From mass customization to C2M

楊璐

Abstract：In this paper， Dell business model and its current problem are analyzed. Then， on basis of these problems， we propose that customer to manufacturer （C2M） is a new production model. Meanwhile， this new model is introduced. Finally， we discuss its potential competitive advantage.

Key words：Dell business model， customer to manufacturer， C2M potential competitive advantage

1 Direct business model of Dell and its existing problem

In 1984 Michael Dell created Dell Computer Corporation， when personal computers just began to emerge. During this period， IBM opened the source code and set up industry standard for personal computer （PC） market. Lots of firms use INTEL microprocessor and Microsoft's operating system as the standard to produce PCs， among them Dell is the most successful one， whose PC prices were much lower， only about 40% compared with IBM.

Dell， which sold PCs as Wal-Mart， created the famous Dells direct business model. It cuts down wholesale， distribution and retail channels to achieve direct access with customer. Obviously this model could benefit to reduce response time to customers orders and minimize inventory. Once Dell has accepted and confirmed customers order， then selects out needed components for a whole product from stock. Picked out all， they are sent to production line， where they are assembled to be a computer. Finally， the computer will be tested， packed and delivered to customer.

From 1997 to 2004， Dell enjoyed steady growth and gained market share from competitors even during industry slumps[1]. However， in 2006 Dell's began to grow slower than the whole PC industry. By 2006 fourth-quarter， Dell lost its title of the largest PC manufacturer to rival HP[2]. So there is a problem： what make this once glorious Dells model run into difficulties？

Dells model is a consequence of modular production development and mass customization with times characteristics， which only provides customers with the chance to customize products in a given small scope. However， more people currently hope that their purchased products are unique and in line with their imaginations and own special functions.

Additionally， Now PC industry develops rapid and their electronic parts update speedily， but Dells model is based on foundation of open source code， when Dell enters the core database and there is no "standard" to follow， the model fails to work.

Above all， Dell model is no longer a myth， and from mass customization to individualization is an inevitable tendency of market further development， which focus not only on individuation， but low cost as well. So the production model need to be changed.

2 A new production model--customer to manufactory

Manual operation realized traditional individualization， but cost is high， lead time is long and quality is instable[3]. Mass production achieved low cost and instant delivery by products stock， but it can only offer single products. Dell model can achieve low cost nearly like mass production and provide customers with a definite range of customizing opportunities， but without personalization and instant delivery. So its urgent to find a new model to achieve individualization with low cost， high quality， customized and instant delivery， which is customer to manufacturer （C2M）.

C2M means that factory produces based on customer order， drives production by customer demand. Firms have to design and build product base on customer specifications. It reduces any type of middlemen that can be taken out such as retail outlets， distributors， wholesalers and even inventories to connect manufacturers and customers directly so that customers can buy high quality products with low prices. Meanwhile， C2M model is driven by customers individual requirements. Except for few materials and components， most of production design， supplies of materials， production and even transportation are decided by customers order.

In C2M， manufacturers can connect different production systems with Internet and exchange data at any time with the high-performance computing system， by which they can determine suppliers and production process in accordance with customer orders， and ultimately produce individual products. So at a foundation for C2M， factory should build its own database according to history data or current customer needs. Accepted customer order， factory analyzes data through automatic contrast with their standard design and database， and designs a product model， which can be presented to customer by 3D or VR. Then factory interacts with customer and adjusts design based on customers feedback until he is satisfied and use the data of final product design to make RFID tag， by which it can organize production and adjust production line in real time. Lastly， the product will be checked， packed and delivered to customer. And Figure 1 shows C2M structure model.

3 Potential competitive advantages of C2M

Competitive advantage is the main indicator of quality and successful positioning of a business[4]. In Michael Porter's view， strategic management should be concerned with building and sustaining competitive advantage. So what are the potential competitive advantages of C2M？

From customers perspective， C2M satisfies their individual needs with a reasonable price. Meanwhile， companies enjoy more benefits. A closer collaboration relationship with suppliers can optimize supply chain and improve production flexibility[5]. They can also avoid imitation from competitors. Most of all， by customer demand-driven manufacturing firms can reduce their inventory， which can also enhance customer loyalty.

Red collar， a Chinese garment firm by C2M model grows into a rapid development period， whose average annual sales volume growth and profit growth are more than 150% and annual revenue is more than 1 billion RMB in 2012[6]， which shows that C2M has more potential advantages in competition in the 21st century.

4 Conclusion

In this article， Dell business model and its existing problems are discussed. According to these problems we put forward a solution， namely C2M， and put forward its characteristics and its advantages. However， on the implements to achieve C2M， there are still many issues that need further study， which are the further research direction in the future.

References

[1]Peter， Park， Andrew. What Do You Don't Know About Dell[J]. Management， 2003.

[2]Darlin， Damon. Falling Short of A+. The New York Times， October 30， 2012.

[3]Wind J， Rangaswamy A. Customerization： The next revolution in mass customization[J]. Journal of Interactive Marketing， 2001， 15（1）：13-32.

[4]Porter M E. Competitive Advantage[M]. Wiley Encyclopedia of Management 3rd edition Vol 12 Strategic Management. 2014：18–24.

[5]Maximising the Value of Supplier Relationships. CIO Leadership. 9 November 2009.

[6]周倩. 紅領模式：基于大數據的工業化定制[J]. 中國工業評論， 2015（10）：82-87.