Mass Customization for the Wood Products Industry

Examples from the Northeastern U.S.*

*As seen during the Regional Wood Products Consortium’s Specialized Innovation Workshops held in Spring 2011

Collin MillerDirector of Wood Products Initiatives603-229-0679foresteconomy.org

WIW at WERC

“ Using 21st Century technology to streamline 20th Century business models is a waste of time and money. Unfortunately, that is the approach most organizations seem to take – try to make stale, old and obsolete ideas more effective through technology….21st century business demands not only a change in systems, but an enterprise-wide change to a mass customization mind-set.”

Douglas T. Hicks Cost Measurement & Management ConsultantWIW at W

ERC

Examples from the Northeastern U.S.

- CedarWorks

- Vigilant, Inc.

- Timeless FramesWIW at W

ERC

Mass CustomizationHow it’s done at CedarWorks

Barrett BrownPresident

CedarWorksWIW at W

ERC

CedarWorks

In business more than 30 Years

Owned by Brown family since 1988

Offices and manufacturing located in Midcoast Maine

95% of sales outside state of Maine

WIW at WERC

CedarWorks Business Model

Marketing company

Direct to consumer

Premium product

Premium serviceWIW at W

ERC

Products:Premium Swingsets

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Products:Ultra-Premium Swingsets

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Products:Indoor Playsets

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Products:Playbeds

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Why Mass Customization? Part of premium strategy

Market differentiation

Avoid commodity trap No pricing power

Low customer involvement/retention

Low margin

High volume/Low reward/High risk

Downward spiral

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How mass customization:Modular design

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How mass customization:Inventory management

High volume components

Manufacture to inventory

Purchase to inventory

Low volume components

Manufacture to orderWIW at WERC

How mass customization:Information systems

Design tool

Customers

Sales staff

Integration with customer database

Quotes and orders

Integration with manufacturing and fulfillment

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How we do it:Marketing and Sales

Design Partner

WebsiteWIW at WERC

How we do it:Post Sales Data Flow

Design

Order

Manufacturing FulfillmentWIW at WERC

Benefits

Wide product offering with modest inventory

Competitive marketing advantage

Faster inventory turnsWIW at WERC

WIW at WERC

When Custom Isn’t CustomWood Products at Vigilant, Inc.

Charles GriffithsPresident and Founder

cgriffiths@vigilantinc.com603-285-0400

WIW at WERC

When Custom IS Custom!

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Shelly s Back Room

Washington, DC

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Vigilant History• Started in 1994 in a Portsmouth, NH garage• First year revenue exceeds $200K• One-product company for first two years• 1996 evidence of unique customer “needs”

appears• By 1997 expansion into multiple lines, options• 1997 revenue hits $600K with 12 products• 1999 revenue of $1.1 M with 21 products

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Vigilant Cigar Products 1998

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Early Marketing Model

Sell directly to end users and tobacconists

Cigar Aficionado magazine advertising Publish our own catalog in 1996 Telesales is critical selling tool Early signs that customizing would be

key to growth First website goes live in late 1997

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1995-2004

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Vigilant Enters Wine Storage Business

Cigar cabinet market plateaus in 1999 Enter wine cellar business in 2000

through acquisition Established competitive landscape Design/build dynamics of sales process Manufacturing process totally different Challenge of shipping a disassembled

product

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Mass Customization at Vigilant

Sport cabinet website in 2002 Build-your-own cabinet functionality Limited commercial success, but! . . . Overwhelming customer feedback Positive internal efficiencies Forced us to standardize where we

hadn’t before

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http://guncabinets.vigilantinc.com/standard‐gun‐cabinets.php

Early Java Script Web Builder

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What Makes It “Custom”? Size (internal standards, external

reasons) Shape (dimensions that make sense

with shared parts) Internal parts (same parts, different

quantities) Three to four standard colors Appearance (same box, different look) Hardware options

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Vigilant Mass Customized Products

Sport Cabinets Kit Wine Cellars Custom Wine Cellars Wine Cellar Doors

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Mass Customization and the Web

Design-your-own interface allows: 24/7 customer access Reduced burden on company resources Virtual relationship with prospects Lead generation and conversion

mechanism for sales department Infinite possibilities into standards

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http://wineracks.vigilantinc.com/wine‐cellar‐door‐builder.php

Current Door Builder

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http://winecellars.vigilantinc.com/design‐your‐own‐wine‐cellar.php

Current Design‐Your‐Own Cellar

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Obstacles to Mass Customization

Upfront costs and follow-on costs Internal and external standards must be

created Marketing messages must be in

lockstep with operational capabilities Changes can be painful! Lead times need to work toward zero Custom must appear custom

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Mass Customization and Lean

• Lean MUST be part of mass customization• Standardization of parts • Create a “pull system”

• Incorporate Kanbans• Integrate with front-of-house (e.g., sales,

marketing)• Standard parts mean standard costs• Commit to speed EVERYWHERE!

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Wine Panel Kanban

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Wine Panel Kanban

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Wine Solid Wood Kanban

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Hardwood Sorting

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Kanban labels

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Benefits of Mass Customization

Increases efficiencies Increases throughput speed Reduces lead times Simplifies internal processes Improves price and product

competitiveness Forces positive internal change In time, improves gross margin

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Conclusions Mass customization can be a powerful

competitive tool It requires hard work and planning It starts with the customer and must

work its way through the entire organization

Not everything can be mass customized, but a healthy percentage will bring profitability

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Timeless Frames/Expressions

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