|Editor's Note: In the following article, "How One Manufacturer Made its Engineer-to-Order Strategy Pay", AMR Research analyst Louis Columbus discusses how Siemen's Energy and Automation is achieving cost-savings by employing engineer-to-order strategies that take advantage of an accurate and streamlined quoting process. According to Columbus, CAD systems will be used increasingly as the "communication vehicle" in the quoting process for complex technical products.|
How One Manufacturer Made Its Engineer-to-Order Strategy Payby Louis Columbus, AMR Research
Siemens Energy and Automation is a leading provider of the NEMA class of motors and relies on Engineer-to-Order (ETO) for 100% of its production. Other manufacturers should pay attention to the lessons Siemens learned in the pursuit of its configuration initiative, MotorPro.
Balancing the goals of lean manufacturing, more efficient use of manufacturing time and materials, and the increasing complexity of customer requirements is forcing manufacturers to look at ETO strategies. The urgency that quote-to-order and quote-to-cash is having across many manufacturing sectors makes ETO an even higher priority for many. Without exception, the urgency to get a highly integrated quote-to-order strategy in place dominates discussions with every company we speak with about to-order strategies. The most complex of these are quotes generated for highly specialized industrial products that must meet exacting performance, design, and compatibility criteria.
The results that Siemens Energy and Automation obtained from its initiative to bring make-to-order strategies MotorPro into its Norwood, Ohio, manufacturing plant shows how the to-order strategy can pay big dividends when integrated with quote-to-order and quote-to-cash strategies. This wasn.t a fast-track initiative; it took years of building MotorPro organizational commitment, planning, extensive vendor selection, and process redefinition to define a configuration and product knowledge management system that accomplished the production, sales, and operations goals.
Lessons learned include the following:
Target line-of-business needs that hit revenue, like quote-to-order and quote-to-cash. Siemens Energy and Automation took a patient path to creating its initiative that eventually delivered a world-class configuration MotorPro and product knowledge management system and exceeded line-of-business expectations by staying focused on squeezing inefficiencies out of the quoting process. The process for completing a quote with certified CAD drawings now takes less than an hour; it took four to six weeks previously.
Make product knowledge easily accessible for the point of quoting and sale. Creating quoting applications that your channel, sales force, and services organizations can use with as much autonomy as possible is critical. Given the high level of complexity, wide variation of 14 different product lines, and exacting standards for producing ETO products at Siemens Energy and Automation, pushing knowledge as close to the quoting and sales as possible was crucial.
Integration to support quote-to-cash is an all-or-nothing effort. Proposal packets often include motor data sheets, performance curves for the specific motor being created, and outline drawings created in CAD systems. Integrating with 2D and 3D CAD systems was necessary for the quoting process to work. Dynamically creating and loading bills of material into an Enterprise Resource Planning (ERP) system was also accomplished.
Plan for little, if any, IT involvement in maintenance of configurator and knowledge management. One marriage expert asked to speak at a technology conference about partnerships said that learning to have low, easily accomplished expectations of your partner was the key to successful long-term relationships. For executives getting configuration efforts off the ground, the same has to apply. Don.t expect miracles from IT about keeping configuration rules, constraints, dependencies, and product information current. Pick an application that is easy enough to work with that makes updates possible by product managers.
Louis Columbus is a senior analyst with AMR Research in Irvine, CA. To learn more about AMR Research, see www.amrresearch.com.
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