Some advertisements end with the line saying, “Get yours while supplies last”. Actually, this slogan no longer fits into our customized world, because modern technology enables us to individualize almost everything at any time: clothes, food, jewelry, appliances and smartphone accessories.
Nevertheless, limited editions with colorful packaging or funny slogans printed on the traditional product are still effective in marketing and can help create demand. For example, Coca Cola has created limited editions, such as colorful digitally printed bottle-labels and personalized bottles. The “Share a Coke” Campaign has proven to be a consistent part of the company’s marketing strategy because it increases demand and keeps the brand top-of-mind.
Consequently, lot sizes decrease and product scope increases. However, what does it mean for supply chains and how can manufacturers offer a greater product range, including limited editions, while keeping the balance between supply and profitability?
Not only production processes are affected
Shifting manufacturing to reduced lot sizes – for instance for limited editions or a mass customization process, results in shorter product life cycles and smaller production runs. This influences the way companies produce goods. However, the internal supply chain (sales, procurement, production, and material planning) is highly interconnected. This means that not only manufacturing is affected by a wider product portfolio, but every process along the supply chain. Procurement must ensure stock availability for more product options, sales must forecast a more complex demand, production planning must optimize capacity, set-up times and costs and the marketing department needs to find the most suitable markets. All the while, management wants a rising turnover.
As you can see, individualization and limited editions are not only campaigns, but rather part of the corporate strategy as they affect the whole company.
Prices, costs and technology
To realize this, managers first need to think strategically and consider every impact along the supply chain. As McKinsey & Company explained, mass customization requires success in two main areas: demand and profitability. On the one hand, individualization isn´t relevant to every sector (for example, no one needs a bottle of pipe cleaner with his or her name on it). Therefore, customization must create value for the customer. On the other hand, pricing is sensitive and supply chain processes need to have sustainable cost levels, even when complexity rises.
As traditional structures aren´t designed to fit these requirements, companies need to implement modern technology. Taking into account the Coca Cola limited edition example, they managed their colorful packaging campaign using HP Indigo digital printing. This allows each copy to be designed differently and reduces waste and inventory costs. 3D Printing is another alternative. It can simplify the customization of products, for example, mobile phone cases can be printed with the name of the owner or a pattern on the back.
A good plan is essential
The above-mentioned possibilities of digital manufacturing and other approaches of industry 4.0 (man-machine-interaction or artificial intelligence) ensure the facilitation of forward-thinking processes. However, they are unrewarding when the superior plan of how to organize the production and the entire supply chain is inadequate.
It is important to consider a planning method that already fits the requirements of small lot sizes, transparency, interconnection within the supply chain, and automated processes. This is due to the fact that, procurement doesn´t work by mass ordering anymore, but it has to keep material availability without overfilling the warehouse. Moreover, sales and manufacturing need to collaborate efficiently to guarantee a fast and reliable customer delivery service. Mass production is no longer profitable. At the same time, approaches such as a simultaneous production planning method, which aims to reduce costs and efforts, can bring value in situations that are more complex. It considers every piece of important information and obstacle emerging in the entire supply chain at the same time, and on this basis, determines a feasible production plan.
Limited Editions are a profitable marketing tool and they make shopping more enjoyable for the consumer. However, the processes behind the colorful packages and the other individualized products cannot be underestimated. They affect the whole supply chain as well as the strategic processes in a company. Use of modern technology and reliable supply chain planning are vital when it comes to turning a profit and meeting customer demand.