| TUM Research Center on Mass Customization & Customer Integration |
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Mass
Customization News edited by Frank T. Piller, MIT / TUM |
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Vol. 8, No.
1 (January 2005)
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What do you find in this issue ?
The 2005 Mass Customization Year: MCPC 2005 and moreI hope you had a good start into the new year. For me, it will become an exciting year at an exciting new place: I will be based this year at the MIT Sloan School of Management in Cambridge (Boston), MA, USA, working in the area of open innovation and innovation management, but also following the mass customization debate here in the USA and in other parts of the world. I will, however, stay closely connected with TUM Business School, my European home base in Munich, and the large "Customer Driven Value Creation" research group there. My e-mail will be the same as before, so contact me at "piller@mass-customization.de". My new phone number for any enquiries: +1 617 230 3748. But also some very exciting events are coming up in 2005: First of all, the 3rd World Congress on Mass Customization and Personalization (MCPC 2005) will take place from 18-21 Sept. 2005 in Hong Kong, followed by a mass customization study tour to Hangzhou, China, on "MCP in China" (22-23 Sept 2005). Make sure that you reserve these dates in your calendar. The two previous events have been large successes, with several hundreds of participants and speeches and presentations about all aspects of mass customization. The conference is organized by the International Institute of Mass Customization and Personalization (IIMCP), and will be co-chaired by Prof. Mitchell Tseng, HKUST, and me. In this year, its focus is on bridging mass customization and mass production. Successful companies are combining both strategies in a unique manner. However, all other aspects along the mass customization value chain will be on the agenda of the conference as well. More information on the MCPC 2005 can be found on http://www.mcpc2005.com (the web site will be updated in the next weeks, so check back regularly). And: Hong Kong and the great campus of HKUST, where the conference will take place, are worth a trip alone (also bring your kids: Disneyland Hong Kong will open early September 2005). To increase the experience, we offer an optional trip to China (Hangzhou), where a number of Chinese manufacturers will demonstrate their mass customization capabilities. In this town, about 2 hours south of Shanghai, Prof. Tseng's Mainland China branch of his HK Advanced Manufacturing Institute (AMI) is based, making it to one of the premier research hubs of China. There will be also great pre- and post-conference workshops in Hong Kong to extend your MC knowledge (Sept 18 and 21, 2005). But most importantly: The MCPC 2005 is a conference to share your thoughts and discuss your ideas. So consider not only to participate, but also to suggest a topic for a presentation and submit a paper and speaking proposal until May 30th 2005 (more information at the end of this newsletter). I hope to meet many of you again in Hong Kong!
A final note on an event that might interest all management scholars in my readership: TUM Business School is hosting this year's EURAM conference (May 4-7, 2005) in Munich. The European Academy of Management is a professional society for scholars in the field of management. EURAM aims to be an open, international and multicultural European forum for networking and research in general management, strategy, corporate governance, organizational theory, organizational behavior and decision-making. EURAM emphasizes multidisciplinary theoretical perspectives and methodological pluralism as well as critical examinations of the historical and philosophical roots of management theory and practice. I liked their meetings very much, and EURAM has become one of my favorite conferences. So if you are from this field, consider to participate. This year's topic is "Responsible Management in a Uncertain World". All information at http://www.euram2005.de. I wish you all a very good, customized and successful new year!
Some rights reserved: A new publishing license for this newsletter
Starting from this issue, this newsletter will be published under a new kind of publishing license ("Creative Commons License") that shall encourage the sharing of knowledge and diffusion of information. Creative Commons (http://creativecommons.org) is a new system, built within current copyright law, that allows authors to share creations with others and use music, images, and text that's been marked with a Creative Commons license. It fits in the discussion of open innovation addressed in earlier issues of this newsletter: "Too often the debate over creative control tends to the extremes. At one pole is a vision of total control -- a world in which every last use of a work is regulated and in which "all rights reserved" is the norm. At the other end is a vision of anarchy -- a world in which creators enjoy a wide range of freedom but are left vulnerable to exploitation. Balance, compromise, and moderation -- once the driving forces of a copyright system that valued innovation and protection equally -- have become endangered species", as it Creative Commons put (in: http://creativecommons.org/about/history). Creative Commons is build on private rights to create public goods: creative works set free for certain uses: "some rights reserved." Read more about this history of this movement at http://creativecommons.org/about/history. I have chosen their "Creative Commons Attribution-ShareAlike License" (http://creativecommons.org/licenses/by-sa/2.0/deed.en). What does this mean to you? If you just read this newsletter, nothing will change. If you, however, like to use material from this newsletter for own -- commercial or un-commercial -- ventures, you have now clear rules how to do so:
It is also worthwhile to browse through Creative Commons Web Site and read the materials listed there. To foster creativity and knoweldge creation, "some rights reserved" may contribute much more than "all rights reserved".
