<TITLE: The Effects of Customisation on Capital Goods Manufacturing Businesses
ACADEMIC DOMAIN: technology
DISCIPLINE: industrial engineering and management
EVENT TYPE: doctoral defence discussion
FILE ID: UDEFD030
NOTES: presentation UDEFP030 in Finnish, not transcribed

RECORDING DURATION: 90 min 58 sec

RECORDING DATE: 6.8.2004

NUMBER OF PARTICIPANTS: unknown

NUMBER OF SPEAKERS: 4

S1: NATIVE-SPEAKER STATUS: Finnish; ACADEMIC ROLE: senior staff; GENDER: male; AGE: unknown

S2: NATIVE-SPEAKER STATUS: Finnish; ACADEMIC ROLE: research student; GENDER: male; AGE: 31-50

S3: NATIVE-SPEAKER STATUS: French; ACADEMIC ROLE: senior staff; GENDER: male; AGE: 51-over

S4: NATIVE-SPEAKER STATUS: Finnish; ACADEMIC ROLE: senior staff; GENDER: male; AGE: 31-50

SS: several simultaneous speakers>


<S1> appointed by the department of industrial engineering and management i announce the discussion opened , the opponents are professor <NAME S3> university of nantes and docent <NAME S4> helsinki university of technology </S1>
<GETTING SEATED, P:10>
<S2> distinct <FOREIGN> kustos </FOREIGN> distinct opponents ladies and gentlemen er it has been agreed that the lectio praecursoria will be given in finnish after that we continue with english and the opponents are aware of the contents of the lecture </S2>

<PRESENTATION UDEFP030 IN FINNISH, NOT TRANSCRIBED>

<S2> now , i ask you professor <NAME S3> and docent <NAME S4> as the opponents nominated by the industrial engineering and management to make any remarks on the thesis which you consider appropriate </S2>
<P:06>
<S3> good afternoon <COUGH> the research presented by mr <NAME S2> on the effect of capital goods manufacturing business is composed of five papers and the dissertation , this research work is easily situated in the mainstream of research in management and management accounting by its orientation its domain its methodology and by the tools mobilised , breaking with the well-established routine (capno) in US and (upwood) in UK in 1983 encourage the researchers to look closely to what was going on in organisation instead of playing with obsolete theoretical models , the work presented today is typical of this new stream of field research which is interested in what is of interest to the firm involved in the research the practical problem of the companies . the domain looked at today is original the capital goods industry , research in this sector is rarely a subject of study especially in management accounting , the vast majority of the research being focused on consumer goods such as cars washing machine computers or chocolate bar , mr <NAME S2> must be congratulated for expanding the domain of management accounting research to this rarely studied sector , the methodology used that is case study even with its well-known weaknesses have gained a respectability in the last 20 years mr <NAME S2> himself shows that he is aware of these shortcomings but case study is one of the methodologies recommended when exploring a new field which here is the case , finally the activity approach well accepted in management accounting provides a relevant tooling device for measurement in complex environment as it is in mr <NAME S2> works , let's now look closely to the work present <P:15> first i would like er to thank to the council of finland's industrial and engineering and management for appointing me as one of the opponents it is really an honour and a privilege to act as opponent especially in foreign country , second i would like to apologise not being able to speak finnish <SS> @@ </SS> and not really being fluent in english but i hope to be able to make myself understandable at least by mr <NAME S2> <SS> @@ </SS> mr <NAME S2> i found the reading of your dissertation stimulating it is e- easy to read the structure is clear the idea are coherently organised , and i will also underline the work you have done between the first draft of last january er and the final version we have today and i interpret this ability to improve your work as encouraging for the future , writing a PhD dissertation from published paper is an easy and risky way to PhD degree , it is an easy way because er it you can take advantage of the opportunities of the local environment and write a few papers with colleague which is often source of fun , of course those paper must be of good standard for publication and that part is not always so easy but you have been successful w- which means that the paper are satisfying the academic standard , but this approach is risky due to the lack of predetermined research question , being a member of an engineering department you are aware aware that adding a local optima doesn't produce a global optima , producing from five independent paper a document not only formally but scientifically coherent may be problematic , you largely overcome this obstacle , as shown in the figure one of your dissertation but it is nevertheless obvious that at least one piece is still needed for bridging the four cases , it also i also suspect this way of starting researching to be explanation for some weaknesses in your case , but i think that the effort you make preparing this public defence help you to reinterpret your work and your methodology and that is the crucial achievement which will bear fruit in the near future , so formally and scientifically i support your work but and you know there is always a but , despite my satisfaction reading your dissertation raises many questions which i thought will give you the opportunity to go a little further in your research thinking and writing . my first question comes up with er formulation of your research question on page two and i quote <READING ALOUD> the aim of this research is to describe the effects exerted by customisation on the capital goods manufacturing business  </READING ALOUD> . due to er what we know and to what you describe in your cases , that is customisation is and has been the normal way of doing business in capital goods sector , why didn't you did you not formulate your question as follows the aim of this research is to describe the effects exerted by standardisation on the capital goods manufacturing business . it seems to me whatever the sector you are exploring business can always be portrayed as a continuum between standardisation and customisation which can be paralleled by another continuum between cost and value , hundred per cent standardisation is linked to cost competition hundred per cent customisation is linked to value competition or differentiation using <NAME>'s words , moving from one extreme to the other is a sign that competition bases are evolving in the capital goods market cost has known to be considered as has value attribute in the consumer goods market , so where is the difference if there is one and why choosing to put your emphasis on customisation when it appears that it is standardisation that is new , but maybe none of those these formulation is correct , in your paper i think it's number two cost of customisation you quote lapierre and you wrote <READING ALOUD> from the customer point of view value creation is more based on services related factors such as flexibility and responsiveness than on product-related features </READING ALOUD> that means that customisation is only one attribute but alone it does not have any value , to produce value you need a full flexibility in services responsiveness quality innovation et cetera , so in a certain sense it is vain to try to evaluate the cost of customisation , as i have been a bit long i will rephrase my question as follows , after writing five papers and your dissertation are you still convinced that your research object that is customisation is a relevant one </S3>
