Engineer to Order vs. Made to Order:

How to Capture Clients With CPQ Solutions

You can take many paths to the same destination. In manufacturing, your destination is always a successfully completed order. How you fulfill that order may vary from client to client, however. One may prefer to customize their product from a list of available options, and the other might want full creative input from the beginning.

That’s the difference between made to order (MTO) and engineer to order (ETO), two of the most common production methods for designing and building products in a more personalized manner than mass production provides. While MTO production methods have been around for a long time, ETO manufacturing solutions continue to grow more complex and powerful.

ETO manufacturing involves creating a product custom-made to a customer’s desired specifications. This can become complicated and requires close collaboration between the manufacturing company and the client. But, solutions like configure, price, quote (CPQ) software can go a long way to simplify the complex ETO production cycle.

To explain, let’s look at the key differences between MTO and ETO manufacturing.

Differences Between
MTO and ETO

The main factor separating MTO and ETO is complexity. Generally, companies that use an MTO manufacturing process have a standardized product that customers can customize in specific ways. This might include size options, decorative components, or upgraded materials. When a customer places an order, production can begin immediately using the company’s existing designs.

ETO manufacturing takes that concept further. Customers can order custom options unique to their specification requirements. Production often requires a significant lead time to allow the manufacturer to engineer the custom product and execute production.

Imagine an MTO fencing manufacturer. They offer picket fences in vinyl or wood and customers can choose different picket sizes, colors, and post caps. An ETO fencing manufacturer might allow customers to choose everything from the precise shape of the pickets and the spacing between each post to the building materials.

With ETO manufacturing, practically every element of a product can be customized. While this may require more work designing and retooling your manufacturing process each time, ETO’s flexibility allows you to meet the needs of more customers.

What You Need to
Transition to ETO

That flexibility has its own challenges. Plus, each order comes with its own hurdles. To become a successful ETO manufacturer, you need a robust CPQ solution to help you tackle challenges like these:

Data management — A more customized and personalized product requires more data, plain and simple. With every new detail a customer adds, data is added as well. You need a management software system that can track all of the changes the product undergoes throughout this process.

Materials acquisition — Quality parts make quality products. CPQ software can help you manage your inventory and remove options that require out-of-stock materials from the available choices. Never again will you have to worry about a client requesting an ETO order with materials that won’t be available for months.

Machine configurations — To make an ETO product, you need to configure your equipment too. These types of engineering changes may result in additional costs, which need to be automatically factored into the overall price of the product.

How Configure One Can
Make ETO Easier

If you’re interested in switching to ETO production, you need software that can keep up. That’s where Configure One’s CPQ software comes to the rescue. It allows you to create custom products with hundreds of customization options using parameters set by your own engineers. Our CPQ software can even automate repetitive tasks so your teams can focus on creating innovative and new products.

Here’s a look at some of the ways Configure One’s CPQ software can help:

CAD drawings — Configure One’s software integrates with CAD software to automate the creation of production models and drawings. In some cases, CAD drawings like this can take weeks. By automating this phase, you can significantly reduce lead times and eliminate avoidable human errors. Once your engineers have designed the base product for customers to customize, they can turn their attention to new projects, too.

ERP connection — Configure One integrates well with a variety of ERP (enterprise resource planning) platforms. This means you can instantly generate a bill of material for precisely what the customer orders using product data from your ERP system. Since both systems work together, you don’t need to keep track of progress across multiple platforms manually. When one system updates, the other will follow.

Competitive advantage — Configure One gives you an edge against the competition, especially if they aren’t using CPQ software of their own. If you can offer custom ETO products and your competitors can’t, you’re already a step ahead in the global manufacturing environment. Companies that only offer made-to-order products may find they’re becoming obsolete compared to those who are stepping up to innovate.

Is your company looking for an ETO solution?
Contact a representative today to schedule a demo of our CPQ platform.
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