**2. Theoretical framework and social background of manufacturing transformation and mass customization**

The manufacturing paradigm has always experienced ongoing shifts. The first paradigm was that of the handcraft in which core processes were executed by highly skilled craftsman. When tools were required, the master of those tools generally possessed the needed skills. As wealth accumulated and market demand increased, the manufacturing paradigm changed to a wholesale handicraft manufacturing system. However, in the wholesale system, it was difficult to manage the equipment which was distributed to each manufacturer. Later, this system changed to employ hand-based factories that brought the equipment and the laborer together.

On the other hand, there are cases that have retained a household-based handcraft industry. Typical cases include traditional crafts industries across the country. The following three items are common aspects of such industries: (1) manufacturing regional products, (2) requiring skills that are difficult to mechanize, and (3) manufacturing products with a low price elasticity. Sake brewing, the main target of this chapter, is a traditional craft industry that features all three of these aspects.

Society then entered the Industrial Revolution. Important examples of this revolution include technical innovations in the process of cotton fabric, economic growth in the iron and steel industry, and reform for power source from the development of the steam engine. This revolution also established factory-based industry.

Both manufacturing and selling were limited to local geography during the age of handcraft manufacturing, as the steam engine had not yet been invented. Since it became possible to deliver products further, the industrialization process moved to mass production achieved through the rapid development of a production system. Factory-based industry realized mass production at a lower cost than before.

Nevertheless, the product types available were limited, and in the latter half of the 1980s, society had seen a change from an era in which many people wanted the same products to an era in which people expressed a diversity of interests; as a result, manufacturing industry competition evolved to provide high product variety, known as mass customization. Mass customization is a flexible manufacturing system that creates custom-made options. It is a system that combines the mass production process of low cost with flexible personalization.

The concept of mass customization first appeared in 1987 [14]. Tseng and Jiao [15] defined mass customization as the creation of products and services that meet customers' needs while maintaining productivity at a level close to that of mass production. There are already many examples of mass customization [16], including software based on product configurators that can both add to and change the function of a core product.

**3. Japan's sake industry and market**

country enjoy those characteristics and diversities.

the sake market is diversified and does not show oligopolization.

skills. In the next section, we study one typical brewery.

than the other classes.

**Table 1.** Classification of sake.

Sake is defined by the Liquor Tax Act as an alcohol drink made from rice, water, and rice malt that is fermented and strained. Currently, it has two classifications: specific classes and other than specific classes. The specific classes are also divided into eight categories based on differences in ingredients and processes (**Table 1**). Generally, the specific classes are priced higher

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**Figure 1** shows the amount of sake production in Japan. Production peaked in 1975 and has gradually decreased. The share of sake in total alcohol drinks has also declined slowly, reaching 6% in recent years. This is because other alcohol drinks other than sake became popular. Beginning in the late 1970s, alcoholic drinks such as wine and whiskey were introduced to the

High-quality, high-priced sake in specific classes, for example, Jumnai and Ginjo, thwarted this trend in the late 2000s (**Figure 2**). At the time, some consumers began to express interest in local small- and medium-sized sake breweries. These breweries produced unique and original sake in specific classes based on local materials and techniques. Consumers across the

Sake breweries are dispersed across Japan. Facilities producing less than 100 kl count for 60% of all sake breweries and those producing more than 300 kl are only 15% of the total. In terms of the market share, the top sake brewery, Hakutsuru, has almost 10% of the sake market, and the top five breweries have 37% of the market (**Figure 3**). Compared to the beer market, almost 99% of which is composed of the top four beer companies (**Figure 4**), we see how much

It seems that small- and medium-sized sake breweries have different market targets than large sake breweries, which continue to make their products at lower prices using mass production techniques. Although the amount of sake production has continued to decline for 40 years, high-value products made by small and medium breweries prevent the total market size from decreasing. These local breweries are also challenged to create new techniques and

market, and drinking places such as beer gardens and wine bars also became popular.

Mass customization is a stage of new business competition in the manufacturing and service industry. The service industry also enables various customizations without increasing cost. For example, a call center adopts agent-based voice technology to process customers' inquiries. The agent does not change everything every time, but he or she does change the response process depending on the customer's inquiries and needs.

Pine II [17] identifies four types of mass customization:

• Collaborative customization

Firms talk to individual customers to determine the precise product offering that best serves the customer's needs. This information is then used to specify and manufacture a product that suits that specific customer.

• Adaptive customization

Firms produce a standardized product, but this product is customizable in the hands of the end user.

• Transparent customization

Firms provide individual customers with unique products without explicitly telling them that the products are customized. In this case, there is a need to accurately assess customer needs.

• Cosmetic customization

Firms produce a standardized physical product but market it to different customers in unique ways.

Another production system, called a personalized system, reduces the distance between the customer and company and reflects a customer's idea. From a historical point of view, this method has existed since the time of the household-based handcraft industry. As a new approach in recent years, customers take part in the design stage [18]. Because customers have various needs, they actively join the design process, paying a price to affect the product's quality. Developing a ubiquitous network environment and a flexible process management method in manufacturing has made this possible.

Thus, to meet these customers' needs, manufacturers need to build new architecture with an open manufacturing platform [19]. In such an on-demand manufacturing system, product simulation, responsive, and cyber-physical systems have already been realized [20]. A more rapid assembly process might be necessary to respond to customers' requests. Hu [21] describes this paradigm as personalization and distinguishes it from both mass production and mass customization.