<S2> er , esteemed opponent er , i think it's still a relevant one er er (xx) is also the one advantage of case studies but when we started our research work with one of these companies they say that they are interested in er what are the effect customisation they er they manufacture because at that time we had a research project where it was really a in- or like a cost conscious engineering and cost conscious R&D and , er one researcher of us was doing really the opposite studying the er effect of standardisation that if he could <SIC> standardisate </SIC> more , er in that company er i haven't start that time er they were they aim was the opposite that they wanted to know how costly is it it will be to customise product , and they it and my opinion that if it's a relevant for that company it should have some er relevance for the science in that sense because er (let's) say that the , that's a one thing of the choosing case studies we listed we find very lot problems within the companies and we tried them generalise them more o- more in that sense er , you there told like it like i'm quoting the lapierre i know that this er customisation is really a one er value-creating thing but er still it might be the way how it's er shown within the company we don't er see as the service itself is really the problem that say that there it's the customised products which cost not the service , and that's er the way they think and they combine the service and that kind engineering service as a part of customisation er er moreover in er there's really is a missing link and it's really is that should we talk about the cost of customer or the cost of customisation and , it's really is that er boundary is quite vague so we don't know which one is which and we have to make some decision and in my research work we do look at the production </S2>
<S4> okay er i and i guess the audience also would like to have your exact definition of customisation </S4>
<P:09>
<S2> er , yeah there there's a definition in the book which is really actually what is in in english but it's a , i say it this way that it's a slight variation of standard configuration is the customisation , and it can be seen that the customisation it's really the process of doing those slight variations of standard configuration so we still have to have a standard configuration (xx) is not a customised product in that sense </S2>
<S4> er is it an attribute of the product or process </S4>
<S2> er . it's a process yeah , just the outcome is a product anyway in at least the way i have studied in this , dissertation </S2>
<S4> er then er continuing this this this direction er i would like to know how your definition of customise- customised product or the pro- customising process differs from er configuring system or product that been configured by er for example (xx) er product configurator </S4>
<S2> yeah . er , those done by er product configurator are also customised product so customised product are wider definition in that sense , so it includes er also those which needs engineering which is not typically done within configuration products </S2>
<S4> er how is it with this er lampel and mintzberg typology of customisation that you showed there er what's your definition compared to this er mintzberg definition is all of those or is it a subset of those </S4>
<S2> er . th- they make that the one which they say that's (pure) standardisation normally , it's a (pure) standardisation in that sense i agree with them er , in capital goods sense the segment customisation is not customisation but but if you ask generally customis- customised product it is still customisation the consumer good business yes but not in capital goods </S2>
<S4> then the customised standardisation and tailored customisation and pure [customisation] </S4>
<S2> [(pure)] customisation can even be it's depend er , er lines drawn the difference between the er tailored customisation and pure customisation is really er i wouldn't make that line actually so there's certain pure customised product which are one of kind i used an example in the text like N- NASA a- airspace craft project for apollo going to moon those are completely customised product but er in my sense i don't consider a- as- at least a- how i've done this research i don't give a er consider the customised product as in this research so they are new product design </S2>
<S4> okay er , now that we talk about the concept i would like to know how did you operationalise or so measure this concept in your work of customisation how did you measure it </S4>
<S2> er , this is er qualitative case study so it's really depended quite a lot of interviews so we did interview engineers er who design the product or customised product really not in the (idea work) in that sense but doing the engineering work what they're doing and manufacturing people manufacturing managers er production manager and er also the marketing people or sales people there and it's depended how they say that what is customised product and what is not so after interviewing few of those in four companies we decided that the- there has to be certain line drawn which is customised product and not and we really did that er and by er saying that er is it a completely new product so in some cases they say that yeah this is the customised product but it's actually new product it's just er like a mistake of their system they have done it in the engineering department even (xx) they have done in the R&D department but i- i left those out in my study so they d- were not customised product and er the really when we did draw the line it was really is there any engineering needed if there's not any engineering er needed in capital goods sense is not customised product it maybe er in that it can be customised product but in that sense it's not it's er configurated product in that sense but s- certain part of certain type of customised product not which are in scope of this study </S2>
<S4> so basically er your concept was a mixture of a product and process attributes whereas your measurement was only whether (as being) in the engineering part , that is an attribute of process </S4>
<S2> yeah then this takes yeah it takes pros- yeah and it does make sense yeah </S2>
<S4> and er you established by interviews not by for example (xx) even though you mention </S4>
<S2> yeah we did yeah yeah with one er at least with er with two companies we did quite er lot of work with their (xx) so we er , one company especially we looked really all er er R&D documentation or the engineering documentation all the changes they have made and so on and with other company not so detailed but still doing the same work and asking what has it done but not not going like machine by machine everything (like we did with first) </S2>
<S4> okay continuing in page eight you say that your thesis assumes that it er i underlined assumes that activity-based costing system is more accurate in er pointing out the differences er between customised and standard products okay you don't say it there but obviously than traditional costing system <S2> mhm </S2> now er could you explain these two costing systems and and and (outline) perhaps their differences and and and what interests me is er give the motivation to your assumption that er the activity-based costing system is more accurate </S4>
<S2> er . er well the the traditional system compared is a marginal costing system so in that sense er , er the direct cost in both systems are really collected similar ways so we can e- er calculate all the er the direct cost how ma- how much material can be spent on that er piece of product or that product but in a sense of er er let's say how to assign or allocating overheads and other things and in marginal costing system they are typically done er maybe by one volume-based driver maybe more than one volume but typically only volume-based driver which is quite often money , so if we compare them er , like following water depending on the cost of this water so if this w- water inside of that bottle would cost er er one euro and the lemonade in the other would cost two euros so after they go into process er every time this goes somewhere it gets a something per cent adder some kind of adder not which depending on the value of the inside of that thing so when y- this comes out the process it in- it can cost twice as much as the one er or it's it shows that it costs twice as much as the one which is the cost only half , and in activity-based er costing the idea is that er there's more drivers than volume-based drivers so every activity like bottling is a activity which could have a er something like label bottling cost ten cents or then the handling of that bottle has a label and similarly the marketing can be dea- done the there's activities in marketing how much certain products or certain customers need certain activities and that sense er the actual cost of the material and the direct labour is not er c- total cost-driver it can be cost-driver in som- some cases at least some part but er but if there are only volume-based cost-drivers there's no sense speaking activity-based cost in activity-based cost there has to be more than volume-based drivers what they are er for example they could be numbers of stock keeping units number of la- employees for example and in marginal costing-systems we don't use those normally and actually that makes quite big difference is it an activity-based or marginal cost-system </S2>