CEC made shoe: A new project on mass customization (and more) in the footwear industry
Manufacturing in developed countries has declined in many sectors including footwear, mainly because of labor intensive processes accompanied by high labor costs. However, it is largely acknowledged that manufacturing cannot be lost. This is particularly true for the footwear sector, since preserving a shoe making capability in Europe is considered vital for the future of the sector, in terms of employment, quality of products, service contents and kind of entrepreneurship of European companies. Keeping the European leadership in fashion and style demands not only to focus company activities on the design stage, but also to be able to master the whole product and process life cycle. The CEC project focuses on R&D regarding products, processes, materials, organization and new IT. The project is coordinated by the European Confederation of the Footwear Industry (CEC, based in Brussels and headed by Mr. R. Smets) and ITIA-CNR (Milan, Prof. C. Boar and S. Dulio) and has in total more than 40 partners from all stages of the industry, supported by a number of research institutions, including our TUM research group. The project aims at moving the footwear sector (retail, industry, university, research and technological centers) from a "product-centered" (shoe) approach to a "human-centered" approach that is represented by three "dimensions" of the human being: - Comfort
(all the aspects of walking, running, standing); To reach these objectives, the project aims at developing radical new manufacturing processes, new materials with a focus on environmental friendliness, an actualized relationship between the supply and demand side and the whole electronic integration of the value chain permitting the optimal use of nanotechnologies and intelligent materials. This includes revolutionary concepts like an "one step production process" (production of a shoe in only one assembling / injection operation), the "seamless shoe" (elimination of stitching operations which represent about 60% of whole labor content) or the "no last shoe" (manufacturing with no lasts), the "reusable last concept" (one last for several sizes). The impact of the project should be:
For more information on the project and a full list of all partners refer to the project's web site: http://www.cec-made-shoe.com.
Mass customization, faster product lifecycles, shrinking labor force are key U.S. manufacturing issues for 2005WAKEFIELD, Mass. -- Jan. 4, 2005. According to data gathered by Rules-driven Product Management (RPM) solution provider RuleStream, three issues will continue to be priorities for U.S. manufacturers in 2005 -- the nation's shrinking engineering labor force, faster product lifecycles and more "to-order" manufacturing. RuleStream's research also showed that fewer engineers will be responsible for an increasing number of products. Shrinking engineering labor force: "The data RuleStream has gathered shows that the opportunities for mentorship, apprenticeship and other traditional learning and knowledge transfer tools are dwindling as manufacturers put more responsibility on their engineers," said David Vredenburgh, RuleStream's chief executive officer. "Engineering teams are adapting the way engineers do--they're bringing in new technologies that can translate these traditional tactics to today's demanding manufacturing environment. "More companies are using software that can capture and reuse intellectual property such as product design rules, and can automate routine and repetitive engineering work," said Vredenburgh. "This gives them the opportunity to shorten design time and more flexibility to fully validate the design, evaluate design alternatives, and innovate." Earlier in 2004, the president's National Science Board found that the number of U.S. citizens qualified for science and engineering jobs is not likely to rise in the near future. At the same time, the board reported that the supply of qualified foreign nationals is down, either because of immigration limits or overseas demand. As senior engineers with years of practical experience look to retirement, manufacturers are looking for ways to transfer their knowledge to the smaller number of new engineers. As engineers become responsible for an increasing variety of designs and products, this transfer becomes more and more difficult. Mass Customization: While the supply of engineers dwindles, the number of products each engineer is responsible for will continue to grow, RuleStream's research shows. "U.S.