The Ultimate Guide to Engineering-to-Order Manufacturing

Amidst the escalating trend of personalization, the demand for tailored manufacturing solutions has reached unprecedented levels. However, this shift towards customization poses significant challenges for manufacturers. Traditional advantages of mass production, such as economies of scale and uniform inventory, are compromised.

To address this, a paradigm shift in manufacturing strategy is required – embracing the engineer-to-order approach. This method allows manufacturers to adapt and thrive in an environment where bespoke production is increasingly valued.

Before we go into the benefits and details, let’s start with a simple engineer-to-order definition.

What is Engineer-to-Order?

Engineer-to-order (ETO) refers to a manufacturing approach where products are custom-designed and built to meet the unique specifications of individual customers.

The primary advantage of engineering-to-order is flexibility. It allows manufacturers to develop nearly anything for their customers, giving them a competitive advantage in the marketplace. You can also charge a premium for ETO products, which helps with revenue.

But that flexibility is also a considerable challenge. Each project involves varying materials, components, and manufacturing processes. Standardizing everything in ETO is difficult, so lead times are typically longer than in mass manufacturing.

Other challenges of ETO include more risks and uncertainty (since the project has never been done before), supply chain issues, and quality control.

Because of ETO’s complexity, it often requires a careful approach. For instance, project management is more demanding as you must coordinate different departments like design and manufacturing. The design phase is also longer and involves extensive back-and-forth for approval.

Engineer-to-order examples are often found in industries that require customized solutions, such as construction, aerospace, industrial equipment, and shipbuilding.

The Difference Between Engineer-to-Order and Make-to-Order

Engineer-to-order is often confused with another manufacturing approach, make-to-order (MTO).

MTO is a method where products are only created when a customer places their order. MTO and ETO contrast with Make-to-Stock (MTS), where manufacturing is done to anticipate customer demand.

What separates ETO and MTO is the level of customization involved.

ETO products, as we’ve discussed, are heavily customized. In contrast, MTO goods require little to no customization. Often, any changes are only minor variations of standard or pre-existing designs. 

A good example is a laptop that looks similar to its peers but differs in the underlying specs. Because of this, MTO has a significantly shorter lead time than ETO. In fact, the effectiveness of MTO relies on churning out products quickly to customers.

Inventory management is also different. ETO components are sourced as needed since each project is unique; therefore, inventory usage is minimal. MTO’s limited configuration means it relies more on stocks of standard raw materials.

The Engineer-to-Order Manufacturing Process

Now, let’s go through the steps in a typical ETO workflow.

Specifications and Quoting

The first step in the ETO process starts when a manufacturer gets a request for quote (RFQ) from a client. The client’s aim is to get different price offers from various manufacturers, compare them, and then choose the best one for their project.

An RFQ is a formal request for pricing and detailed information about a specific project or customized solution. RFQs usually contain technical requirements, quality standards, a target budget, and a proposed timeline. 

If a manufacturer thinks it can take on the RFQ, it responds with an initial quote. Here, designers and engineers collaborate on creating a product specification and pricing that fulfill the RFQ’s requirements.

Clients rarely go with the first quote. They often request changes or compromises, which the manufacturer will revise and resend for approval. This back-and-forth process continues until both parties arrive at a final quotation.

Design and Engineering

With a final quote and specification on hand, the manufacturing firm proceeds to flesh out the product design that’s ready for production.

To achieve this, the design team starts with a conceptual product design. Designers create sketches, wireframes, and other initial designs. 

The engineering team is often involved in ensuring the real-world feasibility and safety of the design, addressing specific dimensions, materials, and tolerances. Designers then refine the product drawings to reflect their suggestions.

Computer-aided design (CAD) is also utilized to simulate and validate the design. The team can also send the CAD drawings to the client for feedback and approval.

Process Planning

After the final product design is decided, the next step is to devise a process to implement it. This is where process planning comes in.

Process planning is essential in engineering-to-order due to the distinct nature of each project, requiring the custom design of the entire manufacturing process to align with the project’s unique specifications.

The goal is to design the project’s most efficient and cost-effective production pipeline. It’s also a chance to identify potential issues early so the team can address them. Without this step, you risk creating a product of lower quality and higher cost.  