<S4> okay your (assumption) seems reasonable </S4>
<S3> yeah well let's stay in the management accounting side of your cases , i know it's difficult to have access to the very detail of a cost-accounting system but this access is paramount to understand the (xx) better , so i am frustrated not having any technical data attached to the cases , we all know that the label whatever it is A-B-C or X-U-Z do not tell us anything about what is really going on in the costing system , and due to the emphasis put on cost marginalises product productivity this sort of detail would have been of great interest , you suggest that the main impact of customisation is in the engineering department and then in the sales department the actual sales department and finally in management department , the question is how can we translate this vision in a model suitable for economic evaluation , unfortunately unfortunately none of your cases covers all the function , there is no costing in paper one , no after-sale R&D and general management in paper two , in paper three er after-sale was known to be profitable and was excluded from the study , paper four is restricted to staff , staff their staff and similarly er case er five is restricted to after-sale , so it's this heterogeneity that i think it keeps you from producing a real breakthrough in customisation evaluation , if you had been able to incorporate trans-functionality at the activity level or at the process level the question could have received at least a first answer on an economic basis , today it is not the case then the system used are still (xx) the traditional function , if you want to close the gap between these two and three on one side and case four and five on the other side you need this trans-functional evaluation . would you be willing to go back to some of the cases and integrate the missing function or are you planning a new case in which you could (bring) that (order in what) you already get </S3>
<S2> er . er we have continued work with one of these companies in the like up to now and we have done a little bit combining the after-sales with production and er but , er we are still on our way and er er say er it would be (say) that er it would be nice to say that er like for myself i would like to do it but it's not all only question of do i like to do it but is also question do we have a access of this company and do we have a time for these companies , but er i agree with you that the er this er research leaves too much questions open as typically of a research and that is a good way to going in the future combining of those er i cannot answer can we do it in future i would like to </S2>
<S4> okay er <COUGH> let's go to the methodological issues er , in page 11 you write about the er don't know how to pronounce it but the hermeneutical <FOREIGN> hermeneuttinen </FOREIGN> research method er which er sort of leads me to think that your er science-philosophical background in your dissertation would be hermeneutist or or or that kind of a er mhm , i would then like to hear your your definition of this hermeneutics how you understand it <S2>  yeah </S2> (xx) for understanding </S4>
<S2> er . if you , it's kind of hard to explain but er in english at least for me but er let's start at the , er like engineering background of mathematics are the other end of the er philosophy in that sense where er everything is exact everything can everything can be measured exactly , these are certain laws which are followed like logics pro- positivism is the other end or hermeneutic may be not be even on the other end the other side but it's more on the other side so er , it's really is that er as we see the world and how we d- describe it it's a our view of the world and we need there it's imperative that sense that er it it what we see what we measure is based on the our previous knowledge and that's in our ca- cultural background and that's way er it's er different in that sense and the er , and hermeneutic is also , gives you a possibility to er to widen you research study er things which are not studied before like er like in finland we have good example of er a dissertation made by riitta nelimarkka er in arts because er depending on wi- wi- will it be accepted or not and in that sense er the only way you can study er things like poetry and er creative process in arts is that you have to have a er methodological background close to hermeneutics , so like i i would say that i cannot give an exact definition but the ideas of where it's suitable on how it's work i've been doing isn't really the exactness </S2>
<S4> okay fine , er you looked the definition of customisation from oxford dictionary i looked the definition of hermeneutics from the oxford dictionary er okay er the the science hermeneutics originated from bible studies and the oxford definition is the art or science of interpretation especially of scripture commonly distinguished from er i don't actually know what this means i checked it out from the er dictionary but i can't pronounce it from exigencies of practical exposition , er . to my understanding er there is also the question of the actor's perspective that is er key ingredient of hermeneutics so er you talk about the exact sciences of for example physics where you can make exact measurements , there's also that kind of perspective er for example er objects in physics like er celestial objects er they don't have their own perspective they don't have their own will er whereas in hermeneutics you want to understand the actor's perspective er and and and and explain the er for example works of of of of of of of of (humans) er in terms of their intention and and and and and and and their their perspective so that i would also also love to add (in the assets) my understanding of of of of of hermeneutics , er you mention that already you er you you have a spectrum of of of of (xx) er this this er exact sciences and this understanding hermeneutics er er are are are those the er schools of er er science philosophy that that that you you er sort of er , are aware of or or or or or or or you know feel you must choose from </S4>
<S2> yeah er i- er er if you put put put in a like a two boxes yes but er there are many other er research philosophies and i have to say that i'm not expert not whe- not where many of those er er i know a little bit of some of them er but to be able to use them , not not that well actually , so i mean i n- have the idea what they know but not really used to them using them </S2>
<S4> okay okay er er if continuing this this this this this line of of of of of question well i could perhaps say that i would i would myself view as as me representing logical realism and also being quite close to the pragmatic school of thought , er anyway coming to sort of a er going to the ontological issues er what is the phenomena that you studied in your dissertation </S4>
<S2> it's a customisation yeah </S2>
<S4> that is [er] </S4>
<S2> [custom-] customisation mhm , more in that sense the ac- er (first the first first) more the customisation process actually we er s- study </S2>
