These are the advantages of configure-to-order versus make-to-order

Blog 5 min.

Configure-to-order and make-to-order are two terms you often hear in the manufacturing industry. When creating complex products it used to be feasible to work according to the make-to-order principle, but thanks to technological developments more and more businesses in this field move towards the configure-to-order method. We often see our customers do this with the help of our whitepaper ‘CTO: Roadmap for the manufacturing industry’. In this blog you will read what the advantages of configure-to-order are.

The difference between configure-to-order and make-to-order

Before we look at the advantages or configure-to-order or CTO, a little about the difference between the two.

When talking about make-to-order or MTO, we mean that a product is made based on order, exactly according to the specifications a customer chooses. We’re talking about extensive customization. With CTO the customer still chooses for customization, but within certain limits you establish as a manufacturer.

Advantages of configure-to-order

CCTO has some great advantages, especially when you create complex products.

Speed

Als je kiest voor CTO, dan bepaal je van tevoren precies wat je wel en niet kunt en wilt maken. Geeft een klant zijn gewenste configuratie door, dan hoef je dus niet meer langs engineering om te kijken of het wel gebouwd When you choose for CTO, you determine exactly what you can and cannot and also want to produce, beforehand. Should a customer send you their desired configuration, you will not have to enquire engineering to check if it can- or cannot be built. Your process is standardized, so you are able to sleekly design your factory. Resulting in a shorter delivery time, as well as immediately being able to communicate your expected delivery time to your customer.

Streamlining departments

Op het moment dat je van tevoren nadenkt over de mogelijke configuraties die je gaat leveren, ontstaat er nog During the moment you think in advance about the possible configurations you will supply, another large advantage shows itself: the cooperation between your different departments will improve. As configurations are validated by engineering and production beforehand, so that your salespeople will never again sell something that cannot actually be built. You can then automatically create BOMs and 3D-models, immediately after a sale.

Easier selling

Because you establish all possible limits of the possible configurations beforehand in your product configurator, your salespeople know exactly what they can sell without a hefty amount of knowledge. Because of the validation in advance you are able to provide your sales- and dealer channels with all they need to know, giving them much more certainty in their work.

These advantages all contribute to the biggest advantage of them all: when using CTO you reduce your costs massively, without giving up any customer experience. In fact: your customer still experiences the satisfaction of choice and immediately gains insight in delivery time and costs. Because your factory is fully streamlined, your customer also won’t often have to deal with delays or unexpected costs.

It isn’t all perfect

You could read it in the several advantages we pointed out: to let configure-to-order be a success, everything has to be very well defined in advance. What are the different modules within a configuration? How do they relate to each other in a complex machine?

If you do not spend enough time and attention to this, you might be able to only process 60% of your orders, where the rest remains plain customization. But still, 60% isn’t nothing. The edge cases will come in time, making analysis easier, so that afterwards they can still be absorbed into the CTO-process. Eventually you will process up to 95% of your orders this way, and a miniscule portion of customization will remain.

Take the step to CTO?

Are you considering moving to CTO? Take a look at this blog with a roadmap for the transition.

Let us know what you think.

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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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