This page is relevant for engineer-to-order (ETO) businesses that assemble projects using some standard products. While for some ETO businesses projects consist of only one-of-a-kind development. Many ETO businesses also sell products and use the ETO model to design complex systems which include these products. For these companies, there is a considerable advantage to combine the flexibility of ETO with the efficiency benefits of configure-to-order (CTO) products components. For many companies, this can remove significant risk from the project, reduce delivery time, lower costs and eliminate errors.
Engineer-to-order (ETO) businesses are characterised by deferring engineering to after the point of order. Many ETO businesses, however, do have products of their own which they integrate into systems provided to customers. Owning products give the company some technical advantage and re-inforces creditability with customers. Many ETO companies, however, continue to operate the ETO production model for both the system and products which adds complexity, time and cost to the business.
Project profitability
Many factors influence project profitability. The profitability of the products used in the project form a significant part of the overall project profitability. By managing products as configure-to-order (CTO), it is possible to increase product profitability with reduced risk. The profitability of the business and the project is influenced by decisions made in sales, engineering and production. Profitability is affected by the accuracy of costs used to calculate the project, and the design of the products used in the project. A change adds considerable risk, and the ability to respond quickly is essential to minimise the impact. Using configurable products can help improve project profitability. See more …
Lower sales cost
By providing product information which is complete and accurate, will reduce the time sales teams need to research and configure products before integration into the overall system. Ideally, the products should be constructed and managed as configure-to-order (CTO) products allowing the rapid and accurate configuration. These CTO products will be supported by comprehensive technical and commercial information. Without having to spend time designing and costing products, the sales team can focus their efforts on the overall project, reducing time and cost. For companies in highly competitive markets, low order conversion rates are typical. Lowering sales time by eliminating repetitive product work becomes a higher priority. See more …
Lower engineering costs
With products fully defined and configurable, engineering requires no further product input during the order execution phase of the project. Engineers will have more time to focus on the system integration issues and areas of the design which add value. All design work for the configurable products will have taken place during the product development phase. By eliminating product design work from the order fulfilment process avoids the repetitive and iterative reconfiguration work which adds no value to the business but results in bottlenecks, mistakes and late delivery. See more …
Fast response to a change
In a change does occur, the configuration of a modular product can be modified very quickly. A product configurator can be used to change product configuration in minutes. Support information such as manuals, data sheets and drawings can often be created at the touch of a button. Responding faster to a change significantly reduces risk and provides more time to manage the effects of the change. See more …
Product cost
Product cost is relevant to the profitability of the project in several ways. Firstly it is important to use accurate product costs when calculating the value of the project. Too often sales teams must resort to using historical information or estimated costs. Using fully costed configurable products eliminates the risk of inadequate information. Secondly, a well managed and developed product optimised as part of a product family usually provides a significantly more efficient and cost-effective product solution. Thirdly, with incurring the risk of prototyping a solution often the case when products are designed in an ETO environment, there is less risk of error. Overall, using CTO products, costs and commercial risks will be lower. See more…
Reduce errors
Design errors occurring in the issue of products are costly, they lead to delays, rework, loss of customer creditability and poor morale throughout the company. A high error rate can occur in sales, engineering and production. Using principles of poka-yoke, create a product standard reference library to ensure errors cannot occur. Ensuring that the standards are complete, accurate and contain all the data required by all stakeholders. Standard information can be maintained and easily secured. Current, validated information is available to anyone who is authorised to access it. All standard products are thoroughly checked to eliminate design and integration errors. When errors are detected, correct these errors at source ensuring continuous improvement. Information stored in the standard library is accurate and up to date and therefore reliable. See more…
Assistance
Gatehouse Design can help ETO companies;
