Time to ROAM: Segmenting Markets by Lead-time to Support Mass Customization

Abstract

This case highlights the capacity dilemma facing any mass-customization manufacturer: How can it offer rapid fulfillment on made-to-order products at a competitive cost? Situated at the intersection of operations and marketing, the case describes ROAM, a startup luggage company that offers customized suitcases delivered within a few days. To manage costs, ROAM must utilize factory time and human resources efficiently. However, demand is unpredictable. On the factory floor, employees often either scramble to process a backlog or sit idle waiting for orders.

To smooth production and increase efficiency, ROAM CEO Larry Lein wants to supplement the current base of time-sensitive customers wtih a new market segment: time-insensitive customers. These new customers would get a discount for waiting longer to receive their custom suitcases. In this scenario, the factory manager could prioritize time-insensitive orders first and fill in the production schedule with the discounted time-insensitive orders.

In the case, Larry Lein asks his director of marketing to increase orders by identifying time-insensitive customers from an entirely new market segment.