<S4> you study er customisation and the process you are thinking (aims) also you said you study the effects of <S2> [yes] </S2> [customisation] so you study the customisation the process of customisation and its effects , now er er mhm okay i'm a sort of a scientific realist and i think feel that you could come up with law-like generalisation a- under er of of of of this phenomenon but now i would like to ask you er why did you sort of choose this hermeneutical er framework of understanding er understanding the actors perspective to study this phenomenon that you have just er stated why you feel it's a good framework to study these phenomena </S4>
<S2> mhm . er mhm my opinion it's really is that the er it's really is it that imperative side of the hermeneutics so er we describe things in words and words means different to different people and er , if you co- if you could do exact science we could calculate how many new like we have done in some papers er th- er (xx) part of that also but we could calculate how much how many different customised things are and we don't give them any values because er you could say that there are one customisation is (it can be that) give them the our value but it's not er er easily to connected that to really what has happened and even if and if it's thought that it's a customised product or not so , er it's my it's really my opinion that er always when there's human involvement we are kind let's say kind of lost with the exact science because human might not act as a way we have thought they have been acting that they should act and that sense i like the hermeneutic approach better </S2>
<S4> er i think your paper number three is about the er product profitability of customisation and you feel there also hermeneutics is (xx) perspective to study that profitability of of of customisation versus standardisation </S4>
<S2> er yeah there's a certain er like my er scien- philosophical background is more hermeneutic and er in that paper we did er like statistical analyses but the way the data has been collected er could be questioned if we would look in er exact science way so even if we have followed the same logic when we have decided what's customised what's not how dividing er er certain er activities and things like that but the when we did er define the activities in activity-based costing model we used that there we have the (imperative) what we think is what's happening within the company so we have to make decisions er by ourself based on our own knowledge and our own judgement that our decisions are right , but there are no exact saying that er there are li- like they have to fill certain er characters to put to be put in that box but it's it's not easy to say that it's all sc- exactly something </S2>
<S4> so er am i right if i er interpret you that you basically say that that that er those er issues in data collection that are are are hidden or or we can't read them from your from your reports are the basis of you choosing the er hermeneutical background in your meso- methodologic part because they were not done as rigorously that would be er required for er for example of a positivist approach </S4>
<S2> yeah yeah that could be (phrased) that way </S2>
<S4> okay er er let's er ask about er the case research method you use cases here exclusively cases so er do you er why did you actually choose er case research approach to study this phenomenon of yours the customisation customisation procent- er process and its effects er but why what is its advantage for example of doing a large survey </S4>
<S2> er , i'm not believer of surveys at all @@ i i can i can start it that way because er er , the survey would have helped like doing like the first paper here basically (where) we define the context of customisation but the problem is when i send a survey i can't be sure that my questions are understood right if people only read them but if i'm doing survey face by face and i can explain what i may asking because words means different to different people then i would be more i can better find and and also after filling surveys before coming to to be a researcher er i had experience how they have filled and i don't trust very much on that data so er there's many problems which are included in surveys and certain er research er they are good but like in this case the sample would have been still quite small there are not like one 100,000 companies making capital goods and i would get a like a mo- i send a 1,000 questionnaires i get 100 back in finland i don't know exactly how many we have these companies but let's say there are no more than 1,000 and if i had to send to all them and how how much i would get back what would be the result of the missing paper and i don't want to do that and that's why i'm not fond of er er er questionnaire survey research in that sense </S2>
<S4> okay but er you don't basically say that it would not be it it would be impossible to use this method of survey methodology to study er this same kind of issues or your your phenomena <S2> yeah [er] </S2> [(sorry)] but i understand you decided your belief and er some practical problems </S4>
<S2> yeah it's er , it's i would say basically say that impossible is not in my voca- vocabulary so you can do it </S2>
<S4> okay okay er but if you if you (your case i think in your case you said) if you if you if you say that er explaining the the the the meanings of the questions then you're introducing an o- other bias there as you are explaining if you wanted if in- in- unintentionally questions answered to some some direction </S4>
<S2> yeah that's always a problem yeah i know i i'm aware of that problem also </S2>
<S4> okay er let's continue er on page er 12 er there you mention that each case involve collection of both qualitative and quantitative data er i would again like to hear your er explain these two concepts er qualitative and quantitative data </S4>
<S2> er qualitative data is really er what we get from interview people opinions er er how people see things and what er what are doing there in that sense the really what we have (inferred) with quite a lot and qualitative quantitative data in that sense it's a like numbers er er how many products we have sold that type of customised (er) or or what's a sales price of that or what's the difference between sales price between standard and customised product or er what's the difference of working hours making standard product or making customised product so that kind of a- about quantitative data was collected </S2>
<S4> right er answers to your questions er of of whether you are a male or a female and then counting how many males and females is that would be in your definition qualitative data </S4>
<S2> er @@ no no it's is quantitative data that yeah [yeah] <S4> [that's is an] answer to your question </S4> yes it's answer the question but similarly the er er because this er case (xx) because it's similar to the answers how many product is sold is also asked in a questions sometimes there were (we looked) the numbers exactly but er sometimes bil- believe what people say that we don't go exactly is it's a 20 or 21 the really is the level is wi- the important for u- us in that sense , and you can collect both kind of data but qualitative data er it's more vague in that sense it's not exact numbers or exact things other than except numbers also is like male and females </S2>
<S4> er i understand so that qualitative data is such data that cannot be er expressed in a numbers </S4>
<S2> er . er there are in some people at are at least trying to express them in numbers like if you think like self-organised maps in that sense you don't put them at like you could say that they have a number they have a at least position in the in that sense you can er make them at some sense quantitative data out of those so it can be done but it's needs the like fuzzy logic or that kind of mathematic thing to work with that </S2>
<S4> er er i'm i'm i'm i'm i'm happy with your explanation but er <SIGH> but er , i would just point out that er the er hermeneutics often deals with qualitative data instead of quantitative data and and and in the end er how much there is of this qualitative data versus quantitative data in your your data field give other examples of both qualitative and quantitative data in your your your your your data that you used in this study <S2> er </S2> which one there is more </S4>