Process planning begins with a thorough review of the specifications and other relevant details by the production team. Through this, they’ll determine the processes required and the best sequence to execute them.

Part of this step is allocating the right resources to the project. This includes scheduling machine time, staffing, raw materials, and auxiliary services.

Product Concept Confirmation

Before the final product design is transferred to the production team, it is essential to complete a critical confirmation step.

Here, the specifications are reviewed and validated to ensure alignment with the customer’s requirements and expectations. A meeting with the client is often done to clarify any ambiguities and address questions.

The team will also send everything that needs approval. These include the final costs, bill of materials (BOM), projected timeline, and manufacturing process. Changes can be suggested by the client if needed.

Once the client provides the final approval, the production process begins.

Manufacturing

This step is where the rubber meets the road.

First, the workflow devised during the process planning stage will be implemented here. Machines and special equipment are procured, installed, and tested. Then, the fabrication of the individual component begins.

Rigorous quality assurance is also implemented throughout the process to verify that every step meets all specifications and performance requirements. For specific projects, customer acceptance testing (CAT) may be utilized.

The components are then assembled into the final form and tested thoroughly. Finally, the product will be dispatched for delivery to the client.

A dedicated installation team will set up the product and officially hand it over to the client if required. Additionally, training sessions can be organized to help the clients understand how to use and maintain the product effectively.

5 Best Practices to Optimize Your Engineer-to-Order Process

Complexity is a natural part of ETO, meaning work times for projects tend to go over time and budget. However, there are certain best practices you can do to minimize this. Here are some examples:

Establish Open Communication

Open communication is critical for success with engineered-to-order processes. It ensures that your team thoroughly understands the client’s requirements, expectations, and preferences so you can create a perfect product for them.

Collaboration between teams is also required with ETO, and this is something open communication can facilitate. Without it, the product can’t flow smoothly from one step to the next.

There are many ways to implement open communication, but the best way is through having clear communication protocols. For instance, you can require everyone to use project management software to track all the moving parts. Having regular team meetings in person or via Zoom is also helpful to keep the team on the same page.

Use CPQ Software

Engineer-to-order software can streamline the entire engineering-to-order process. One of the most critical in the early stages is CPQ software.

CPQ (Configure, Price, Quote) software like Tacton CPQ streamlines the specification and quoting process. It allows anyone – even non-technical users – to create product specifications, features, and components using a graphical UI.

More importantly, CPQ software automatically generates pricing and quotations from the set product specification. These can be flexible enough to account for discounts, bundle pricing, and other pricing schemes.

CPQ software significantly enhances the efficiency of the planning process. This tool lets sales agents quickly generate precise specifications and pricing details based on a client’s needs, often within just a few hours. This rapid turnaround enables them to secure more deals in a shorter time, thereby boosting the company’s revenue.

Moreover, once the quote is approved, these specifications can be automatically transformed into CAD drawings. These are then seamlessly forwarded to the engineering team, eliminating the need for manual creation and transfer of files, which often leads to errors. This streamlines the entire process, ensuring accuracy and efficiency.

Standardize Procedures

While ETO projects are unique by nature, several aspects of the process can be standardized. This is the secret to making ETO more efficient and cost-friendly.

For example, you can create standardized templates for key project documents such as plans, design specifications, and quality control procedures. Having templates can save you plenty of time when drafting these key documents.

You can also outline standard engineering steps that apply to every engineering-to-order project. For instance, every product would require testing, inventory management, prototyping, and design validation. Creating common SOPs and implementing them across every project you do ensures consistent quality.

Focus on Documentation

Documentation is critical to navigating the complexities of ETO projects. It is a clear reference point for all stakeholders, including engineers, designers, project managers, and the client. Without it, it’s easy for one or two teams to go off completely off-track.

There are many ways to implement adequate documentation.

One strategy is to have a clear version control system to track document changes. Clearly indicating updates to a document can help avoid confusion and eliminate the risk of anyone working on outdated information.

You can also require every team to accomplish and submit progress reports. This document provides task status, achievements, challenges, and upcoming milestones of every person involved in the project. It’s a practice that promotes transparency and helps managers detect potential problems before they arise.

Finally, ensure all documents are located on a cloud-based, centralized repository for easy access.

