CHALLENGES AND

OPPORTUNITIES IN THE eBook

CONFIGURE / ENGINEER
TO ORDER INDUSTRY
One of the more complex industry sectors to automate and drive
improvement through software and process change is the configure to
Challenges and Opportunities in the Configure / Engineer to Order Industry

Contents

Introduction ............................................................................................................................................... 2
Don't lose your competitive edge. ............................................................................................................ 3
Industries that typically build or manufacture / configure to order include ........................................... 3
Challenges facing the industry .................................................................................................................. 3
Is the configure to order industry really that unique? ............................................................................. 4
What’s required from ERP – generally and specific to the industry? ...................................................... 5
ERP for the industry – what can a good ERP solution offer? ................................................................... 5
Must the ERP solution that I select have CTO specific functionality? ..................................................... 5
ERP Selection process. ............................................................................................................................... 5
Summary .................................................................................................................................................... 6

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Challenges and Opportunities in the Configure / Engineer to Order Industry

Introduction information and business improvement.

Automation (enabled through software and
The team at Leverage Technologies has been process change) in the configure to order and
implementing ERP (Enterprise Resource engineer to order industry presents some
Planning) solutions for 10 years – we take challenges and opportunities for
great pride in our ability to assist customers in improvement.
choosing and implementing the right systems
This e-book was written to help companies in
for their business. Over the years we have
the configure to order / engineer to order
consulted to hundreds of businesses in
industry with:
various industries. One of the more complex
industry sectors to automate and drive - Understanding some of the industry
improvement through software and process challenges as they relate to ERP /
change is the configure to order / engineer to business management software;
order industry. At the end of the day ERP - Getting a better view of the
software (finance, customer relationship opportunities for improvement;
management, inventory, manufacturing, - ERP software functional requirements
reporting and mobility) is an enabler to for the CTO industry sector;
driving better processes, more meaningful - The ERP selection process.

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Challenges and Opportunities in the Configure / Engineer to Order Industry

Don't lose your competitive edge If you fall into one of the above industries you
would be acutely aware that whilst there are
several common components to an
If you run a business in the configure to order engineered capital equipment product there
or engineer to order industry you will already are always numerous options to be
know two things: configured. This equates to potentially
thousands of different product combinations.
1. Your competitive edge comes from the
fact that you manufacture a unique,
engineer to order product specific to your Challenges facing the industry
customers’ needs and
What's certain is that the more configurable
2. the very nature of building or
the product the greater your competitive
manufacturing a unique product or advantage and the greater the complexity and
potentially engineered to order product room for error with your ERP / business
creates some real difficulties for your management software and other internal
planning, engineering and finance team. systems.
The challenge is having internal systems
that can help your team work together to Companies in industries that offer a
customisable product for their customers face
streamline every aspect of the configure /
challenges in several key areas:
engineer to order process – from quote to
cash collection. Quoting.
When manufacturing a customer specific
product the quote can be complicated. Your
Industries that typically build or quote is typically not going to be a two-liner.
You might need to include CAD drawings,
manufacture / configure to order
technical specifications and more. Often
include: quotes are complicated in MS Excel or MS
Word.
1. window and door manufacturers; the
end product is a window or door but Bill of materials and manufacturing
let's not forget that the end product instructions.
can be made in several colours, with These can be unique for every product.
different finishes and in thousands of
different measurements. Imagine the Costing.
number of possible end product This leads to numerous challenges including
configurations correctly pricing the item for sale and
2. furniture manufacture; a desk could calculating the margin on the sale.
be configured in multiple different
colours, with different drawer
configurations and a combination of
different finishes.
3. fence manufacturing; finish, colour,
size are all common combinations for
fence manufacturers
4. capital equipment manufacture; if you
manufacture an engineered piece of
equipment.