<S2> i really don't know which one is more because <S4> (xx) </S4> er it's it's really the problem is that how to make the qualitative data quantitative so we can measure it and that's a problem i cannot answer and in my opinion hermeneutic doesn't e- exclude quan- er quantitative data so it's question of really the (imperative) how we see it </S2>
<S4> okay er then i have this question that er about scientific observations er would you agree with the statement that scientific observations should be repli- replicable er s- that is they could be repeated like experiments e- er experiments could be conducted by other scientists in order to verify the findings <S2> [ye-] </S2> [do] you agree with that statement </S4>
<S2> yeah i i in generally i agree with that statement that's (xx) </S2>
<S4> so i guess you are already guessing my next question er how does this er er this comply with er confidentiality in your thesis er first you have the confidentiality there er you don't report the key underlying data and other scientists cannot replicate or verify your results </S4>
<S2> yeah yeah . that's also the question of part of hermeneutic and par- er also part of the (xx) er very wide and the business because the situation we have in the company today is not the same we have a year ago and if we go there back now we don't might get the same data as we would have get a year ago in that sense replicating is really problem with the with er this al- typical problem with management sciences , er however if i would give all my notes er and people who has the similar background than i have should come at least similar results not exactly the same results because we don't have exact same background and that's a part of her- hermeneutic research and in my sense that er if i believe that everything i have done honestly and tried to do my best i can be pleased with the data and be pleased with the results </S2>
<S4> yeah i guess the crucial issue is there if you would give y- give your notes but you are not giving them </S4>
<S2> er it's really is that i- including those notes are </S2>
<S4> so outsiders can't really verify <S2> [yeah] </S2> [your (mistakes)] could be if you gave them but you don't </S4>
<S2> yeah they have to come to me to ask them and it's really is that er some of those er all of them are not written down some are based on those feelings and memories and about we are doing the process most of them are still written down and collected so most of them can be used but not all of them </S2>
<S4> yeah and they are not <SIC> publicised </SIC> </S4>
<S2> no they are not <SIC> publicised </SIC> no , but er that's a question of many research er the problem with many research so er if we would include all the data all the papers would come so long that i don't know how many papers i would read </S2>
<S4> yeah that's that's yeah that's that's i i i i i i i most certainly agree that you can't <SIC> publicise </SIC> in in in in the scientific journals they are not interested but then again you would have had er in this er dissertations probably enough pages to er document them so [(xx)] </S4>
<S2> [yeah] </S2>
<S3> er my third question is related to the cost of (direct) margin object used in your cases it is always the product that is the conventional way presenting cost and profit and i agree to that usage in many situations but not in the case of capital goods at least two additional direction has to be explored , but before exploring them let me go back to paper three er entitled product profitability causes and effects , er the introduction starts as follows and i quote <READING ALOUD> information on product costs and product profitability is a prerequisite for conscious cost management </READING ALOUD> first page , and i'm sure that the majority of the (xx) agree with that sentence , but two page later i read <READING ALOUD> the remaining eight millions was mainly derived from after-sales activity the company had been profitable though within the company it was not known exactly which of the products was profitable </READING ALOUD> isn't that a bit contradictory </S3>
<S2> er <P:06> it's in it's really is that situation that company before we started this is a er last period before we started research (for it) er they had a marginal costing system and , quite typical marginal costing system and it was operating in some sense quite well there were no mistakes in that but however in a product level it wasn't very accurate so they didn't know really which products were make- bringing the money they don't and and this is really the situation er before we were in there so what we er we started (this process) and er , the like the income and profit come really from the after-sales it's still remain unclear even after this process so we had e- even more detailed er analyse if we would have could been able to correct the revenues coming from the after-sales to the project the products but we were not able to do that at that time because it's it's also always a at le- at least two parties making the negotiation and er the company didn't allow us to go in that that er er er information at that time in the future we have done more data analyse but still it it's really is really hard to connect er spare part or (consumer) parts to exactly to which product they are used </S2>
<S3> yeah , but in a certain sense that means that you can do a good management without any idea of your cost of product </S3>
<S2> er <SIGH> er . yeah , it's er it's really is a if company is making good money it's a we cannot be even certain it it it's it is because good management or is it the er just the er what do you say high-season er there's a finnish er magazine it's a economical magazine and er there's a writer who writes certain columns there he said that er when you are skiing you never when you are riding a bicycle you never se- er notice when the wind is blowing behind your back always notes when is blowing against you and i think is similar to business </S2>
<S3> okay let's go back to my two direction i suggest we explore the first direction is customer and you were anticipating the question when you wrote page ten <READING ALOUD> similarly one element closely connected to customisation customer costing or profitability has not been a subject of study , taking customer profitability as part of the study would not have been a simple task as the division between customer and product cost is somewhat unclear </READING ALOUD> , my observation is if it is unclear in one direction it should be unclear in the other direction , so i- your cost of customisation is also as unclear as er cost of consumer would be </S3>
<S2> er , er in that sense if you talk the cost of customer or cost of er customised product er we have included with the cost of customer within the customised product so we should not , er in in that sense we should not er actually speak as a product cost and however er er this is a not only er model (our) problem in management accounting field this is a thing we meet quite often that we divide it then er quite er like putting it in two big baskets because it's easy and i guess we have done the same thing easy way and it's really is er hard part of it and and in like in my sense i would like to do it really </S2>
<S3> mhm yes i think that most of the firm are now operating their customer (bundle of) product and services and for instance the customer can buy a new product and mantenant- maintenance for previously purchased product or additional services for the product , in such a situation it is interesting to evaluate the cost of the different product or services but it is also of great interest to understand the profitability of each customer it is more and more applied in the consumer goods sector and i think that is it will be specially relevant in the capital goods <DISC CHANGE> on that research perspective </S3>
<S2> mhm er <SIGH> like when we started this really is we wanted to do that but er maybe is it because when we started the project with that company er we were in situation that er even these results er overcame the expectation they had made for the project (so) they didn't believe that we could get that kind of numbers and er unfortunately the situation is quite often similar in every company we have started the project so we first have to get something basic things right and after that we can continue more advanced things </S2>
