Fabrizio Battaglia, Head of Manufacturing & Distribution, HSO explores this claim…
Fast-escalating demand for customised products has led to rapid growth in the number of engineer-to-order (ETO) manufacturers. In line with the growth in online and digital routes to market and the rise of servitisation as a core manufacturing methodology, consumers have become attuned to having product offerings tailored to their preferences and needs and often they are even prepared to pay a premium for this level of service.
This is in turn driving a corresponding growth in the practice of employing a feedback loop to capture the customer’s likes, dislikes and recommendations about product design, delivery and support.
Suppliers who fail to react to these changes risk losing out on the opportunity to tap into potentially lucrative bespoke manufacturing and after sales service revenue streams. Customers often value superior service over price but mass-volume manufacturers, worried about having their margins squeezed by the competition, have invariably failed to deliver a fully service-led approach.
ETO manufacturing, with its emphasis on meeting customer specifications, fits the new service-oriented environment well. Yet, while the market is ideally placed to continue its growth trajectory, increasing customer demand is ramping up pressure on manufacturers in this space to move quickly to meet the precise needs of their target markets. Indeed, with the final product often being an original one-off creation that needs to be designed from scratch, it is critically important that ETO manufacturers are as agile as possible and, in particular, able to streamline workflows and cut lead times.
This brings challenges. These manufacturers are often burdened with complex quotation and ordering processes. They have established ways of handling workflow and are understandably wary of technology that they feel could constrain this. Yet, that said, manufacturers do increasingly appreciate that they need to change. So how can they best address the extensive list of challenges they are likely to meet and capitalise on the opportunities that ETO manufacturing brings in order to achieve faster time to market and sharper competitive edge?
Finding an Answer
First, it’s important to understand that making the transition to a new way of working, is not just a purely technological decision. For manufacturers, it’s often just as much about reviewing working processes and finding a partner that can help rethink what they are doing and put the right systems in place.
We believe that enterprise resource planning (ERP) will be a critical part of the solution for many manufacturers – not only helping manage each complex project end-to-end but also providing a platform to improve collaboration and respond faster to market needs, while minimising re-engineering and reducing risk.
Critically, ERP provides a way for manufacturers to view all-in-one-place the complete range of information they need to deliver an efficient ETO service. They can see open orders, prices, and preferred vendors, as well as the impact of their choices on production, finance, and procurement. They can control the quality of products as well as the efficiency of their design and production throughout the product lifecycle.
ERP brings further benefits through its seamless alignment to other related systems. Integration with standard product lifecycle management (PLM) systems can link engineering to production. The use of product configurator software can help to quickly configure products, services, projects, and quotes for customers and provide the sales team with a resource to generate complex quotes and proposals meeting customer needs.
Materials requirement planning (MRP) software can help manufacturers buy common parts for use across multiple projects. Reporting/business intelligence and data analytics can be integrated to drive faster and more informed decision-making while the use of the cloud, mobile and business apps can help enhance collaboration and drive business efficiencies.
Ultimately though, the customer needs to be at the heart of the ETO manufacturing approach and the best ERP platforms support this capability. Integrated product configurators enable consumers to see the different available versions of a product online and choose the exact specifications they want. This enables the customer to have a stronger influence on the way that the product is designed and produced. By adopting a more servitised approach, where feedback is captured and acted upon to inform product development, manufacturers can further strengthen the approach to benefit both themselves and their customers. After all, the more information the ETO manufacturer knows about the customer, the more it can improve its service to them and that simple focus is certain to be key to the future success of this sector.