Copyright © Leverage Technologies 2015 www.leveragetech.com.au

Challenges and Opportunities in the Configure / Engineer to Order Industry

Is the configure to order industry solution. After all software is not in itself the
really that unique? answer to our stock, manufacturing or
financial issues however ERP software is an
Yes and no is the answer. It sounds simple - enabler to positive change. Software together
take a standard product and offer your clients with a number of other factors – good
configurable options (colour, fabric, size, implementation, project scope, project
finish). The challenge is the potential number management and change management is an
of finished product enabler to real and meaningful change – Isn’t
configurations......thousands of potential that what we are all looking for. The end
options. How do you quote and design the bill
result of a well implemented ERP solution is
of materials for each unique option?
Traditional ERP, planning and manufacturing not the fact that you had no project over runs
systems were designed for standard products during implementation or that you
- do you want product x ($10) or product y implemented your ERP solution in record
($11). The result - the engineer to order / time. Real change only comes from ERP
configure to order industry has been forced to solutions that enable:
use a combination of different business
management / ERP software solutions - often - Better customer satisfaction through
with manual intervention. on time in full delivery;
If you currently use separate CAD systems,
- Increased cash flow through lower
manufacturing, purchasing, planning and
finance solutions with a myriad of inventory holdings and easier cash
spreadsheets you are not alone. Traditional collection;
ERP (Enterprise Resource Planning) solutions - Increased profitability and margin by
where aimed at distribution companies and providing the tools to better manage
process or discreet manufacturers. This left your business;
the engineer to order / configure - Better quote to cash conversion
(manufacture to order) industry out in the
through a streamlined quoting,
ERP wilderness - the domain of spreadsheets
and non-integrated solutions. manufacturing and cash collection
process.

These are tangible advantages available to

anyone that implements an ERP solution
correctly. Imagine the improvement in
customer satisfaction and cash collection from
a streamlined single, integrated solution
approach to your business process. When
your customer calls in wanting a quote for a
specific product you could:

- quote the product directly in your ERP

solution (including a highly
Opportunities
configurable quote) using the
configure to order module. This will
In this section we discuss opportunities that
include the ability to have the CTO
are not unique to the CTO industry but are
module prompt your customer service
worth discussing. We should always ask
representative for questions and
ourselves why we are implementing an ERP

Copyright © Leverage Technologies 2015 www.leveragetech.com.au

Challenges and Opportunities in the Configure / Engineer to Order Industry

sequences depending on the product - to be able to measure profitability per job

being configured; or product,
- incorporate CAD integration into the - not to hold too much safety stock (using
up our cash flow),
bill of materials design;
- the ability to consolidate all requirements
- cost the raw materials, and the final for purchase and production planning,
bill of materials. This costing could be - to improve customer service.
based on supplier price lists (local or
foreign currency based); All of this sounds simple but given the number
- quickly check what raw materials are of departments in any company involved in
required based on the bill of materials quoting, order taking, planning, design,
manufacture and delivery there is a lot of
and production order;
room for error.
- expedite the order,
- order the raw materials.
Must the ERP solution that I select
What’s required from ERP – generally have CTO specific functionality?
and specific to the industry?
If you are in the CTO industry then yes – make
sure that the solution you are considering has
ERP solutions should be judged by the results CTO specific functionality. Without the ability
they deliver – business results. ERP should be to handle complex quotations(typical of the
seen as an enabler to business change: CTO industry) your ERP solution will not be an
enabler to positive business change.
- Improved cash flow
- Better customer service
- Staff retention
ERP Selection process
If your ERP
solution is not an So when it comes to purchasing an ERP
enabler to solution specific to the CTO or engineer to
positive business order industry how should the ERP selection
change then you process run? As with any ERP selection
might have the process you will want to:
wrong solution
implemented. - Prepare a requirements analysis. This
analysis will focus on all aspects of your
business – finance, CRM, sales,
ERP for the industry – what can a purchasing, manufacturing etc. Given
good ERP solution offer? some of the complexity associated with
the CTO industry that we have discussed
in this ebook it is safe to assume that a lot
- the ability to manufacture a highly of focus will and should be placed on your
configurable end product (this gives us a
operational business requirements.
competitive advantage),
- to be able to deliver the finished product - Budget – there are lots of good ERP
on time in full (in fact the ability to deliver solutions that have CTO modules available
a highly configured product quickly is for your industry. As always, get an initial
another great competitive advantage), indication of budget. There is no point
- to be able to quote accurately,

Copyright © Leverage Technologies 2015 www.leveragetech.com.au

Challenges and Opportunities in the Configure / Engineer to Order Industry

looking at potential solutions that cost

three times your available budget.
- Demonstrations – get detailed product
demonstrations from potential solution
providers. Once again make sure that the
demonstrations focus on some of the
more complex operational aspects of your
business
o Quoting a configurable product
o Creating a BOM for a configurable
product
o Product costing
- Shortlist your suppliers – get a shortlist of
two potential suppliers.
- Scope of works – ask your preferred
supplier to prepare a scope of works for
you – with detailed costing including
o Software
o Annual maintenance
o Implementation
o Report writing
o Data conversion
o Any development requirements
o Ongoing costs – including annual
maintenance (year 2 and beyond)
and the costs associated with
software upgrades and updates
- Visit/investigate reference sites

Summary

The configure to order industry presents some

challenges and opportunities. Make sure your
ERP software is an enabler to positive
business change by implementing the solution
that best fits your process and CTO
requirements.

Copyright © Leverage Technologies 2015 www.leveragetech.com.au