Back in 2005, 25% of manufacturers in the US were engineer to order.
In 2020, that number stood at 51%.
By 2025 it’s predicted that 74% of manufacturers will follow this tailor-made production approach. Engineer to order is the future of manufacturing. That’s a fact.
But the engineer to order space is still considerably more complex than made-to-order (MTO), where manufacturers sell standardized products. Without the right software, sales, engineering, and manufacturing become so labor-intensive, convoluted, and error-prone that all hope of generating a meaningful profit melts away.
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It’s no mystery that CPQ has a major impact on customer experiences, but what can it do for your organization?
In this article, we look at three manufacturers that are doing engineer to order the right way. Each one in a different industry has achieved the highest levels of efficiency, profitability, and customer satisfaction. Join us as we talk to some of the people responsible for their transformations.
What is Engineer to Order?
Mueller et al. said it best: “engineer to order (ETO) companies develop complex one-of-a-kind products based on specific customer demands.” Rather than selling from inventory, engineer to order manufacturers sell bespoke, customized products catered to each buyer’s unique needs.
On the other hand, made to order (MTO) manufacturers receive an order and get to work on production right away. They might allow basic customization – different colors, sizes, or materials – but essentially, they’re manufacturing products from a limited selection of existing designs.
Engineer to order manufacturing requires going back to the drawing board for every new product. This approach adds several additional stages into the process flow, most notably engineering activities that have to be added onto the lead time. But every process, from sales through to procurement, assembly, and delivery, becomes increasingly complex.
If it’s so much more complex, why even bother with engineer to order?
Because engineer to order has multiple benefits:
- Buyers want customized products: According to Deloitte, more than 50% of consumers are interested in purchasing customized products or services.
- Buyers are prepared to spend more: Again, according to Deloitte, one in five will pay a 20% premium for personalized products.
- You can expand your customer base: The greater the variety of products you offer, the more customers you attract.
- Customer satisfaction is higher: Customers don’t have to “make do” with imperfect products.
- Because you can!: Various new technologies are making mass customization realistic and profitable for the first time. This includes software (namely visual CPQ solutions as explored in detail below) and hardware (like 3D scanners and printers.) Take a look at “Driving the Customer Experience with Industry 4.0 Technologies” for more.
Three Companies Winning At Engineer to Order with Visual CPQ
The engineer to order production approach has never been more profitable and accessible. This is mainly due to the recent evolution of visual CPQ solutions that automate the entire engineer to order process flow from sales to engineering and the shop floor.
How does visual CPQ (engineer to order software) work?
A visual CPQ solution works like this:
Step 1. The user configures a product using an intuitive interface called a visual product configurator. They interact with 3D product renderings to change colors, dimensions, parts, shapes, features, and functionality according to their specific needs.
Step 2. The software calculates prices for products as they’re being configured in real-time.
Step 3. With the click of a button, the solution generates sales documents like quotes, proposals, and estimates. It also generates CAD drawings, BOMs, CNC files, AMF files for 3D printing, assembly guidance, and more. These are sent to engineering and the shop floor as required.
Visual CPQ provides engineer to order manufacturers the following benefits:
- Visual product configurators can be embedded into an eCommerce website empowering buyers to self-serve the most complex products, wherever they’re located.
- Configuring products in 3D is compelling and engaging. Add VR and AR into the mix and you can provide a fully immersive buying experience that rivals any physical showroom.
- Visual CPQ solutions contain tiny bits of code called product rules that guarantee every configuration is optimized for customer satisfaction and engineering efficiency – it doesn’t matter if the “configurer” is an experienced product expert or a clueless potential customer.
- Sales reps can follow product and pricing rules to provide outstanding service while eliminating costly mistakes. New hires can get up to speed in days.
- Visual CPQ integrates with all of your front- and back-office systems, providing a single source of truth, reducing siloization, and enhancing transparency and collaboration.
- Manufacturers can slash sales cycles from weeks to minutes. Reduced sales-manufacturing complexity means you can ship products faster than your competitors.
Below are three engineer to order companies using visual CPQ to their advantage and experiencing massive improvements in efficiency and profitability.
