2023 could get ugly. The worsening economic outlook, rising geopolitical tensions, and volatile energy and commodity prices will push some manufacturers to breaking point. All this against an existing backdrop of increased product complexity, growing customer expectations, digital disruption, and global competition.
But it’s not all doom and gloom, especially for digital leaders in the manufacturing space. These companies have the technology and expertise required to turn turbulence into opportunity.
This begs the question: “How can I transform my more traditional manufacturing business into a force to be reckoned with in an increasingly digital 2023?”
There’s no panacea. The answer lies in combining the right technology with exemplary leadership and, crucially, the culture required to achieve digital transformation. But if there’s one change you can make to move the needle, it should be implementing a CPQ software solution.
This article explains what CPQ (configure, price, and quote) is and how, with the right CPQ, you can accelerate quote generation, approval time, quote-to-cash, and the ramping of new hires. We’ll help you evaluate the CPQ software solutions on the market by highlighting the vital features to look out for.
Start 2023 off right and prepare for whatever the future holds by implementing CPQ. It’s a game-changer.
Learn CPQ Implementation from Start to Finish
It’s no mystery that CPQ has a major impact on customer experiences, but what can it do for your organization?
What are CPQ Software Solutions?
CPQ software solutions are tools designed to accelerate, simplify, and automate the complex product configuration, pricing, and quoting processes that many manufacturers carry out daily.
Best-in-class CPQ software also generates CAD files and documents needed by the shop floor, removing engineering bottlenecks and driving end-to-end automation.
Here’s how CPQ software drives CPQ processes:
The Sales Portion
Step 1. Complex Product Configuration
The user–who could be a sales rep or the end customer–uses a visual product configurator to create a design for a configurable product. They use an intuitive drag-and-drop experience to change things like colors, parts, dimensions, materials, and other options you offer.
Product rules constrain their choices, optimizing every configuration for margin maximization and manufacturability. If the user makes a suboptimal selection, the system flags the issue and guides the user to a better alternative.
Step 2. Pricing
As the user configures their product, CPQ calculates prices in real-time. Manufacturers can choose to display prices on the front end or keep them hidden, showing only sales reps or other back-office teams.
Displaying prices is often a good option–it creates transparency and larger deal sizes as users upsell themselves. But this might not be feasible if approvals are required. In this case, CPQ can push pricing approval requests to the proper person automatically and allow sign-off with a single click.
Step 3. Quoting
CPQ generates quotes automatically, saving reps from creating quotes in Excel, which is slow and prone to error. Automating configuration, pricing, and quoting speeds up the sales cycle, meaning buyers can receive a quote in minutes instead of days. This responsiveness reduces the chance of competitors swooping in to steal the deal.
The Engineering Portion
Step 4. CAD and Design Automation
CPQ captures the design input through the visual product configurator, validates it according to your company’s engineering knowledge and logic (which are programmed into the system in the form of rules–more on this later), and automatically converts the design into sales drawings, CAD files, and BOMs. CAD automation removes the burden of custom design from the engineering team, letting them focus on R&D.
The Manufacturing Portion
Step 5. Shop Floor Automation
In addition to CAD files and BOMs, CPQ software solutions can generate various files and documents for the shop floor. For example, CPQ can instruct the shop floor team on which timbers or sheet material they should use for a particular custom product. Because the design has been validated upstream, fewer checks and balances are required.
The Best CPQ Software Solutions Have These 3 Features…
With plenty of CPQ software solutions on the market, it can take time to choose the right one. And price doesn’t always determine functionality. Below is a list of features you should look for if you’re evaluating CPQ software for your business.
1. 3D/AR/VR Product Configuration
Configuring complex products isn’t easy, especially when working off parts numbers and product descriptions. The more visual the configuration process, the easier it is to pick suitable options and convey product information and features to buyers. And the easier it is for buyers to make a purchase decision or get buy-in from their team.
Your product configuration experience is the shop window for your brand. It has to be transparent and user-friendly. Beyond that, it should be impressive. Leveraging augmented and virtual reality can be a powerful differentiator, especially in industries where products vary little. Harnessing these technologies elevates your business, turning buyers into brand ambassadors.
2. No Code (For Creating Configuration and Pricing Rules)
The best CPQ software captures your engineering and pricing logic in the form of rules and reuses it each time users configure products. Creating these rules can be difficult and time-consuming, requiring specialist knowledge or the help of external agencies. That’s not the case with a “no-code” rules engine, which best-in-class CPQ software solutions contain.
The term “no-code” refers to the use of visual, drag-and-drop tools to create rules. This approach has several potential benefits:
- It allows people who do not have experience or training in coding to create rules.
- It’s faster and more efficient than traditional coding, thanks to a visual interface and pre-built components.
- It’s more flexible and adaptable than traditional coding, enabling users to make changes and update products quickly and easily
3. CPQ Cloud
Cloud-based CPQ software, also known as software as a service (SaaS), is a type of software hosted and managed by a third-party provider on the internet. This approach has several potential benefits compared to traditional, on-premises software (see below) and, as such, is the logical and future-friendly choice for most modern manufacturers.
- Cloud CPQ is more scalable and flexible than on-premises software. Because it is hosted on the internet and accessed through a web browser, you can easily add or remove users, adjust their access levels, and scale use as needed. This is particularly useful for businesses that are growing or experiencing fluctuations in demand.
- Cloud CPQ is easier and more cost-effective to set up and maintain than on-premises software. Users don’t need to invest in expensive hardware or IT infrastructure to run the software, which can save businesses time and money and reduce the burden on their IT teams.
- Cloud-based software is more secure and reliable than on-premises software. Because the provider is responsible for managing and maintaining the software, they can ensure that it’s kept up-to-date with the latest security patches and bug fixes, protecting your business from security threats and data breaches.
2023 could be a rocky year. You’ll need to be agile, responsive, and customer-focused to come out on top. With CPQ software, you can increase efficiency across your sales, engineering, and production departments while reducing costs.
When evaluating CPQ software solutions, choose one that will provide the rapid ROI you want. And If it doesn’t have 3D, no-code, and cloud-based capabilities, you should probably look for an alternative.