Track Key Metrics

Metrics are essential for gauging the progress and success of an ETO project. They can also help you see the early signs of trouble so you can course-correct immediately.

For example, the defect rate metric measures the percentage of items produced that are broken to the point of being unusable. Lowering your defect rate requires looking at your production process and equipment.

Another is resource utilization rate, a metric that assesses how efficiently resources (like labor and equipment) are used throughout the project. You want to maximize your utilization rate to keep costs low.

There are dozens of other metrics you can use. What’s important, though, is to adapt those metrics that are relevant to you.

CPQ Software for Engineering with Tacton Systems

As you can see, engineer-to-order projects are some of the most challenging and complex in the manufacturing industry. To succeed, you’ll need to automate some of these complexities so your team can focus on designing and building successful products.

This is where Tacton CPQ software for engineering can help you.

Our system can help streamline some of the most tedious parts of the sales process. Design a product specification, calculate pricing, and generate a professional quote in a fraction of the time.

It’s clear why Tacton stands as the premier CPQ solution in the manufacturing sector, earning the trust of industry giants like Yaskawa, Husky, and Siemens. With a solid 25-year history of innovation, you can rely on us to provide cutting-edge solutions that will enhance the agility and profitability of your manufacturing business.

Want to learn more about Tacton CPQ? Contact us now to schedule a free demo.

How are fully integrated visualization solutions with CPQ changing manufacturing?

Visualization (also known as Visual Configuration, or 3D product configuration) is the combined use of digital technologies (Augmented Reality, 2D and 3D visualization software) to be able to configure products directly in the three-dimensional visual representation. A Visual Configuration software enables your sales team and customers to configure their 3D products quickly and accurately from anywhere. Enabling an integrated visualization solution with CPQ is a step many manufacturers are taking this year. 

What are some visualization benefits?  

• Buyers see with their own eyes how a product they will receive looks like. 
• Customers can understand how product customization decisions (choosing a specific product variant or product option) impact the final product. 
• Companies can highlight unique selling points and special product functions. 

• Further simplifying a complex configuration task by visualizing the different product options and functionalities instead of describing them with text-based descriptions. 
• Companies create trust in their solutions because they use AR (Augmented Reality) to show the configured product in the actual usage environment and customers can immediately check spatial specifications. 

Visualization has been on the minds of manufacturers for the last few years as an addition to their eCommerce initiatives. Many have transformed their selling process by adding real-time visualization, in real environments for their prospects and customers. Visualization has been a major selling point to customers who now grapple with at-home demos and product configurations.  

Different approaches to visualization

Creating a great customer experience that fits seamlessly in your existing technical architecture sounds great doesn’t it? To me it does, but with so many options on the market, it’s important to find a visualization solution that is built to be agile, and maintainable with no surprises in the back end.  

With a push for more visualizations across the manufacturing industry, it can be a lot to learn about the industry. Many manufacturers have a lot of questions about the different options available to them. That’s why we’re here to help discuss two different approaches for adding visualization to your CPQ application, using a 3rd party game or rendering engines and their maintenance workflows or using visualization as an integrated part of the CPQ solution.  

What are game or rendering engines? 

A Game Engine is a software development environment/framework for creating video games or interactive applications. They provide multiple functionalities including a rendering engine (2D/3D), a physics engine, collision detection, an audio engine, a scripting/logic engine, animation, artificial intelligence, user input handling, user interface generation, and networking capabilities. Additionally, they typically provide an editor, tools, and content pipelines to drive and support the game creation process. 

Different Game Engines like Unity or Unreal are focusing on different audiences and target platforms. Not everyone is best suited to create web-based experiences in a browser, while others are not providing the possibility to create native mobile experiences. 

The central part of a Game Engine is the Rendering Engine or Renderer which is responsible for generating the graphical output, turning 3D models, textures, and material descriptions in a visual image on the screen. Instead of using a Renderer as part of a Game Engine, it is possible to use a stand-alone Rendering Engine. Widely used WebGL-Renderer are for example ThreeJS or BabylonJS. 

What are the benefits of using a widespread game or rendering engine? 

• If it is a commercial one or driven by an active community, the development speed for new and improved functionality at a high quality will most likely be superior compared to building and maintaining your own engine with only a few resources. 
• If it is used by many developers and users, good documentation, training, knowledge, and experience will be available in various ways. 

