For more than two decades, mass customization has been the future of manufacturing—and for some manufacturers it probably always will be. On the face of it, mass customization is a remarkably attractive proposition for consumers and producers alike. Consumers get a reasonably priced, tailor-made product reflecting their personal selection of colors, features, functions, and styles. Producers, for their part, get to reduce their inventories and manufacturing-overhead costs, to eliminate waste in their supply chains, and to obtain more accurate information about demand. In short, a win-win proposition.

Two relatively recent developments have given the prospects for mass customization a boost: first, the success enjoyed by Dell Computer and other high-tech companies that build products to order and, secondc the emergence of the Internet. Dell’s story is by now a familiar one. Over the phone or via the World Wide Web, customers select what they want from hundreds of different components to configure the computer of their choice, which Dell doesn’t begin to build until it has the money for it in hand. The company has become the envy of manufacturers of all stripes—from automakers to toothpaste formulators—that produce to forecast and are thus burdened with sizable finished-goods and components...