-based manufacturers are responding to the low cost of mass-produced goods overseas with a combination of greater variety and a lot of engineering ingenuity," Vredenburgh said. "For example, in the automotive industry, the number of nameplates has doubled over the last 30 years, despite the dramatically increased competition from foreign automakers. Americans are discovering that they have the engineering skills to grow profits even as market shares decrease or remain flat." "We are seeing that more and more companies seeking a competitive advantage and higher margins are looking towards the custom products business and simply giving up the standard products business to foreign competition." One of the tactics employed most successfully is mass customization--the ability to easily produce many different products with the speed and efficiency of mass production," said Vredenburgh. "Companies were traditionally reluctant to expand beyond their product catalog, but to remain competitive, it's a necessity, and technology has made is significantly easier to do so. We've seen companies get to the point where they can design and build unique products in quantities of one with nearly the same lead time as an overseas supplier of standardized products." Faster Product Lifecycles: A third trend affecting U.S. manufacturers is the faster product lifecycle. "Faster product lifecycle doesn't necessarily mean faster time-to-market," explained Vredenburgh. "But it does mean there will be more flexible engineering and manufacturing environments that allow the manufacturer to quickly respond to changing customer and market demands and competitive pressures--whether that's by getting the product on the market sooner or keeping the product schedule on-track as you introduce significant design changes." Manufacturing software and services providers have responded to these demands with a variety of solutions, but RPM has emerged as one area that addresses all three issues. RPM - enterprise software that allows discrete manufacturers to respond to customer-specific orders more rapidly, accurately and cost-effectively -- is an integral part of a Product Lifecycle Management (PLM) environment that supports product development activities. (Source: BUSINESS WIRE - RuleStream Press Release)
"stylingcard": Individuality becomes standard wit a new "platform for good looking and well being"The following guest article is written by Hans Flury, who has a far reaching, very comprehensive and also challenging vision in regard to mass customization. Based on the idea of sharing personal data in a network of partners, a new kind of truly customized and customer centric value creation shall become possible.
Focus on individuality. Most companies focus today on customer's behavior and data, implementing customer cards, performing market analysis or surveying customer's satisfaction. Stylingcard removes the uncertainty of guessing customer's whishing and tailoring of innumerable products to best fit the demand. All services can be sold with high competitive prices and high customer satisfaction, the market's data is managed efficiently. The virtual twin: Key for your success. The principle stylingcard is based on collection and presentation of a detailed personal profile. The personal profile is a combination of a high quality 3-D scanning data and a structured analysis of personal requirements and wishes. The entire data constitutes the "virtual twin". The principle guarantees complete protection of privacy and personal data. Each customer is owner of his own data, and can periodically update its profile. The virtual twin can be used easily in different applications. An intelligent
solution: The regional consulting center Styling Point. The Styling
Point is the communication platform in the concept. In a Styling Point,
the customer obtains all the required personal data (3-D scanning and
personal profile) and is offered style consulting from specialists of
different branches. Personal one-to-one consulting, as well as online
access to the entire stylingcard network are provided at the styling point.
At a Styling Point, mass customization becomes reality. The value net connects customers, retailers and manufacturers. Stylingcard is a platform offering great benefits for everybody. Customers have a never-seen-before variety of products available. They can choose, based on their own profiles, clothes, shoes, jewelery, eye-glasses and much more in a transparent way. Retailers have the possibility to offer a much larger range of products and services, without high investments. Manufacturers receive electronic readable orders, based on 100% transparent data and ready for direct manufacture. Stylingcard is flexible and can be used from home through Internet, in the styling point or in a retail shop. Stylingcard will improve the customer advisory service and the value chain of the stylingcard partner. Stylingcard partner take profit from the closer match of demand and supply with e.g. lower logistic cost, lower capital requirements and write off rates. These are the elements to have a fast return of investment (ROI) for the stylingcard partner and provide the basis for a successful business. Stylingcard is based on serious research: The joint venture of science and representatives of different markets is developing the presented solution for good looking and well being since more than two years. The company founded 2003 in Zurich will provide the possibility to buy individual and cost-efficient products, based on professional style consulting. The market is
ready for new solutions: It is an accepted opinion that the consumer
market is shrinking or saturate. Customers have money, but they hesitate
to buy new products. Low cost products of global players are sold everywhere
at very low prices. This battle ruins more and more European companies.
