A good supply chain should:

  • meet needs and wants of customers
  • be efficient


  • Flexibility is the ability to respond to change
    • To meet a sudden increase or decrease in demand
    • Change an aspect of the product to meet changing consumer tastes
    • Respond to erratic demand
      • Seasonality
      • Fashion
    • Flexibility can be improved through managing inventory and supply chain management
      • Good relationship with suppliers to respond quickly to changing needs
      • Just in time operations
      • Technology to quickly change re-order levels
    • A trend in increased flexibility is the ability of firms to use mass customisation
    • Mass customisation is the ability to tailor goods made in bulk to meet the requirements of individual customers

Benefits and Difficulties of Mass Customisation

Four types of mass customisation

  • Collaborative Customisation
    • The business works closely with the customer to meet their precise needs
  • Adaptive Customisation
    • A standardised product which can be customised or adjusted by the customer.
  • Transparent Customisation
    • This type of customisation occurs when unique products are produced for each customer but these are not identified as mass customised products.
  • Cosmetic customisation - where standard products are produced but marketed to different customers in different ways.


  • Higher revenue
  • Cost reductions
  • Greater customer loyalty
  • Competitive advantage
  • Improved understanding of customer’s wants
  • Improved workforce motivation
  • Higher profile

Factors required for mass customisation

  • A market in which customers value variety and individuality
  • Quick responsiveness to market changes
  • Ability to provide customisation (a wide variety of alternative versions of the same product).
  • Scope for mass efficiency/economies of scale.
  • Requirement for sophisticated information systems
  • Greater expense in terms of IT, capital equipment and staff training
  • Problems with rejected products
  • Unsuitable supply chains

Speed of response and dependability

  • Speed of response
    • To meet customers needs within a set time period
    • Ability to make changes to products to reflect changing consumer tastes
      • This will only be achievable if inventory levels are low a d suppliers can change order sizes and components quickly
    • Dependability
      • A business operating a just in time system will be reliant on suppliers to deliver the right quantity and quality on time to ensure supply meets demand.

How to make supply meet demand

  • Lots of stock/capacity
  • Outsource
  • Temporary Labour
  • Produce to order

Practice exercise 1

  1. c
  2. c
  3. d
  4. b
  5. A business trying to use mass customisation might face issues relating to lead times, as suppliers may struggle to deliver products on time when changes have to be made on a per unit basis.

A strategic supplier is a supplier that is essential for the running of a business, whereas a commodity supplier is not completely essential.