ETO manufacturing is happening - and ERP is the key driver
In line with the rise of digital routes to market, 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 focus on customised solutions is leading to a corresponding growth in servitisation, incorporating a feedback loop to capture the customer’s likes, dislikes and recommendations about product design, delivery and support.
Providers who fail to react to these changes risk losing out on bespoke manufacturing and after sales service revenue streams to more forward-thinking peers. Customers often value superior service over price but mass-volume manufacturers, worried about squeezed margins, have often failed to deliver a truly service-led approach.
ETO manufacturing is a good fit for the new service-focused environment. Yet, while the market is well positioned to continue its growth trajectory, increasing customer demand is ramping up the pressure to move quickly to meet the needs of target markets. Indeed, with the final product often an original one-off creation, it is important that ETO manufacturers are agile and able to streamline workflows and cut lead times.
They cannot simply continue to work with their old systems in the same way they always have because that methodology is not going to give them sufficient agility to manage their data more effectively and use it to deliver a more tailored customer service. However, moving from that realisation of the need for innovation to actually taking the plunge is not always easy.
These kinds of manufacturing companies are often saddled with complex ordering processes. They have established ways of handling workflow and are wary of technology that they feel could constrain them. Yet, that said, manufacturers do increasingly appreciate the need to change. To keep up with the evolving market environment, they simply cannot afford to remain as they are. So how can they best address the challenges and capitalise on the opportunities that ETO manufacturing brings in order to achieve faster time to market and sharper competitive edge?
Finding a solution
First, it’s important to understand that making the transition to a new way of working is not just a purely technological decision. Often, it’s just as much about manufacturers reviewing the way they work and finding a partner that is able to help rethink what they are doing and put in place the right systems for them. It’s important too that this is a steady, evolutionary process that enables the manufacturer to gain internal buy-in at each stage as it moves step by step to a new methodology.
We believe that enterprise resource planning (ERP) will provide a critical part of the solution for many manufacturers - not only helping manage each complex project end-to-end but also to improve collaboration and respond faster to market needs, while at the same time minimising re-engineering and reducing risk.
Arguably the key benefit of ERP in this context is that it provides a way for the manufacturer to view all-in-one-place the complete range of information it needs to deliver an efficient ETO service. Manufacturers can view details of open orders, prices, and preferred vendors, and can see 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 key benefits through its seamless connectivity and alignment with other related systems. Integration with standard product lifecycle management (PLM) systems could 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 the manufacturer buy common parts for use across multiple projects. ERP can also provide full product traceability from requisition to inventory. Reporting/business intelligence, data analytics can be integrated to drive real-time analysis and faster and more informed decision-making to ensure optimal revenue and an excellent customer experience while the cloud, mobile, and business apps can help enhance collaboration and drive business efficiencies.
Taken together, all of this allows ERP to manage every complex project that the ETO manufacturer takes right through from quote to service delivery and this, in turn provides complete transparency across the whole process with regard to costs incurred, resources used and interactions both within and between departments.
Ultimately though, the customer needs to be at the heart of the ETO manufacturing approach and the best ERP platforms support this capability also. Integrated product configurators enable consumers to see the different available versions of a product online and choose the exact specifications they want. The customer is effectively part of the production line. The tight integration between different processes and systems that ERP can deliver helps makes this possible as does the flexibility and scalability offered by the technology. And the use of servitisation and the feedback loop play into this approach also. After all, the more information the ETO manufacturer knows about the customer the more it can improve its service to them – and moving forward that will be key to the success of the whole ETO sector.
Looking ahead, we are confident that if ETO manufacturers continue to focus on customer service and deliver a servitisation approach based on flexible ERP technology, their future prospects and those of the sector in general will look increasingly bright.
Fabrizio Battaglia is Head of Manufacturing & Distribution for HSO
Follow @ManufacturingGL and @NellWalkerMG
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