An opposite trend shows economic growth on the home market. The demands
for personalized products with prices comparable to mass production merchandise
is steadily growing. Consumer want to become co-designers and identify
with their product. They don't want to buy clothes or shoes, they want
to buy best-fitting clothes and most comfortable shoes. The Stylingcard project starts NOW: The Stylingcard AG in Switzerland is actually collecting with mobile and stationary styling points individual customer data of more than 100'000 people (average 5% of the market potential in Switzerland). A 3-D body scanner is the base for the virtual twin. The first collection of data is offered at no cost to the customer. A fee will be eventually introduced in the second year of use. Partial sponsoring by partners is anticipated. The different industries can be part of the stylingcard principle. Their participation is based on a developed questionnaire. The expectations of customers, retailers and manufacturers are high. There is a high potential of cost savings and a reduction of the risk associated with the introduction of a new product. More Information about " stylingcard "
Change management for mass customizationHave you ever wondered why so many mass customization projects fail? One cause beyond the typical reasons discussed (like incomprehensive IT systems, lack of branding, wrong scope of variety, etc.) may be the strong demand for internal change management -- an issue not discussed in the mass customization literature before. However, in the meetings of an industry board of mass customization experts, hosted monthly by our research group at TUM Business School, change management for mass customization was mentioned as a predominant need and major factor of success. Why change management? Mass customization empowers customers to become co-creators and design their own, individual products or services. Empowered customers, however, have to meet motivated and competent employees. The company's employees have to understand mass customization and their roles in this co-creation process. Managing mass customization thus includes to manage the internal change in an existing organization that is moving from a closed production system towards a system of mass customization. Shifting the locus of value creation towards customers requires no less than a radical change in the management mind-set. Mass customization demands that customers are regarded not as "enemies" or disruptive factors of steady business processes. As a basic condition to enable mass customization, firms have to cope on the level of the normative management with the challenge to change old, often negative perceptions of the customers in an organization appropriately. The basic idea of mass customization has to be implemented deeply into the cultural mindset of the organization. Consider the example of Levi Strauss' final failure to implement mass customization (see http://www.mass-customization.de/news/news04_01.htm#levi). The main reason why this venture failed was, in my opinion, Levi's lack of change in management thinking. MC was seen as a marketing gimmick and nice PR-tool, but without seeing the needs and possibilities of dealing with single customer orders. Like all humans, business managers and their employees at Levi and other companies moving from mass production to mass customization are socialized into a dominant logic, shaped by the attitudes, behaviors, and assumptions that they learn in their business environments (Prahalad and Ramaswamy describe this good in their book "The future of competition: co-creating unique value with customers", Boston, MA: Harvard Business School Press 2004). What are the areas where change management initiatives inside the manufacturer's organization have to take place to foster mass customization and other strategies of customer integration like open innovation? Members of the manufacturer organization have to be motivated to acquire feedback from the customers that can be used in the production process, and transfer this information to the right internal organizational units. Here, often training sessions and workshops building "mass customization mentality" have to be undertaken with the firms' employees. This process has to be accompanied by implementing corresponding information systems like toolkits. Change management has to support the assimilation and transformation capabilities of a firm. Assimilation describes a firm's routines and processes allowing the firm to process, analyze, interpret and understand information from external sources, in our case demand information from an individual customer. Transformation is the capability to design and re-design the routines that facilitate combining existing knowledge and the newly acquired and assimilated knowledge. The objective is to prevent a new "not-invented-here" syndrome. The firm has to be able to assimilate and transform the customer input in form of need and / or solution information for the mass customization process efficiently and effectively. Exploitation capability is based on the routines that allow firms to refine, extend, and leverage existing competencies or to create new ones by incorporating acquired and transformed knowledge into its operations. This is the largest and most thorough task. In many firms, mass customization initiatives are tried as a pilot initiative, but not implemented as part of the organizational routines of the production process. Here, change management has to increase heavily the exploitation capability of a firm that wants to benefit from open innovation over a longer period of time. Firms may, however, get support in the change management process form the customers themselves. Customers are becoming change agents for the company. The motivation of employees to be customer orientated is not only influenced by employee training and internal motivation, but also by the interaction and social exchange with the customers. Employees are controlling their behavior by the perceived feedback and discernments of the customers as much as by the perceived discernments of their hierarchical leaders. Customers are becoming "organizational consultants", as Schneider and Bowen, two service management researchers have written in 1995. However, in most cases it is not sufficient to believe that customers will do the co-change job alone. Internal change management for mass customization demands that the firm's (top) management actively installs programs to comply the organization's norms and routines with open innovation. The most generic starting point is this regard is to adjust the firm's cultural guidelines. Today, most firms have written cultural guideline, which are taught to all members of the organization. Within these guide lines, often regularly a code of conduct in regard to the firm's stake holders is included, mentioning also the customer. On this level, open innovation and the role of customers as a value co-creator have to be deeply integrated and communicated. But just writing about the need for open innovation is not enough. Companies have to develop change management programs addressing this need. Do you have own experiences or ideas in this regard? Write me -- I am very interested in your insights! This will be also a great topic for discussion during the MCPC 2005 conference in September 2005.
