industry. In this section, we prepare the reader to comprehend the application of the framework to the industry. First we present a brief overview of the industry which supports the growing need for personalized golf clubs. Secondly, we present the basic components of an iron golf club and some parameters that can be offered

Personalization framework applied to the iron golf club industry

This section aims to allow the reader to grasp the essence and intricacies of the personalization framework through its application to the golf club industry. For each personalization option presented in Table 1, we describe its instantiation in the golf club industry. This is to prepare the reader to anchor the illustration of the impact of personalization on the demand and supply chain as described in Section 5.

Implication of personalization offers on the demand and supply network processes

There is hardly any doubt that a golf club manufacturer would become more competitive by offering and efficiently delivering a comprehensive personalization offer combining the various options presented in the previous section. In fact, the leading manufacturers who have expanded their offer for personalized golf clubs have gained market shares and popularity among professional players. However, offering personalized products implies major changes for the firm.

A manufacturer needs to determine

Conclusion

Our work was motivated by the fact that there is a growing demand for personalized products and that for certain firms, fulfilling this need is becoming a matter of survival and prosperity. The paper has attempted to convey the different personalization options that can be offered and combined for the iron golf club industry. The first few options are offered to the mass accompanied with high service rates and short delivery delays. For highly personalized options, customers are involved

Acknowledgments

This research has been supported by the Natural Science and Engineering Research Council of Canada under grant no. 44138, by Le Fonds Québécois de Recherche sur la Nature et les Technologies under grant no. 98ER2094 and by the Canada Research Chair Program under grant no. 95-01-17 of the Canada Research Chair in Enterprise Engineering.

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