In the world of manufacturing, the concept of “configure to order” (CTO) has gained significant attention in recent years. Configure to order refers to a production strategy that allows customers to customize products based on their specific requirements. It has become a strategic choice for businesses aiming to gain a competitive edge in the market.

Unlike traditional mass production, where products are manufactured in large quantities with limited customization options, configure to order enables businesses to offer a wide range of product variations and options. This approach involves designing products with modular components that can be easily combined and customized to create a unique end product.

The importance of configure to order lies in its ability to provide customers with tailored solutions that precisely meet their needs and preferences. By allowing customers to personalize their purchases, businesses can enhance customer satisfaction, build loyalty, attract new customers, and differentiate themselves from competitors. Configuring products to order goes beyond basic customization and offers a more personalized and meaningful experience for customers.

Implementing a configure-to-order strategy requires a holistic consideration of various factors, including engineering capabilities, supply chain management, and customer satisfaction. It is not solely an engineering decision but a strategic choice that impacts multiple aspects of the business.

In this article, we will explore the pros and cons of configuring to order, highlighting its strategic implications beyond the engineering realm. We will also discuss the creation of CAD models and the importance of a comprehensive 150% Bill of Material (BOM) in successfully implementing a configure-to-order strategy. By understanding the benefits and challenges associated with configure to order, businesses can make informed decisions and leverage this approach to drive growth and success in the manufacturing industry.

Pros of Configure to Order:

1. Enhanced Customer Satisfaction: Configuring products to order allows customers to personalize their purchases according to their specific needs and preferences. This customization leads to higher customer satisfaction levels as they receive tailored solutions that precisely meet their requirements. By offering personalized products, businesses can strengthen customer loyalty, attract new customers, and differentiate themselves from competitors. Smart customization involves leveraging data-driven insights and customer feedback to offer relevant and meaningful customization options, further enhancing customer satisfaction.
2. Improved Market Responsiveness: The ability to quickly adapt to market demands is a crucial advantage of configuring to order. By utilizing a modular design approach, businesses can efficiently respond to changing market trends and customer preferences. This agility allows them to introduce new product variations or modify existing ones more rapidly, enabling them to stay ahead of the competition and capture emerging market opportunities. Smart customization incorporates market intelligence and predictive analytics to identify and anticipate customer demands, facilitating proactive product customization.
3. Optimal Resource Utilization: Configuring to order reduces the risk of overproduction and minimizes inventory costs. Instead of producing products in large quantities and hoping for sales, businesses can produce components or modules based on confirmed customer orders. This just-in-time production approach leads to improved resource utilization, reduced storage requirements, and better cash flow management. Smart customization optimizes resource allocation by analyzing demand patterns, production capabilities, and supply chain dynamics, ensuring efficient utilization of resources.
4. Streamlined Supply Chain: Adopting a configure-to-order strategy streamlines the supply chain process. With a modular product design, businesses can source and manage inventory more efficiently. Components and modules can be standardized, reducing the complexity of procurement and inventory management. This streamlining enables businesses to optimize their supply chain, reduce lead times, and minimize the risk of obsolete inventory. Smart customization leverages advanced supply chain technologies, such as real-time inventory tracking and demand forecasting, to streamline the supply chain further.

Cons of Configure to Order:

1. Increased Complexity: Implementing a configure-to-order system involves complex engineering and manufacturing processes. It requires businesses to develop robust product configurators, integrate them with existing enterprise systems, and ensure compatibility across various modules and components. This complexity can lead to higher development costs, increased training requirements for employees, and potential challenges in system maintenance and upgrades. Smart customization addresses complexity challenges through user-friendly configurator interfaces and intuitive design tools that simplify the customization process.
2. Risk of Product Variability: Configuring products to order increases the number of product variations, which can pose challenges in quality control and production efficiency. Each customized order introduces potential variations in design, specifications, and manufacturing processes. Managing this variability requires careful planning, quality assurance measures, and robust communication between engineering, production, and sales teams. Smart customization employs robust quality control processes and emphasizes clear communication channels to ensure consistent and high-quality outputs.

Crucial step: Creation of CAD Models and 150% Bill of Material (BOM):

Implementing a configure-to-order strategy necessitates the creation of accurate CAD models and a comprehensive 150% BOM. CAD models serve as the foundation for designing and visualizing the configurable product options. These models enable engineers to develop a modular architecture that allows for easy customization while ensuring compatibility between components.

A 150% BOM, also known as a super BOM, encompasses all possible variations and options within the product line. It includes a comprehensive list of components, sub-assemblies, and materials required for each configuration. This detailed BOM accounts for all possible combinations, enabling efficient sourcing, production planning, and inventory management.

The CAD models and 150% BOM work hand in hand to facilitate the configure-to-order process. The CAD models provide a visual representation of the product options, while the 150% BOM guides the procurement and production processes by accurately capturing the required components for each configuration.

By integrating CAD models and a 150% BOM, businesses can ensure seamless collaboration between engineering, procurement, production, and sales teams. This integration allows for efficient customization, accurate component sourcing, optimized production planning, and streamlined supply chain management.

Implementation Roadmap Configure to Order:

1. Evaluate Customer Demand: Analyze market trends, customer preferences, and potential demand for customized products. Conduct market research and engage with customers to identify the most sought-after customization options.
2. Develop Modular Product Design: Create a modular product architecture that allows for easy customization. Standardize components and modules to facilitate flexibility while maintaining compatibility.
3. Implement Configurator Software: Invest in a reliable product configurator software that integrates with your existing systems. Ensure the configurator is user-friendly and supports the customization options identified in the evaluation phase.
4. Train Employees: Provide comprehensive training to employees involved in the configure-to-order process, including sales, engineering, and production teams. Ensure they understand the configurator software, customization workflows, and quality control procedures.
5. Optimize Supply Chain: Streamline the supply chain by establishing partnerships with reliable suppliers, implementing real-time inventory tracking systems, and optimizing logistics and procurement processes. Leverage smart customization to anticipate demand and minimize lead times.
6. Communicate with Customers: Establish clear channels of communication with customers to gather customization requirements accurately. Maintain transparency regarding lead times, pricing, and product specifications to manage customer expectations effectively.
7. Monitor and Refine: Regularly monitor and evaluate the performance of your configure-to-order strategy. Collect feedback from customers and employees to identify areas for improvement. Continuously refine the customization options and processes based on market dynamics and evolving customer preferences.

Conclusion:

Configure to order is not merely an engineering decision but a strategic choice that has wide-ranging implications for businesses. While the approach offers significant benefits such as enhanced customer satisfaction, improved market responsiveness, optimal resource utilization, and streamlined supply chain management, it also presents challenges in terms of increased complexity, longer lead times, variability, and pricing complexity. By carefully considering these pros and cons and leveraging CAD models and a comprehensive 150% BOM, businesses can successfully implement a configure-to-order strategy and capitalize on its strategic advantages.

If you want to know more about this topic feel free to contact me:

Thijs Schepman

schepman@modular5.com

+31654622089