<S3> er there was a direction in which the cost accounting could have been expanded is the life cycle cost , and that is so obvious that the idea is rising to the surface in each paper but never er deal with , the selling of a capital good one day is all of the story the warranty cost they come two years after (xx) for same business maybe more profitable (post-) (xx) more important than er the customisation the existence of a second market the cost of usage and the cost of disposal can no longer be ignored , and it is broadly agreed that a great percentage of all this cost are predetermined at the R&D stage so leaving the R&D department without tools to focus consequences of their technical choices is more and more risky , to (document) this question you need to develop longitudinal cases which is far more complex but it is so crucial for the future that you and the firm you are working with cannot bypass this question as we ar- idea was rising to the surface in your paper maybe it's now on the agenda </S3>
<S2> er , let's say that we are working on it and er our research group to post-management (xx) that er and part of its we are doing the life cycle costing now more and my colleague <NAME> is sitting here there er he did his er dissertation in a mea- measuring R&D success in life's of s- er si- life time context so we are moving that way er er and like with our group i am part of that process not a- at the moment actually a- actively involved with the proj- project </S2>
<S4> er , can you just explain in detail you have four companies er you mention there in the end of the thesis you have four case companies that are present in the papers you have five papers one have four companies there it's easy but how the papers and the companies map perhaps you can even draw a graph or something like that or a matrix <S2> er <SIGH> </S2> tha- that shouldn't be confidential </S4>
<S2> yeah yeah that's that's confi- er i can say that the only those four companies two are studied more closely and paper two and three are written of the same company and paper four and five are of the same company so i could say that but i cannot say that the one of the paper two is written on company A or company B or company C or company D combining too many things . <SIGH> er @i have@ even i hate this but er because i always say that people say this is question of confid- confidentially er maybe after few years company is ready to say that yeah you can use our name because that was then and in my se- in in my opinion er in those numbers there are nothing that we should keep confidential maybe at the time they were done maybe one year and that's it but if we want to co- continue to do research because er i (xx) management accounting lets us really , we get all the information we get the process information we get the cost information so we actually get a qu- quite good an idea how their expenses are ke- er (calculated) or accumulating within the company so we want to be able to get in that to that information in the future and that's why we er er we believe what the companies say and we don't question </S2>
<S4> yeah i understand that but er am i right by understanding that in in in in in paper number one you have four companies <S2> yeah </S2> in paper number two and three you study extensively the same company <S2> yes </S2> which is different from the company that you study in papers four and five are the same okay <S2> yes </S2> it's er insufficient for yu- for me er well how why did you choose these particular companies for ins- for for these these papers </S4>
<S2> er it's really is that er the papers are wri- written in the order that the er like within paper four and five er s- er they are that's the order in the with they writing those papers and writing two and three are no they were written in the order that three first two second er after that er but but those were in similar process the writing time with the other like four and five and two and three were doing the same time and it's really is that the er we have a er research er concept contract with some companies and er it's really is that we do something for them and they give us er numbers and data which we can use for scientific purposes and their purpose is not only scientifical they want to get some advantage us doing work there in that sense we do kind of action research in er that could fo- say would be the best process , and er after that we have those two companies er i personally er did choose two other companies er the following view that are we only looking these two companies and little bit different but quite similar so so we can find the same er operation within those companies the volumes are about the same level for the cost varied quite a lot between the companies but er er the (xx) the products but still er quite similar companies so i can er and moreover then after i have experience with those two companies er it was much easier to go back to those two companies but also to go to other companies because er i was all- already aware of the ph- phenomena of customisation so i was able to ask better questions would i have been able we- i- at the time i started the research </S2>
<S4> okay er you of course er (xx) also started from the phenomenon and the need for be the best company from that (you value) or er already er sort of understanding and intimacy contact (xx) contact also er <S2> that's true </S2> that's (really) understandable we do it like that also our university , er in paper five er that is a based on the analysis of single product in a case company or a s- single case company er , you this decision is justified by er you naming a critical product the criticalness of this er er could you perhaps er elaborate on the the the motivo- your motivation of this er particular choice and and and and the advantages and and and disadvantages of such choice in terms of of of of building scientific knowledge </S4>
<S2> yeah it's always a , yeah problem to build scientific knowledge based on one case so er you cannot make any generalisation out of that er not any big generalisation if but if it's er in line with the previous knowledges it can er strengthen the (quantitative) knowledge and maybe er move the knowledge a little bit er er er forward er . now i missed your questions @@ could you er repeat </S2>
<S4> okay the idea is single <S2> [yeah yeah] </S2> [product (xx)] a single product is <S2> [yeah] </S2> [single] case company i would just want to know er disadvantages and advantages of <S2> yeah </S2> just doing a research on <S2> alright </S2> a single case for single product <S2> er </S2> you said already generalisation and then you continued to er strengthening the existing knowledge <S2> yeah </S2> and then you lost your [thought] </S4>
<S2> [yeah then] i lost my thought , er it's really is that question of er did er there's always a like , (that) has been the one er single product and like this case er was really is that er it was well-documented case in that company and they had other product with has a- also i don't know if they were actually as well documented as they should be because the company has really good er engineering documentation and things like that and the company er selected really this product and said that yeah this is a typical presente- presenting of their product manufacturing quite heavily customised t- typically for that type of product and the advantage really is that if we would have gained more data er of course it would have (written) the er the results and saying that yeah this is with one product what it would it be with other products , and the dis- ma- disadvantage is that also there's a er it's always the situation that like you have to make more effort to get it and doing this er work i don't know how much would long it would have taken it has i- it would have taken more long but even er like in this case the they say that this is a very heavily customised product and this should cause a very big effects in a spare part business and it do- it doesn't didn't show any would i say great effect it showed some effects so er would e- would we would have we have get different product results if we would taken other product maybe but er the results if we believe what the company presented s- say would have been even more er minor er results so even less effects in the spare part business </S2>