Mass Customization Internet Links: Build your own Neighborhoodhttp://www.kaisersrot.com (go to Projects -> Project Kaiserrot -> Veld12: Implementation of Kaisersrot in Schuytgraaf ) The architecture software Kaisersrot simulates dynamic models. Within a frame of different plots, each plot has specific characteristics such as size, proportion, programme and building position. Furthermore, plots contain information about certain external attactors, like water, nature, shops or public transport links. When the simulation is started, all plots strive for an optimisation of built-in demands. After a certain amount of time, an equilibrium is achieved and the process stops. Now, infrastructure can be generated automatically. The initial results show that this method creates variable patterns that comply to all the given parameters. But, more importantly, this method introduces an interactive component enabling a profound participation of home builders. The software can
be used in order to optimize land use and to develop sustainable patterns
of plotlayout. The solutions that Kaisersrot offers are programmed designs.
Plans are not drawn any longer, but are virtually designed from a collection
of intelligent objects with changeable parameters. The visualized result
is thus one representation of a possible solution. The parameters and
their effects thus become more transparent for planners, owners and municipalities.
In the future, the automated urban generation will be available on this
website, and can be tailor-made to meet specific demands.
Information and Management Systems for Product Customization. A new mass customization bookBlecker, Th./Friedrich, G./Kaluza, B./Abdelkafi, N./Kreutler, G.: Information and Management Systems for Product Customization, Springer's Integrated Series in Information Systems Vol. 7, Springer: New York et al. 2005 The Mass Customization Group at the University of Klagenfurt has recently published a new book on the topics that seems to be highly interesting for our topic. However, the book has not been delivered before this newsletter went to press, so I quote from the official announcement of the publisher in the following: "In today's competitive environment, manufacturing and service companies are intensifying their customization processes. Customization means companies must meet the challenge of providing individualized products and services, without introducing high costs. Therefore, companies must address both customization and cost factors to gain a competitive advantage. While product customization is the manufacturing of products according to individual customer needs, it does not involve any focus on the cost perspective. The book "Information and Management Systems for Product Customization" will concentrate on both product customization and costs' efficiency, which is termed as mass customization. Moreover, mass customization with its multi-dimensions is the new business paradigm challenging today's manufacturing companies. Understanding the needs and desires of the customer are central to the strategy of mass customization. However, introducing customer needs into the realm of product development dramatically increases the level of complexity of creating and delivering the product both internally and externally. This book introduces an innovative model that assesses and distinguishes subjective and objective customer needs. This model along with other software tools and AI agents address the complexity issues that are both external and internal in a mass customization strategy. Fundamentally, the book- with its technical analysis, models, conceptual frameworks, and managerial tools-closes the gap between the complexity and the difficulty of mass customization with its potential payoffs and implementation. This volume consists of three parts. In the first part, within the theoretical basics of mass customization are discussed, and within the theoretical context, the main problems that are encountered with the implementation of mass customization are outlined. Part two deals with the development of appropriate information systems for mass customization. Part three discusses the topic of product modularity. More specifically, this part develops a managerial approach or tool to assess and solve complexity issues induced by the variety of needs expressed by customers. Using the tools and conceptual frameworks developed in the book, the main problems of mass customization can be resolved."
