Batch Size One and the Customer Experience: Rethinking Business Models

Batch Size One and the Customer Experience:

Rethinking Business Models

In 1913, Henry Ford’s statement that a Model T Ford customer could have the car in any colour they liked, “as long as it is black”, was ground-breaking; ambitious, confident, self-assured.

His words promised and ushered in a glorious, brave new world; a world in which a golden age of mass production was emerging – where industry would be transformed to produce goods efficiently and uniformly to an assured standard. His words proclaimed progress.

Yet, today, they seem curiously lack-lustre. One hundred years later, perceiving his statement through the lens of the twenty-first century, we wonder: how could a company be so successful with so little thought to the customer experience?

His words seem less ground-breaking than arrogant and out-dated. In the intervening century, our expectations of what it means to be a consumer have changed. Quality assurance, standards, and efficiency are taken for granted; what we are seeking now is differentiation.

Enter: batch size one.

“Parts will be made to order as and when required – reducing inventory and warehousing costs and streamlining operations.”

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Batch Size OneIssue no 9 - February 2019 industry 4.0

Batch Size One

This concept is a cornerstone of the Industry 4.0 vision: a new and innovative way of doing business that will open the door to extreme customisation, enhance the customer experience, and reduce waste.

In the factory, where most of the talk of “batch size one” is currently focused, the concept is all about pushing the boundaries of “just in time” production.

Producing just the parts you need when you need them in a way that supports customisation and adaptation is a model of efficiency of which Henry Ford could only have dreamed.

Industry 4.0 technologies are making it possible. Through the use of flexibly, quickly programmable “plug and play” components in an integrated factory-wide control system, mobile robots instead of fixed conveyors to provide flexibility in workflow, and the automation of part transport between processes

to deliver flexibility in material handling, automation experts are opening the door to batch size one production.

These tools make it cost effective to move away from mass production to a mass customisation. Gone will be the days of producing large batches of the same component, followed by time-consuming changeover or retooling and the associated costs, followed by the production of the next large batch. Instead, we will move to small runs – even down to batch size one – of individual components and products.

Parts will be made to order as and when required – reducing inventory and warehousing costs and streamlining operations.

Video:

HOMAG Group Batch Size One Production - Furniture Manufacturing Case Study

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industry 4.0 Issue no 9 - February 2019Batch Size One

Digital Twins & AI

The key challenge then becomes how to operate and manage the individual processes and movement of parts, materials, and components around the factory and supply chain in order to ensure efficiency isn’t compromised.

This is where another key Industry 4.0 concept – that of the digital twin – enters the batch size one discussion.

University of Michigan Professor Emeritus Yoram Koren explains, “The synchronisation of manufacturing operations of a variety of products produced simultaneously is critical to cost-effective production of individual products. For obtaining the optimal synchronisation of the manufacturing operations on several products manufactured simultaneously, it is critical that digital twin models be applied.”

On the digital twin model, production schedulers can play out different production scenarios to see which will be most efficient and productive.

In this way, the use of the digital twin leads to the use of another Industry 4.0 cornerstone technology: artificial intelligence.

Koren continues, “AI has a major role to play in optimal product scheduling in the production system. AI software can group products in a way that are the best fit in geometry. You want to choose similar products to be produced together so that you can synchronise the system to optimise efficiency.”

Using machine intelligence to try out different production scenarios using the digital twin and then to select and schedule the most efficient combination of processes to the real-world production systems optimises the optimisation.

However, despite the use of exciting technology such as digital twins, AI and flexible manufacturing, this vision of batch size one is limited. It sees the batch size one concept in a way that is little more than an extension of Ford’s and the other early industrial pioneers’ search for greater efficiency.

A Fundamental Rethink?

Others argue batch size one could lead to a much more fundamental rethink. For example, batch size one offers scope for efficient automation to reach parts of the supply chain that it may not have reached before.

Smaller and general-purpose manufacturers are more likely to have very high numbers of different parts produced at very low volumes. While their specialism and differentiation may have given them their market niche, it may also the thing that is holding them back – by making it difficult to scale.

For these smaller manufacturers, the new flexibility of automated production offers an opportunity to use technology that was once the preserve of major mass producers, to improve profitability and grow their businesses.

Yet, even to see batch size one in this light is to entirely miss its potential.

To get a feel for the full extent of how the concept could change manufacturing, we need to come at it from a different angle: from the viewpoint of customer experience.

“AI has a major role to play in optimal product scheduling in the production system. AI software can group products in a way that are the best fit in geometry. You want to choose similar products to be produced together so that you can synchronise the system to optimise efficiency.”

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Batch Size One

Issue no 9 - February 2019 industry 4.0

Customer-led Manufacturing

Ben Alun-Jones, Hal Watts and Kirsty Emery founded Unmade in 2013 with a vision of delivering an entirely new customer experience through customisation and direct interaction with the product, its design, and the production process.

The Royal College of Art graduates were aided by the Makerversity incubator at Somerset House in London. Having realised that most of the knitting machines currently in use in the industry were already digital, the team wondered why no manufacturer was currently making use of this characteristic. Instead, throughout the industry, businesses were using the digital machines in the same way as their mechanical predecessors: to make large runs of identical objects.