<S4> okay basically so you actually have there sort of er falsifying er reasoning er you probably know the ideas of <NAME>'s who okay er , er his idea of of building building scientific knowledge is that you actually can't prove a theory correct <S2> right yeah </S2> you can only er only prove it being false <S2> yeah maybe i now (xx) yeah </S2> and and and and it in in in that terms your choices you mentioned there there was this er sort of er er , er theory in use at least in action research terms er that they thought that this product would be er would er add most to the extra costs but by showing that it did not you sort of falsified their theory and that's the my understanding of great er er (big) possibility in in in in in in building scientific knowledge by by or clearing a part by case studies if you have established a theory and you find single case that is against that then you falsify that theory <S2> yeah er </S2> which you actually did there </S4>
<S2> yeah but er , yeah but life is not that simple anyway so @@ in some other cases we would have might get different results and er er er it's really is that the i er would not make any generalisation that so if the one apple is bad every apple is bad one so there could be one rotten apple in the basket so er in that sense that we er if they say that apples are good it doesn't mean that all apples are good and </S2>
<S4> but if you say apples are good i i understand it it means all the apples are <S2> [yeah] </S2> [good] and that we falsify by just pointing <S2> [yeah that's it] </S2> [(out) one rotten apple] that's the s- the strength of a case approach </S4>
<S2> yeah there in that sense you are right but er if you how it's really is how you understand that apples are good do you understand that all the apples are good or the most of the apples are good because we don't say it we didn't don't say it exactly at the time we said that apples are good , in that sense </S2>
<S4> but [there you should be] probably exact </S4>
<S2> [yeah yeah] yeah that's really the er problem and that's why i don't want to make that conclusion that it's a generalisised er that the only in every case in this case in this company yes but not in every case so i would be more careful with that </S2>
<S4 AND S3 WHISPERING, P:07>
<S4> okay er let's er move to er . move to er results in page 20 er the question number six on profitability you say that the findings did not show that customisation led to any differences in profitability so how did you reach that negative conclusion that they did not show any differences in profitability </S4>
<S2> er , if we look the er er how we how profitable were or like in this case unprofitable were the customised product or the similar products they made er you couldn't say er like i did a statistical analyse that there is no statistical differences at least it doesn't show any difference between customised product and the standard product in that sense so there's no sense to say that there's a difference at least in (statistical) sense and , there might be but not at the least at the level we have measured in this case </S2>
<S4> and in in in in process i mean that you you build an A-B-C model <S2>  yeah </S2> got the er true costs or A-B-C model cost and you compare those to the true prices and that was the profitability <S2> yes </S2> (xx) that's how you er arrived to that so er if customisation did not increase profits is it really worth the trouble </S4>
<S2> mhm , it's really is the question that do we do that business at all or do we want to do it so er , er in some sense er if we won't do those customised product we might lose a lots of the markets from the standard products er , other things is that er company's cost at least in short term are fixed so if we drop some products out of product line in general not in this case but in general er we lose at least some income but we still might have all the fixed expenses left so , it could be and and other thing what i think is er more important is really is not not really the profit of one product is really is that the er im- for me it look like that the making customised product is really giving you like the right to be in a ball game so if you don't make them you are not in the business </S2>
<S4> yeah er i have to admit that's somewhat a tricky question because this symmetric you didn't find any any difference so that (xx) ask so is there (xx) to standardise worth the trouble <S2> [yeah] </S2> [okay yeah] er in page 20 er question number six on profitability of the products you say i quote er your er exact statement here <READING ALOUD>  furthermore the study revealed part of findings concerning the profitability of customisation and product variety suggesting that it is profitable to increase product variety by creating more models from single product however it is not profitable to increase variety by creating new similar products </READING ALOUD> er could you explain this in in in in in in in in more plain language what does this mean i have some difficulties in understanding the reasoning of this this is after all the conclusion </S4>
<S2> yeah it's conclusion er , er , m- maybe the er er i i gi- give you an example because this is a discussion i talked with my wife about week ago less than week ago we went in a shop to buy candies to our girls and we noticed that the one company has made a er er actually they make a c- er candies named TV mix and now you can they don't make different brands they only sell TV mix and there's within TV mix there are many different er kind of candy boxes of (xx) so they have created to one product e- er actually er i- i go back for industrial goods after (to that) the they have made one product and they made similar er models w- underneath that one product so they can do one marketing theme and things like that so they s- er save plan expe- er expenses but if you go to like well this company er they made a er let's say they made a er refrigerators and they have designed one size of refrigerator so they have the basic design so now we got some advantages so you get the eat ice cubes out of your refrigerator and more room but you have one basic design you use that in always but other way you (xx) that you design new wit- w- w- refrigerator always when you put some er feature in it so er maybe the different relations that adding features and maybe like a like for example cars which i usually like to also example even if they are not er indus- k- capital goods but er er it's a one idea that we have a certain product (xx) for example volkswagen golf and then we put the motor starting from 1.6 litres up to three litres and that's the er really the making more models out of one product and the other way other way round that we have only golf with two litre motor then we re-design the whole car and make 1.6 litre motor and the re-designed car name it then er i cannot (xx) name for named baseball then and then we design with the big motor and then we call it like like football and that's it so that's my idea </S2>
<S4> yeah i suppose i (re-) agree er i understand (veri- veri- verify) explanation er thing is that you have groups that you have not really defined like product variety single product er similar products and and and models so that it little little bit hard for at least for me er and after we discussed it with my wife (who) also cannot understand @@ er one question about the conclusions here in conclusions here you have a separate chapter for the all your conclusions so every conclusions i think seven eight and nine er you put into one er one paragraph er can you er clarify where are the exact conclusions to research questions eight and nine </S4>
<S2> back to research questions @@ </S2>
<S4> (they are) after sales </S4>
