Introduction

Engineer to order (ETO) is a production approach that creates products only after an order is confirmed. Thus, the end consumer determines the timing and number of produced products. The ordered product is customized, meeting the design requirements of an individual, organization or business. This approach is useful for highly customized or low-volume products. Building fully customized products requires more adaptability both in material sourcing as well as in production techniques.

Key considerations for business entities operating in this model

• • Higher conversion of leads
  • Shorter lead time from conversion of order to delivery
  • Optimized resource utilization
  • Reduced procurement lead time
  • Optimized cost per unit
  • High customer satisfaction for return business and new lead generation

The business process involves several steps. Firstly, the company receives the design document in the form of CAD diagrams and material specifications. The company determines the manufacturability based on this information and sends appropriate feedback back to the client. Once the company finalizes the design and manufacturability, it sends a commercial quotation, along with a Bill-of-materials, to the client for acceptance. Upon the client’s acceptance of the quotation, the company creates an order for manufacturing and raises a purchase order for the required materials. The company then receives the materials and proceeds with the manufacturing of the required product. Once the company builds the products, it packs and ships them to the client, accompanied by a relevant packing list and invoice. Finally, the client receives the products and makes the payment.

Some of the key constraints faced by the customer in Engineer to order

• • Communication of client requirements, feedback, confirmation, order status was mostly via multiple email exchanges and were prone to missed or miscommunication, leading to lower customer satisfaction
  • Inter department communication were mostly via exchanges of emails and documents. Maintainability / availability of most recent version was usually a challenge, this was cause of delays or sometimes re-work.
  • Identifying required material, tracking of purchase orders, receipt of material, inventory management were managed in excel. Managing approved suppliers, PO, tracking inventory required lots of efforts
  • Generation of required documents for shipping, invoicing was manual and records were maintained in documents, required significant efforts to retrieve and track.
  • Management required periodic updates to make appropriate business decisions and consolidating the required data to generate such information were very effort intensive activity.

We approached this by combining the core processes of sales, materials planning, inventory management, and procurement into one easy-to-use ERP system. It comprised these modules

• • CRM – Core functionality implemented in this module involved, On-boarding customer, receive product specification (design and material specification), determination of manufacturability, application based exchange of review and feedback messages, tracked, conversion of lead to RFQ generation.
  • Order management – It tracks all the information and processes, including order entry, inventory management, fulfillment and after-sales service.
  • Procurement Management– Involved supplier management, purchase order and tracking, receipt of material, inspection
  • Inventory management – Receipts, issues and returns of material, inspection at each stage.
  • Logistics management – It includes activities such as sourcing, planning, tracking, warehousing, transportation, inventory control and customer service.
  • Human resource management – Tracking resource time utilization in various departments
  • Finance management – Covers accounts payable and accounts receivable
  • Web application for customer interfacing, management dashboard

Post implementation of this ERP system, following benefits were observed in Engineer to order process.

• • Customer satisfaction – Primary contributors for this was result of intuitive and easy to use web application provisioned for the customer to manage all communication right from first contact regarding potential requirement to receipt of material and making pending payments.
  • Saved time.
  • Faster decision making.
  • Higher conversion, faster completion due to multiple start-stop, reduced manpower required to manage.

Planned future upgrades involve Production planning, QC, and payment integration.

We have customized the solutions to meet another customer requirement for Build-to-order and Assemble-to-Order production and sales.

Also, this solution can be customized to meet the requirements of configure-to-order and make-to-stock production modes as well.