The Future of Manufacturing: A Shift into Product Mass Customization

Over the past year, I have noticed a growing interest in the shift from the mass production of products to the mass customization of products. This topic was discussed recently at Aras’ webinar Scaling Variety: The Role of Digital Twins, PLM and Agile Manufacturing in Mass Customization featuring Forrester’s Vice President and Principal Analyst, George Lawrie.

While shifting the paradigm from mass producing a product with a limited number of variations, to offering consumers myriad options to create customized products can have a positive effect on customer demand, it can also come with a cost. Companies need to look at their existing systems and processes to ensure they can execute new strategies effectively; otherwise, an increase in sales may likewise increase the cost of goods sold (COGS) due to higher production costs and overhead. Conversely, a well-executed strategy can reduce the COGS with better economies of scale and reduced inventory. Products that are customized to a user’s exact needs often come with an increase in price point.

Manufacturing for mass customization

Using different manufacturing strategies like configure-to-order (CTO) and engineer-to-order (ETO) help companies create efficient and structured processes supporting their mass customization objectives. Configure-to-order allows customers to personalize products by selecting from predefined modular components, while engineer-to-order involves designing and manufacturing customized parts for a product based on unique customer requirements. Each has its advantages and disadvantages that will affect a product’s cost and time to market. For example, companies can:

Companies often leverage other manufacturing strategies beyond ETO and CTO like made-to-stock and assemble-to-order. If you want a deeper dive on this topic, take a look at Forrester’s report Master the Mass Customization of Manufactured Goods for an excellent discussion on the subject.

Three steps for making the shift to mass personalization

Implementing mass customization strategies is a complex endeavor. Organizations must master essential concepts, technologies, and processes to achieve top-level execution. Without the proper expertise and technology in place, a shift to mass customization can negatively impact organizations by driving costs higher, extending manufacturing and lead times, and minimizing the expected value of the strategy by missing reusability opportunities. To avoid these consequences, let’s look at three areas companies must ensure well-developed strategies and capabilities for success on their process shift to mass production of customized products.

The use of modularization

Modularization in PLM (product lifecycle management) refers to breaking a product down into smaller, self-contained modules or subassemblies where each modular component can be designed, produced, assembled, and replaced independently. Additionally, the standardization of these components enables interchangeability and flexibility in the product configuration and customization. This approach minimizes the need for significant modifications to the overall product architecture when variants are created or changed by allowing for easy combination or replacement of the individual modules.

In PLM systems, modularization helps manage the complexity of product variability by enabling detailed configuration management, change tracking, and efficient collaboration across different teams. This means when a customer needs a specific product variant, the PLM system can quickly identify the right combination of modules that meet those requirements, confirm there are no conflicts in the product definition, and ensure all parts integrate seamlessly.

Modularization is so critical to the process, many companies look to experienced partners that specialize in helping customers establish their approach. One Aras partner, Modular Management has stated that “Working with a Modular System is a mindset. It can be leveraged across all industries, pushing the boundaries of what can be achieved with product platforms and shared components. Masters of the art of modularization acknowledge that it is much more than just a modular product. Modularity encompasses the whole business; Products, Operating Models, and Infrastructure.”

Hear more from Johan Källgren, executive vice president, Modular Management at Aras’ webinar Winning at Configure to Order: Drive Innovation to Meet Complex Customer Demands on March 18th, 2025.

Demand forecasting

Accurate demand estimation and forecasting are essential in the mass customization process to effectively manage resource allocations and ensure part procurement and inventory for the product variants. Without precise forecasting, companies risk overproduction or stockouts, leading to increased costs and customer dissatisfaction. Some organizations may already have sufficient capabilities to estimate and forecast demand, but as product variability grows so does the complexity of the process. Keep in mind, variability is not just in the customer product options, but also to support regional regulatory requirements across borders.

Professionals use advanced statistical analysis to determine how much product demand to plan for ensuring they have inventory available at the proper time. They also need to anticipate risks and contingencies for the many unknowns of each variant of a product over time.

Let’s take a look at an example in the consumer electronics sector. Perhaps a video game provider plans to make six variants of a new video game, each with a different combination of options (memory, storage, CPU) but with a substantial reuse of components across other parts of the product. They may also plan to sell the video game console in three different regions of the world, each with a different power supply and cord. By using a mass customization approach and modularization as discussed earlier, they can get the benefit of scale for reusing modules, and an optimal price point when customers buy the specific variant that suits them best. Each of the variants must be forecasted separately over time and location.

With many variants, companies risk overproducing one variant while underproducing another leaving excess inventory and product shortages at the same time. As the number of product variants grows, managing the product line gets more complex and brings increasing risks but also high rewards for those who can forecast well.

Lionel Grealou from Xlifecycle Ltd recently wrote in his blog Driving Make-to-Stock Process Manufacturing: From Demand Forecasting to Finished Product, “PLM systems enable the analysis of historical data and market trends, providing accurate demand forecasts, maintaining proper inventory levels, and reducing the risk of over- or under-production.” You can also read Lionel’s thoughts on the importance of integrating Material Requirements Planning (MRP) with demand forecasting and procurement strategies here: How PLM enhances CPG supply chains with concurrent engineering, contract manufacturing, and integrated MRP.

Advanced product line management

As companies shift to mass customization to extend their product line quickly and efficiently, they will require advanced product line management capabilities in their PLM solution to handle the increased number of product variants and the evolving trends in their customer base. Implementing modular designs as described above is a great start but the system will need to handle new configurations by adding and obsoleting product options as trends change. The solution also needs to systematically check and prevent conflicts in the new product definitions based on the defined usage rules created for each variant. Considering the number of potential product variants of some products, manual verification of the data points is unrealistic.

Additionally, PLM systems need to capture all the information of the process so having a flexible platform that can adapt to an organization’s specific requirements is critical to managing an evolving product line. This means that the product line management process must be inherently connected to the product’s digital thread to ensure the changing business rules and details of product variants are automatically connected to the extended product development process. This is critical for the traceability of the product, the ability to execute better analytics and eventual creation of the product’s digital twin.

Solutions like Aras Innovator® provides advanced product line capabilities in its variant management application as part of the Product Data Platform. CIMdata recently discussed the variant management application in their eBook Configure-to-Order: Efficiently Meeting Diverse Customer Requirements and stated “To successfully enable CTO, a flexible product architecture, modular design strategy, and a robust PLM platform with strong configurator capabilities are crucial. Aras’ approach to product variation and its management ensures a consistent variability definition across the entire product lifecycle—from sales to product development, manufacturing, and service—while leveraging a low-code approach for maximum product configurability.”

Closing thoughts

Quickly changing customer trends have pushed companies to adopt the mass customization of their products to provide new options that help create new demand while potentially raising the price point. There are several manufacturing approaches to support mass customization, each with their own advantages and challenges. To implement the right internal processes to leverage the approach, companies need to review their business strategies and systems. These include the use of modularization, exceptional trending and estimating capabilities, and advanced product line management capabilities in their PLM system. Regardless of the process an organization uses, there are many components that must be considered to make sure the process runs smoothly. The following graphic from CIMdata’s eBook Configure-to-Order: Efficiently Meeting Diverse Customer Requirements does a great job highlighting this for a CTO strategy.

Make sure you register for our upcoming webinar, Winning at Configure to Order: Drive Innovation to Meet Complex Customer Demands on March 18, 2025.

Also, don’t forget ACE 2025 is right around the corner!

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