Company 1: KparK
The French company, KparK, manufactures windows, shutters, and doors. They’ve been in business for over 30 years, have more than 1,000 employees, and operate 120 showroom locations.
With the exploding demand for their bespoke products, KparK needed a software solution to streamline their engineer to order process. By integrating KBMax’s visual CPQ solution with Salesforce, they shortened sales cycles, reduced costs, and now lead their industry in customer experience.
According to KBMax’s Corrado Songini, who worked closely with KparK, the manufacturer’s sales process used to look like this:
- Customer walks into showroom.
- Sales rep attempts to explain hundreds of product options using generic product photos and a limited number of samples on display.
- Sales rep makes a note of customers’ requirements on a piece of paper.
- Sales rep sends piece of paper to head office.
- Head office seeks further clarification and information from sales rep who in turn reverts to customer for clarification.
- Head office converts piece of paper into a BOM and sends relevant info onto the factory.
- Production begins.
Post-visual CPQ, KparK’s sales process is automated and streamlined. It looks like this:
- Customer walks into showroom or visits www.kpark.fr from any device.
- Customer interacts with entire product catalog in hyper-realistic 3D.
- Customer uses a visual product configurator to configure products in line with product rules.
- CPQ calculates prices in real-time.
- CPQ generates a quote, estimates lead times, forecasts delivery dates, and creates CAD files for the factory floor.
- Production begins.
The result: Quote time has been cut to a fraction of its previous duration. The endless back-and-forth, paperwork, and napkin sketches have been eliminated.
Company 2: MacLean-Fogg
Illinois-based manufacturer, MacLean-Fogg manufactures products for the automotive and power utility industries. It generates over $1 billion in annual sales, operates over 40 manufacturing facilities, and employs 5,000 people worldwide.
Overcoming complexity is critical for a company that sells as many products across as many business units as MacLean-Fogg. Visual CPQ has been instrumental in keeping complexity to a minimum.
Today, four of their core business units use visual CPQ (KBMax) to:
- Streamline configuration: Sales reps use KBMax to pinpoint the optimal product configuration for each customer from a vast catalog of options and dependencies.
- CAD automation: KBMax takes the data collected during the configuration stage and auto-generates CAD drawings, saving engineers hours of valuable time (time that could spend on R&D.)
According to Jenny Bulanadi, the MacLean-Fogg Business Analyst responsible for the company’s CPQ transformation, it’s KBMax’s no-code programing language, Snap, that has been the biggest win for their team:
“What we liked best about KBMax was that you don’t need business resources to support the solution – business users themselves can maintain everything in-house. Non-developers can create product rules by dragging blocks around using Snap (KBMax’s no-code programing language).”
Tuff Shed is a leading manufacturer of storage buildings and employs over 1,500 people. In addition to online, they sell their products in 150 of their own stores and 2,000 Home Depot locations throughout North America.
Tuff Shed uses visual CPQ to “automate the entire engineer to order process, from shopping cart to shop floor,” says Steve Stessman, one time VP of National Sales at Tuff Shed.
Sales reps and end-customers use a 3D product configurator to design custom buildings, following rules and on-screen cues to configure products independently of the engineering department.
With visual CPQ, Tuff Shed can “interpret exactly what the customer wants, with or without a salesperson. (They’ve) closed the gap between the customer and manufacturing, shortening sales cycles, reducing the need for back-and-forth, and eliminating configuration errors.”
Not only is Tuff Shed’s visual configurator available at TuffShed.com and embedded into the HomeDepot website, but it’s also accessible on thousands of iPads located inside Home Depot brick-and-mortar stores. Thanks to this B2B2C relationship, Tuff Shed has acquired thousands of valuable new customers that might never have found the brand otherwise.
It’s clear from the three examples above that visual CPQ (and other engineer to order product solutions) can be employed in various ways. For some, it’s predominantly a sales tool. For others, it’s the single source of truth orchestrating the entire end-to-end engineer to order process.
To find out how visual CPQ can supercharge efficiency, profitability, and customer satisfaction in your organization, get in touch. We’re here to answer any of your questions.