In our previous blogs, we discussed the importance of balance between time, cost and quality and how manufacturers cannot afford to emphasize on any one of the triple constraints. Easier said than done.
Especially, the ETO manufacturers, who make highly customized products, are forced to compromise one constraint over the other. It is a challenge for these manufacturers to serve their customers with personalized products and services that justify the cost incurred. As a result, the processes may not be cost effective and margins tend to be are very low.
Each product tends to be unique. In order to deliver the personalized features promised to the customer by the sales team, the engineering team has to design variants of the product. Specifications are different, hence various new parts, assemblies and systems are designed each time an order is placed. There are multiple product versions, each with a varied degree of complexity. These products have complex supply chains and high inventory costs which could lead to exorbitant pricing.
In cases where the design and development teams are spread across the globe, a possible lack of effective collaboration can have a huge negative impact on cost, quality and customer satisfaction. Information silos lead to high part proliferation and duplication of efforts. Multiple reworks add onto the overall cost and result in lesser productivity and efficiency.
It is a challenge for the techno-commercial team to respond to inquiries in the stipulated time. Increased pressure on quick turn-around time results in a faulty job and on the other side, pressure on personalization and quality results in prolonged inquiry turn around time and loss of orders.
So, is there a trade-off between time, cost and quality for the ETO type of manufacturers? Yes, there is and the answer is mass customization through the use of a configurator.
Mass customization is the process of delivering wide-market goods and services that are modified to satisfy a specific customer need. Mass customization is a marketing and manufacturing technique that combines the flexibility and personalization of custom-made products with the low unit costs associated with mass production. (Source: Investopedia)
A product configurator, also referred as CPQ (Configure, Price, Quote), is a software tool that enables a user or customer to create their specifications or requirements in a product inquiry. It empowers the customer by automating their order placement process and makes the decision making process easier and less time consuming. They can choose from a variety of approved options provided by the manufacturer, with their inputs forming the base of the quotation process.
The CPQ tool allows customers to build specifications that suit their product and pricing needs. With the design automation process in place, the sales engineers are better equipped to respond to inquiries and the turnaround time for developing a quote is significantly less. As a result, the bidding process is further accelerated and cost estimation is more accurate.
Due to reduction in manual bidding, there is also a reduction in errors, improved efficiency and the team has better bandwidth for responding to more quotes. The tool generates all required documentation on completion of configuration, like 3D drawings, BOM, that are needed for product development and manufacturing. This reduces the design cycle and reduces engineering effort considerably, resulting in faster time to market for the product.
Modularization of parts and assemblies, standardization of parts, processes and tools, improves the configurability of a product. All the parts and systems in the product configurator are pre-approved on these parameters.
So, it also ensures design compliance and manufacturability of the product, thus reducing errors, increasing through-put and improving quality.
Conclusively, configurator is an effective tool for accelerating inquiry turnaround time, improving order win rate, reducing the design and development cycle, improving manufacturing effectiveness, optimizing costs and delivering quality. No wonder, it can facilitate an effective balance between the triple constraints of time, cost and quality.
Keep watching this space for more information on configurators and how it works for manufacturing organizations. Click the image below to learn more on how to solve the time to market crisis in engineering.
Another version of this blog was previously published in ERPVAR blog as Cloud Manufacturing Software Helps Engineer-to-Order Manufacturers Balance Time, Cost, and Quality.