From ETO to CTO: 5 Do’s and Dont’s

As said in the previous blog, a lot of production companies move from Engineering to Order (ETO) to Configure to Order (CTO). As such, they attempt to adhere to the customer specific wishes, shorten run times, and lower costs. Product configuration and ERP play an important role here. The transition from ETO to CTO usually […]

Smart industries

As said in the previous blog, a lot of production companies move from Engineering to Order (ETO) to Configure to Order (CTO). As such, they attempt to adhere to the customer specific wishes, shorten run times, and lower costs. Product configuration and ERP play an important role here. The transition from ETO to CTO usually does not happen without some struggles. What do you need to take into account when making this transition? Read 5 do’s and don’ts in this blog!

Do!

  1. Set up CTO with customer needs in mind

IT is important to set up CTO with customer needs in mind, because the process should fit this as well as possible. Do be careful not to immediately jump into these needs or try to answer them immediately. First, be sure you really understand what is needed. For example, a customer may want a trailer of 3.10 meters. In this case, ask yourself if the standard of 3 meters is not enough. Is it really needed to add these 10 centimeters, or is it just a possibly unnecessary measurement drafted up by the customer?

2. Appoint someone to be responsible for the central standard within CTO

With CTO there is always a central standardized product. Components can be added to this standard, and configurations can be made so a customer specific product is developed. It is of importance to have someone within the organization be responsible for this standard. He or she maintains this standard, and makes sure it is always up to date and keeps on conforming to the market’s needs. This way, the standard will keep on adjusting to the customer’s needs, for years to come. A capable product manager is a must for a company making the shift to CTO.

3. Give the customer something in return for the restriction

So, the customer wanted a trailer of 3.10 meters at first. But when the customer commits to the standard, you are able to create a quotation within 10 minutes. The ‘restriction’ the standardization creates (the 10 centimeters in this case) has to be tolerated by the customer, in exchange for the benefits it offers, primarily the decrease in price and time consumption.

4. Choose for a user system that integrates well with the other system within the organization, for a better CTO process

When, for example, someone seeks to invest in a product configurator to form the CTO process, choose a system that integrates well with other systems. This to prevent unnecessary isolated IT projects because of unfit integrations. This should result in saving a lot of time, and lower chance of errors.

5. Choose a partner that understands the market

Perhaps the most important ‘do’ of them all: choose for a partner that understands your market and is experienced in it. Nothing is as disastrous as investing in a system and partner that do not suit you at all. A good partner guides you throughout the process, knows how to tackle any challenges, and arranges an implementation without worries

Don’t!

  1. Do not aim for economization

Do not look at the transition with economization in mind. When doing so, you will not get your employees on board with reaching the set goals. Their jobs are on the line, after all. CTO simply provides a means to get more from your current capacity.

2. Do not start too big

Do not try to realize CTO in a matter of days. Ensure you configure product lines after product line. For example, one machine at a time. This makes the transition bite-sized, and prevents making mistakes due to trying to do too much at once. Additionally, configuration will be easier with each product line, because experience will be gained from configuring each previous product line.

3. Comfort your employees

Some resistance from employees can be experienced, for fear of them losing their function within the CTO process. Explain and demonstrate that they will be able to take on more work within CTO, and that more time will be made free for R&D and innovations, for example.

4. Do not relegate the configuration(s) to Engineering exclusively
To prevent making the compositions too technical and complicated for sales, partners, and customers, try to involve them in setting up the configurations. This way, it can be worded in a way that is comprehensible to them, and will prevent confusion later on in the process. Does this mean the engineers get no say at all? No. They are the cornerstones of the configuration, and need to ensure it is set up aptly. By involving all these parties, the configurator should run smoothly and be understandable for anyone involved. 

5. Keep responsibility over the configuration to yourself

By keeping the configuration your own responsibility, you will be able to quickly adjust configurations or add product lines. If you are not able to do this, you will be dependent on other parties. As a result, you will likely have to spend money on consultancy. Which is unnecessary, and not flexible at all.

Combination Elfsquad – Ridder

To support manufacturing businesses in the CTO process, Ridder and Elfsquad have realized an integration between Ridder’s own ERP-software, and Elfsquad’s product configurator. This integration synchronizes all contacts, products, quotation data, and more between the two systems. When a salesman, distributors, and/or end customers have composed a configuration, Elfsquad’s product configurator generates a quotation and bill of material, which is automatically processed by Ridder’s ERP. This way customers are provided with the basis of tomorrow’s production business. Want to find out more about both products? Visit Ridder iQ’s ERP-software page, or take a direct look at our CPQ software.

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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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