Share your thoughts: The 3rd Interdisciplinary World Congress on Mass Customization and Personalization (MCPC 2005): Converging Mass Customization and Mass ProductionHong
Kong University of Science and Technology, 18 - 21 Sept 2005
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"Mass
Customization und Kundenintegration: Neue Wege zum innovativen Produkt",
herausgegeben von Frank Piller und Christof Stotko, Düsseldorf: Symposion
Verlag 2003, ISBN: 3-936608-05-9, Euro 89,00 (mit CD-Rom und Individualisierungsgutschein).
Information und Konfiguration als Individualbuch: http://www.mass-customization.de/ibook.htm
(2)
Proceedings of the MCPC 2003, edited by F. Piller, R. Reichwald and M.
Tseng, more than 1500+ pages on interactive CD-Rom (plus 300+ pages update
on special web site).
The latest state
of the art of mass customization and personalization research. Read what
more than 200 authors in over 100 contributions have to say about the
design, development, production, marketing, sales, and service of MCP
offerings.
More info:
http://www.mcpc2003.com/proc.htm
(3)
The Customer Centric Enterprise: Advances in Mass Customization and Personalization,
edited by Mitchell M. Tseng and Frank T. Piller
Despite a few exceptions, literature about mass customization and personalization is dominated by an argumentation focusing on the benefits of these strategies, but not delivering concepts and implementation steps how to build a customer centric enterprise. The book provides insight into these particular aspects. Following an interdisciplinary approach, leading scientists and practitioners in the field share their concepts and strategies for building a customer centric enterprise from the perspective of design, production engineering, technology and innovation management, customer behavior, as well as marketing.
The Customer Centric Enterprise: Advances in Mass Customization and Personalization, edited by Mitchell M. Tseng and Frank T. Piller, New York / Berlin: Springer 2003. (XII, 535 p. 168 illus.), Approx. $ / € 99,95, ISBN 3-540-02492-1. Available NOW !
More information and a 30+ page information leaflet with abstracts of all chapters is available on http://www.mass-customization.de/cce or http://www.mass-customization.de/cce.pdf.
(4) Mass Customization: Ein wettbewerbsstrategisches Konzept im Informationszeitalter,
3. überarbeite und erweiterte Auflage,
von Frank PillerFrank Piller's
scientific book on mass customization building the foundation of this
concept from the perspective of production and strategic management. The
capabilities of new information and communication technologies break with
traditional borders and help to overcome, or at least reduce, many contradictions
and limits in management. Based on an analysis of 150 case examples, the
book provides an structural model around the "information cycle of
mass customization" and a process approach on the different phases
of a mass customization concept.
Frank T. Piller: Mass Customization: Ein wettbewerbsstrategisches Konzept im Informationszeitalter, 3. überarbeite und erweiterte Auflage, Gabler Verlag: Wiesbaden 2003, (XXII, 415 S.), ca. € 64,90.
Nähere Informationen oder downloaden Sie einen ausführlichen Auszug (mehr als 50 Seiten) aus dem Buch unter http://www.mass-customization.de/mc-gabler03.pdf.
Mass Customization News -- A Newsletter on Mass Customization, Personalization and Customer Integration
Vol. 8, No. 1 / 2005
edited by Dr. Frank Piller
MIT Sloan School of Management, MIT Sloan School of Management, BPS / Technological Innovation and Entrepreneurship Group, 50 Memorial Drive, Room E52-513, Cambridge, MA 02139, USA; Tel +1 617 230-3748
Technische Universität München (TUM), TUM Business School, Research Group "Customer Driven Value Creation", Leopoldstrasse 139, 80804 Munich, Germany; Tel. +49 (0)89 289-24800
piller @ mass-customization.de
http://www.mass-customization.deSubscribe and unsubscribe at http://www.mass-customization.de, or write at newsletter@mass-customization.de. You will find also an archive of old issues on this web site.
This newsletter is published by Frank Piller under a "Creative Commons Attribution-ShareAlike License". Some rights reserved. Read the http://creativecommons.org/licenses/by-sa/2.0/deed.en for details how to use content from this newsletter in your own work. (more information on this license and your rights to use this document can be found also here).
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Contact and more information at http://www.mass-customization.de; piller@mass-customization.de.
Please contact me to learn more about our corporate lectures, speaking assignments, workshops, case studies, and consulting activities.
Copyright (c) 2005 by Frank Piller. Some rights reserved.
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