Emery explains, “We realised as long as you gave the machines the information in the right format, there was no additional cost to changing what they made.”

> Play Radio clip of Unmade

The team created their own .KNIT programming format and began exploring ways to involve customers in the creation process. In Unmade pop-up shops, customers could design their own knitwear, generating a .KNIT programme that would facilitate bespoke and one-off production of their garment in just a few hours.

Alun-Jones explained the team’s vision to the Guardian: “We seem to have lost something in mass production where you are making things for everyone, but everything is made for no one… Imagine a place where a more appropriate, better use of resources makes things that people want and are involved in. You want to own it and it’s something to be proud of.”

It’s a cultural shift.

The scale of this shift is humorously tackled by best-selling teen-fiction author Rick Riordan in his stories about the gods of Asgard. His hero, Magnus Chase, is surprised by the attitude towards possessions held in the dwarven world of Nidavellir and asks why each item bears a name and must be introduced before use.

His dwarven friend explains that dwarves are craftsmen: “We’re serious about the things we make. You humans – you make a thousand crappy chairs that all look alike and all break within a year. When we make a chair, we make one chair to last a lifetime, a chair unlike any other in the world. Cups, furniture, weapons… every crafted item has a soul and a name. You can’t appreciate something unless it’s good enough for a name.”

“Imagine a place where a more appropriate, better use of resources makes things that people want and are involved in. You want to own it and it’s something to be proud of.”

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industry 4.0 Issue no 9 - February 2019Batch Size One

Reduced Waste, Less Discounting

Instead, back in the real world today, 20 percent of what the fashion industry produces goes to landfill. For some luxury brands the figure is far higher – as much as 40 percent.

Producing stock knowing nearly half of it is going to landfill seems like a gross waste of natural resources in a planet on the brink. By producing on demand only what is wanted, the Unmade team hopes to prevent this kind of wastage.

It is an approach with which major brands are also experimenting. In 2017, German sports brand Adidas began testing a new in-store strategy that also encompasses the entire production cycle. The process would allow customers to design their own bespoke-fitted clothing, produced from design to finished product in just four hours.

Combining a body scan to ensure the perfect fit, and a darkened room in which customers can customise patterns of projected light using hand gestures, before selecting their final design and colour combination on a computer, the initiative is part of a plan to boost full-price sales.

At the moment, less than half of the brand’s products are sold at full price. Adidas brand chief explains the problem: “If we can give the consumer what they want, where they want it, when they want it, we can decrease risk… at the moment we are guessing what might be popular.”

The four-hour on-site production window would transform the 12 to 18 months it currently takes Adidas to bring a new product into store.

If successful, these moves could revolutionise the high street. Experience shopping is muchtouted as a way to revitalise the dwindling commerce in market towns the length and breadth of the UK. Unmade and the Adidas initiative take batch size one and experience shopping to its logical conclusion – using technology to address some of the most pressing problems of our age, including waste reduction and reducing the environmental impact of complex supply chains whilst also providing an improved customer experience and offering the potential to revitalise our high streets.

Additive manufacturing – that other cornerstone Industry 4.0 technology – broadens the scope of products for which this batch size one + customer experience model could be applied.

The consequences for the way supply chains are organised is shattering.

“If we can give the consumer what they want, where they want it, when they want it, we can decrease risk… at the moment we are guessing what might be popular.”

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Batch Size One

Issue no 9 - February 2019 industry 4.0

Rethinking Supply Chains and Business Models

It is for exactly this reason that Professor Jan Godsell of the Warwick Manufacturing Group at the University of Warwick argues that we need to bring together technology and business processes to create a new and innovative ways of doing business.

“Historically, we have tended to look at cost as the main driver of manufacturing. Whereas, in this new world, we’re really going to look at the consumer,” she says. “The second major change is the way we look at the cost base. Historically, we’ve tended to look at manufacturing just in terms of manufacturing costs. We are shifting to a viewpoint now where we actually look at the total landed cost, or total supply chain cost, which looks at not just the manufacturing element but all the logistics, tax and excise; the real bundle of costs.”

Instead of waiting two months for a part or product to arrive on a messy, polluting, labourintensive shipping container from China, customers and manufacturers may find it much cheaper and more convenient to source or produce the part locally, as needed.

Godsell continues: “The essence of Industry 4.0 is to be able to make things in a batch size of one. I think that’s going to drive a totally different way of thinking. When customers are then making decisions about purchasing a product, they’re not just going to look at the cost, but they’re going to be much, much more aware of both the social and environmental impact of buying that product as well.”

Instead of the complex, lengthy supply chains we know today, we could move to a model of many localised factories producing individual products for people – creating new local manufacturing jobs, breathing new life into our cities, and reducing the environmental impact of transporting multiple parts around the world to produce a product which will then travel around the world some more only to end up, unloved, in landfill.

Video:

Supply chain implications of Industry 4.0

Find out more:

unmade.com

warwick.ac.uk/#Lunarlinkedin.com/school/university-of-warwicktwitter.com/warwickuni

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