<S2> yeah er the exact numbers are really in that sense shown in the a- actual papers so it's the last paper out out in in the press version is will be pub- (xx) soon but er , so it's really is that the er , the er its affect the number of sales volumes er it affects er like in that case er i really cannot recall the exact number but er it was something like five new items and even less than those are kept in stock if i m- recall myself right so the effect itself is er , er quite er small at least measured in a number of new stock items or new er after sales items and similarly the sale volume of after-sale item is always low so regardless of do we customise it or not it doesn't in at least in this case doesn't show any difference because the volume is like in , if it's it has a- annual volume is ten it's really high volume after-sale item typical to volume is zero one or two , customisation doesn't make any difference small number remain small </S2>
<S4> how about number nine the last question </S4>
<S2> oh , er </S2>
<S4> i guess the eighth now or or (xx) some way answers it </S4>
<S2> yeah the eight answers some way er if i recall it was something like i have to go look the exact number but it was something like five thousand (euro) or something like this the (xx) valuable (cost) (xx) rising comparing the with the all total inventory value they had at that time so you (xx) (think why) er it's quite er i'd say not important is the where we , i can't find here but it's really small number compared to sale price of the product or the total inventory value in this case at least </S2>
<WHISPERING>
<S3> yeah , i have also a long list of technical question on the cost-accounting but i'm afraid that would take more than the four hours remaining so i suggest we postpone the discussion on this point </S3>
<S2> yeah </S2>
<S4> mhm er , final statement er , <READING ALOUD> the aim or er mr <NAME S2>'s dissertation is to describe the effects of customisation on capital goods manufacturing business and operations as well as to describe extra costs resulting from such customisation , mr <NAME S2>'s dissertation the effects of customisation on capital goods manufacturing business consists of five papers and a binding story , there are four papers that have been published or are forthcoming in scientific journals and one conference paper the scientific journals abide by a peer review procedure and they are overall of good quality , the subject in the binding story is introduced through the definition of customisation versus standardisation and capital goods versus consumer goods the defi- the definition of capital goods used for the purpose of this research is narrowed down to low-volume products for which standard and customised versions exist , er the review of literature highlights the relative lack of existing research on this subject in contrast with pro- proliferation of research on mass-customisation in the consumer goods sector , at the same time the dissertation could (xx) adopted a slightly more cautious stance to the conclusion of scarcity of relevant contributions in the field , the literature study also s- shows how difficult it is to use typologies of customisation due to the number of combinations and the inability of the typologies to take into account the hierarchy of the characters , the author of the binding story always faces a daunting task of integrating the various papers that may be written before the binding story and perhaps with intentions other than the future inclusion in binding story mr <NAME S2> accomplishes this task by presenting nine separate research questions that relate to the aim of the dissertation each of these research questions is studi- studied in one the five papers except for the research question number seven that is studied in two of the papers , a brief methodological discussion is followed by the abstract of papers chapter results and general discussion provides answer to the research questions except for the research question number four which remained not fully accounted for as the author candidly admits the conclusions can also be found in the papers , er all the five papers of the dissertations can be characterised as case research , there are four different case companies and the paper can be based between one or four case companies , as the papers report different aspects of a limited number of overlapping case companies it can be said that the topic is treated with sufficient diversity , the selection of the particular case companies is motivated through er their involvement in the capital goods sector and by their having manufacturing engineering and sales departments , inside the case companies both qualitative and quantitative methods are applied as is stated in the dissertation this provides methodological triangulation and thereby increased increases the validity of findings , the page limitations imposed by the scientific journals do not allow presenting the actual data like the semi-structured interviews or the company documents as the interests lies more in the results , the case company names as well as products and other data leading to identification of the case company are not disclosed citing the business confidentiality as a justification the binding story does not take the opportunity to remedy this either the policy of non-disclosure of data and case company is not entirely uncontroversial as the openness and replicability er or at least verification of the results are values cherished by the entire scientific community , as comes to the scientific merits okay customisation increases costs therefore the finding that customisation had no impact on profitability of products is significant , also the actual foundation of costs of customisation for different functions in capital goods manufacturing can be considered a new contribution , after sales effects of customisation is a topic of relatively limited previous research focus for example the finding that customisation may increase the sale of consumer goods can be regarded as a new finding , while the narrow focus of the research conducted through five cases studied contributes to the robustness of the conclusions it calls into question the overall generalisation to all capital goods , customised capital goods needs specific engineering but also wide range of after sales services and plenty of spare parts before being recycled in that configuration traditional (xx) A-B-C product cost and product profitability is of little interest , the great improvement in understanding cost and profitability can be obtained by moving to whole lifecycle costing what is important is that all the ingredients are now in place in this dissertation for making a critical move towards new tools for the capital goods industry based on a lifetime product study value process analysis and customer profitability , our overall evaluation is that this dissertation was clearly written and mr <NAME S2> has presented it with great clarity , his work is original and provides many interesting insights , the results presented in the five papers contribute to the existing body of knowledge of the effects of customisation in the capital goods manufacturing , during the dissertation mr <NAME S2> has demonstrated that he masters his field of research , he has been able to respond to our questions and criticism concerning his thesis , he has also shown that he can reasonably justify the decisions and choices he has made while writing the thesis , as regards to the criticism presented here it should be borne in mind that it concerns complicated research and methodological issues where no easy answers can be found , such points in this statement should in our opinion by no means preclude the acceptance of this dissertation , the dissertation er the effects of customisation on capital goods manufacturing business as a whole fulfils the standards of doctoral dissertations er we therefore recommend that this work will be accepted </READING ALOUD> </S4>
<S2> i want to thank you professor <NAME S3> and docent er <NAME S4> for those comments you made out of my work and also those er showing me new ways that i can continue with my research , <CONTINUES IN FINNISH, P:14> </S2>
<P:06>
<S1> i announce the discussion closed </S1>