Tacton’s fully integrated visualization solution with CPQ

At Tacton we offer our visualization solution as part of our Configure, Price, Quote solution for a fully integrated creation and maintenance process. We see several benefits of using and maintaining the visualization as an integrated part of the CPQ system compared to a separate 3rd party game or rendering engine. 

A common strategy and aligned roadmap 

When it comes to the two different solutions, they serve the same end purpose, showing your product in a visually appealing, exciting way to sell to customers. The product roadmap is an important aspect of buying any solution, and visualization is no exception. After the purchase of any 3rd party software, like a game engine, buyers are at the mercy of the vendors strategy and roadmap. A game engine is mainly built with a focus on creating games. Bigger Games Engines are opening their target audience but creating and integrating dynamic visuals in a dedicated CPQ system is not among those target use cases.  

So potential needs of a small customer base looking to use the visualization for their highly complex product configurators are typically not the highest-ranked priorities on the roadmap. With Tacton visualization we make sure to consider our customers unique needs when it comes to changes, improvements, or new functionality to support their workflows and use cases the best way.  

Even if you only want to use a small part of a Game Engine, as the 3D Engine, you must use the complete tool pipeline and process designed by the vendor. Once you are in the solution, there is no way out. For example, it is not possible to only use the included 3D Engine but build your own tooling around it. Tacton’s visualization is already tailored to the needs and requirements around extending the configuration process with visualization. 

A complimentary maintenance experience 

Mapping a configuration to visualization is not as straightforward with an external maintenance workflow compared to an integrated one. For example, the wording is with no relation to the configuration at all, making you learn and map every domain and requirement. And only using the rendering functionalities of a game engine leads to excessive parts that users can’t get rid of, so they must navigate their way around it.  

Especially for the major Game Engines, learning the necessary essentials and mastering all the tools and processes is quite a challenge if 3D Game development is not your main occupation. Creating tailored solutions specifically in the area of visualization can reduce ramp-up time and speed up the learning curve since the use case and the users are much narrower compared to a general Game Engine with multi-purposes.  

And if one of the goals and values of your solutions is that customers/manufacturers should be able to maintain and extend the visualization part on their own, it is not very convenient if the customers/manufacturers must buy and learn those 3rd party tools and processes as a mandatory component. This makes it much harder and complex to transfer the responsibility after the initial setup. 

Tacton’s integrated visualization solution is designed to perfectly align and match with the bigger goal of enhancing a configurator with visualization with the least necessary friction in the process. The visualization builds on top of existing knowledge and workflows in CPQ, minimizing ramp-up time, making it one integrated experience. 

Out-of-the-box integration to CPQ 

When using a 3rd party visualization for a CPQ + visualization project, it is not one standard product that is offered. It will always be two products (from two vendors) + an integration between what is offered. This integration needs to be maintained and adjusted as well over time since interfaces are likely going to change. 

With Tacton it’s one platform, everything out-of-the-box and everything developed and improved together ensuring a working solution all the time with no additional efforts. 

One approach for all use cases 

Depending on the use cases and related platforms you like to support with your Visualization solution, it is quite hard to find only one engine to support all of them in the best way. Web-focused engines have a hard time utilizing the full power of native platforms and engines with a native-first approach struggle more when used in web-based scenarios.  

Supporting native mobile apps as best as possible on top makes it even more complex to find a proper engine. Most Game Engines and Rendering Engines with a focus on the web need supporting technologies to run natively on desktop or mobile devices, reducing the benefits of running natively. If you are not able to solve all use cases with one engine, the complexity of the tech stack and all workflows and tools around it is increasing quite drastically.  

With Tacton’s own visualization, we are able to support all our customers use cases out-of-the-box with the same approach and workflows. You do not need to add additional tools or processes to support web and mobile. 

An integrated visualization solution with CPQ can be your next big win

Visualization is a complex topic, with so many different options for success it can be difficult to pick one that is right for your business. If you’re in the manufacturing industry, it’s important to work with providers who have experience in the field. At Tacton we’ve got over 20 years of visualization experience, specifically for manufacturing. Learn more by scheduling your personalized visualization demo!