Configure-to-order: a road map for the manufacturing industry

My customers are asking for more and more customization, my production needs to be more flexible, my production’s run time needs to be shortened, and it is difficult for me to predict customer demand. These are but a few examples of the market trends at play in industry 4.0. Unfortunately it are also examples that belong with the Engineer-to-order process. A manner of working that no longer belongs in today’s industry. The Configure-to-order process, however, adjusts much better to today’s market trends. Why? What does it consist of and what steps must be made? After reading the whitepaper, this will all be clear.

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Ridder Data Systems and Elfsquad support businesses in the shift from Engineer-to-order (ETO) to Configure-to-Order (CTO). This does not happen through software alone, but also by sharing our experience and expertise. What is ETO, what is CTO and what does CTO yield? And what are the downsides in ETO and where lies the success in CTO?

Together, we have realized a whitepaper, in which all steps in shifting from ETO to CTO are clearly explained.

ETO is the order process where businesses design, engineer, and produce products for each specific customer order. This is characterized by its complex sales process, huge freedom in customer-specific solutions and long runtimes. Whereas CTO practically means ‘configure on demand’. The process aims at composing orders and assembling from existing modules. With this, re-engineering becomes a thing of the past. These modules enable the design of a customer specific product which will be standardized within the primary process. This results in peace and predictability.

To tackle the aforementioned challenges in ETO, more and more manufacturing businesses make the shift to the CTO-principle. Because CTO also delivers an important contribution to chain integration. Within CTO it remains possible to tailor to specific customer wishes within certain situations, and as such the unique worth of a manufacturing is upheld. CTO also brings a lot of benefits with it. First of all, it is less prone to error because the processes are repeated often. Additionally, the delivery time of products is reduced. Because the engineering phase is shortened, precious time is saved and delivery time is mainly dependent on the amount of time production takes. Next to this, CTO also makes for a reduction in costs, since the engineer does not have to draw out a new design time upon time again. Finally, CTO enables a significant rise in quality for your products. 

Now what is the danger in ETO?

You might be thinking: I have worked with the ETO-principle for years, why would I stray from this? The following points should give an impression of the downside in ETO:

Frustration

The complicated quotation process works as a snowball effect through the entire supply chain. Faulty compositions could be sold, leading to a lot of unnecessary contact and friction between Sales, Engineering and Production. All in all, a lot of frustration.

Long runtimes

The customer is obviously closely involved in the entire process. This makes for continuous contact between customer, Sales and Engineering. Is the design not perfect? Back to the drawing table. The result? Weeks fly by and production has not even begun.

Innovation

There is no time to focus on what engineers like to do most: R&D. Product development and innovation are on hold. Partly because of the constant engineering of other products, knowledge transfer and achieving competitive benefit become difficult.

And what is the success in CTO?

As soon as the CTO process is implemented in your manufacturing business, the aforementioned obstacles can be tackled. This, among other things, reflects the success in CTO:

Everyone knows what they are dealing with.

Salespeople will always compose a correct product. Quotations for the most complex of machines and installations are always correct. No long-term contact and no frustrations.

Extremely short runtimes.

The customer only is involved in the first contact with Sales. The customer and Sales configure the perfect customer need. With a nearly instantaneous errorless quotation, bill of materials and blueprint. Production follows directly.

Time for a victory in innovation!

By automating the pre-production process, time for R&D is finally found. Engineers can let their innovations show and develop product solutions that really advance you as a company.

Which steps do I need to take to work through CTO?

In short, the steps look as follows:

  1. Choose a partner who understands the market;
  2. Know what this means for your organization;
  3. Build modularly;
  4. Make someone responsible for the standardization;
  5. Use a Product Configurator as a basis;
  6. Combine Marketing, Sales & Engineering during your CTO shift;
  7. Link the chain.

Elfsquad can guide you perfectly during both shifting from ETO to CTO, but also with implementing the Product Configurator.

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No more pre-production nightmares

Elfsquad removes all worries from your pre-production process. With Elfsquad as backbone, we realize the digital factory that smart industries have been trying to find for so long. We do this through a product configurator, with integrated solutions for marketing, sales, and operations.

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