How to improve competitiveness using configurator
This article looks at how to improve competitiveness using configurator
Globalisation can attract strong competition. Partially because of technical exposure, and partly because of the success that the global business brings. European companies can no longer expect to maintain supremacy in an increasingly competitive market. However, what can be done to regain an edge? When so much company time and effort is invested chasing bids and engineering solutions?
One of my clients, a successful materials handling company. Renown as a market leader in their field, having developed both the products and technologies which the industry accepts as standard. Their business grew rapidly over two decades, quickly reaching new markets in Asia and the Far East. It was not long, however, before further competition challenged their supremacy. Strong patents, an excellent reputation and a strong brand, staved off the competitors for more than a decade. Slowly competitive firms caught up.
As competition grew, my clients retained market share by globally sourcing components and moving assembly close to the installed location. Engineering teams worked hard to value engineer the products and reduce cost. The company adopted new sizing methods to size systems tighter to customer requirements.
Over time, the knowledge became available to competitors. Patents on critical components expired, and it was difficult if not impossible to protect the remaining intellectual property. With a falling order book and concern for the continuity of work. My client cut their core staffing levels, relying more on temporary staff for specific projects. New business started to be governed by the availability of skilled engineers to quote and deliver projects rather than the market demand. The company was forced to take on more complex, higher risk projects. As the less demanding, safer projects were snapped up by local competitors. High numbers of projects quoted with a diminishing order conversion rate and prices were reduced to maintain a sustainable order volume.
Asian/Far Eastern competition was getting good. They could employ large project teams with well qualified and organised engineers at a fraction of the European cost. The competition was often the first choice for the most attractive projects, and not only because of the price. My client started to cut back on research and development, and it became more difficult to maintain morale and key staff.
In a strategy meeting to review the future of one particular product, a seemingly ridiculous proposition was suggested, perhaps more in frustration than seriousness, “What if engineering was always complete and accurate”. Serious consideration is given to this seemingly absurd and unachievable goal.
Without engineering delays customers could be quoted within minutes, this would remove the high cost of the proposal preparation and concerns for the low order conversion rate would vanish. Customers would be pleased with an immediate response, and without the need for estimation, the accuracy of the quotations would be exact. Products would be right first time without errors, and lengthy periods of uncertainty. Manufacturing could start the same day as the order was received, components could be sourced in larger batches as information was available instantaneously. Without engineering, the company would be able to be more competitive than the overseas competitors with low staffing costs. However, of all the things that could be shaved off an engineering company to save money, surely the last thing to cut back would be engineering, right?
Like so may hypothetical situations, the solution was too idealistic and seemingly unachievable. Maybe it was time to discuss how to reduce cost further and find ways of becoming more efficient at doing more of the same? However, the idea remained, and I was confident there was some potential in it.
The start of a concept
20 years ago, I worked for a product company which operated under license, but the products were outdated, costly to manufacture and relied upon extensive manufacturing facilities. With falling profits, our group management decided that the business would relocate under the wing of the parent. We relocated without our old factory, and all but three of us remained after the move. Given a fresh opportunity to push the company forward I developed a new product around a modular principle. The final design was made up of a few interchangeable, modular components and the result was that we had more configurable options than the previous product offered. Outsourcing the modular components became straightforward, and assembly could take place in a small warehouse with minimal cost.
From there, I employed a bright young graduate to help me develop a basic sales configurator written around an access database. The configurator embedded the logic and engineering rules that the company use for sizing and selection. In a few months, we had the means to configure the product modules with accurate costings in a few clicks. Furthermore, the configurator generated a written quotation and a costed bill of material, all in far less time than it would have taken to create estimates.
The new business was a fraction of the size of the old one with few overheads. A product range that was now modern and competitive. By just making the product configurable and embedding the engineering knowledge in a configurator tool we had taken significant steps towards losing the dependency on re-engineering. Indeed, preparing a quotation took a few minutes, and the results were always accurate.
Adoption of the idea
I relayed this story to my client who agreed that such a configurator could go a long way towards a business where “engineering was always complete and accurate”, a previously ridiculous idea. Once the concept of embedding engineering into a software tool was accepted, the configurator was adapted to carry out every possible process carried out in the quotation and execution of both a proposal and live project.
Together with generating 3D models and accurate costing, the configurator generated wiring diagrams, flow sheets, spares list and maintenance manuals to name just a few. It was essentially a “business in a box”, with the product only having been engineered once to cover a whole range of solutions. New data was input, and the 3D model reflected the changes made. A new design took a few minutes and, if the customer was not happy, a revised version configured a few minutes later, the whole time the system ensured an accurate and integrated result with no room for human error.
While the results spoke for themselves in the time saved, this was not the end of the story. The configurator met its design brief. It delivered on all its proposed features, but it was the integration into the business that caused a problem. Without being integrated into the overall business process, the content was static and soon out of date. Maintaining the configurator would need to become a core business process. This required the engineering teams to develop new skills and to invest time to perfect the tool.
With the best intentions, the company sidelined the configurator to focus on several large, new commercial projects. My client maintains that the concept of the configurator is a strong one. They continue to struggle with the ability to integrate it into the core business. Perhaps one day the configurator receives the attention it deserves.
A new generation of product configurators
Since the implementation of this first configurator, a new generation of configurators has evolved, which simplify the maintenance tasks. With our improved knowledge, the code used to write the configurator software has been re-written. It is now modular like the products it manages. With re-usable software, the task of maintaining products has become simpler and required less skill. Over the next decade, I believe coding becomes a necessary tool in every engineer’s toolbox, favouring tools like this.
The development of this configurator itself is one I will cover separately. Together with a further article that digs deeper into an engineer’s role in designing and maintaining configurator’s. The product configurator is an extension of the business processes, not purchased and ignored.
Can you improve competitiveness using configurator?
Can you improve competitiveness using configurator? Certainly. Product configuration can reduce thousands of hours of repetitive work. If you are responsible for a manufacturing company that offers customers bespoke variants of standard products or systems? Perhaps you have a large team of sales support engineers to provide customer quotations? But also incur a low order conversion rate? If products can be adjusted to be re-usable with interchangeable modules? If project execution requires extensive engineering to provide similar documentation? Then perhaps a product configurator could be for you. A configurator is a significant investment for any company. It requires engagement from the engineers that use it. And also, a shared understanding of the product configurator and how it integrates with the business.
The power and flexibility a product configurator gives a team is invaluable in a world of intense competition. A robust product configurator can become the core of a business. Augmenting all facets of a company, but not without ownership and effort. I hope this article demonstrates one way to improve competitiveness using configurator.
If you would like to read more on the power of configurators, then please read our article on configurator scalability.
Otherwise, you might be interested in our thoughts on coding as an important tool for engineers.
Written by Peter Slee Smith, Edited by Jason Spencer – 20/03/2018
Gatehouse Design offers services around product configuration, along with other design services.
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