Do you feel your current way of working limits your business growth and scalability, while proving ‘the best product’ or ‘100% customer focus’ arguments is getting more difficult? Is there a serious pressure on the cost price? The Engineer-to-Order (EtO) approach is demanding. The calculation and quoting takes a long time, engineering and development costs a lot of money, failure costs are considered as a common sense and delivery times often are delayed. As a result: high efforts but profit is lacking.
Many EtO companies embrace so called Configure-to-Order (CtO) approach, making their product range configurable. Where with EtO you will design each customer order, with CtO you compile every order from existing blocks with a help of a product configurator. This means that CtO companies reduce the turnaround time for time-consuming processes, such as quoting, planning and engineering, even though a product is still customized according to customer specs.
The transformation from EtO to CtO is an intense change process with a strong management involvement. The examples of key alterations towards a new business paradigm are a more prominent product (portfolio) management process, total redirection of engineering, new competences in sales, digital marketing, introduction of Master Production Schedule and reconsideration of production layout and used systems.
Challenges to make a step forward
Making a step towards CtO concept means revising the whole business model (unless you just want a purely visual product configurator). You might have announced your strategic direction but making a step forward is still a challenge. Are you ready for CtO? Here are just a few first checkpoints to consider:
- Can I communicate and explain my vision to my workforce? While the theoretical model of CtO is relatively fixed, it will often mean different things to different firms. Getting shared understanding and alignment throughout the organization, so that the line management can deal with several aspects and choices at very low level of detail, is one of the first steps in any major endeauvour.
- How far can we standardize our technology? Before you can start designing building modules, the key people of your technical staff need to define standards for product functions of your core technology. Just some examples are drives, converters, embedded software routines or stabilizers.
- Does my technology lead understand, and can he/she outline the product modules for me on a one-pager? The definition of modularity and module boundaries is a challenging subject. Several criteria like reusability, independence, cross-product use can be discussed.
- Can my technology lead merge several systems (mechanical, hydraulic, electro, etc.)? A CtO product gets an extra complexity that should be managed- interdependence and interaction between various single components/modules consisting of several technologies. For example, a small change in one module can affect performance of another.
- Where do I get my product manager(s) from? This would be a new function within your organization.
- The plan! Where to start first? Choose the optimum of a potential fast runner and a serviceable technical complexity. Lock the required funds!
Are you considering to move from EtO to CtO? With Mobina this becomes a reality!
We offer a unique software tool in which (top) management can outline and control this complex transition. As a manager, you always have an overview on how the transition is moving forward and can you manage the associated risks. An active role of the line management ensures you have the necessary information and the organization is empowered. Using Mobina software you:
- mobilize your organization for change,
- get access to extensive and relevant knowledge and experience from the industry,
- guarantee consistent and continues documentation of your business, target states and transition;
- have an overview as management on how your organization is evolving,
- ensure your IT landscape is aligned to your business processes