5 Benefits of Configure-to-Order Manufacturing and When to Adapt to CTO

Customization is now a baseline for customers buying complex industrial equipment, but how it’s delivered makes a difference. Engineer-to-order (ETO) gives manufacturers full flexibility to meet unique customer requirements, and for certain highly complex or regulated products, it remains the right fit. But as demand for tailored solutions increases, relying solely on ETO slows down the sales cycle and leaves less room for margin predictability. Configure-to-order (CTO) offers an efficient way to deliver customization that doesn’t require reinventing the wheel with every order.

That’s why many manufacturers are re-evaluating their mix. By introducing CTO where repeatable configurations are possible, manufacturers can shorten lead times and reduce engineering effort, while still meeting customer expectations.

What is configure-to-order (CTO) in manufacturing?

Configure-to-order (CTO) manufacturing is a production approach where customers choose from a set of predefined, modular components to create a tailored product without requiring new engineering work for each order. Instead of starting from scratch or relying on rigid, one-size-fits-all stock, sellers assemble valid configurations from modules that are already designed, tested, and ready to go, like LEGO for manufacturers. This allows customers to get exactly what they need more quickly.

CTO sits between two traditional approaches: engineer-to-order (ETO), where each project requires custom design and long lead times, and made-to-stock (MTS), which offers speed but little flexibility.

How does it work?

Behind the scenes, engineering teams define the rules or constraints that govern how these components can be configured. This work happens upfront—often in a configure, price, quote (CPQ) software—so it doesn’t need to be repeated for each order. Once in place, the seller can use this system to automatically check for compatibility, generate pricing or 3D drawings, create a bill of materials (BOM), and send the configuration to production. This reduces reliance on engineering during the sales process and streamlines handoff to manufacturing.

Benefits of configure-to-order in manufacturing

For manufacturers balancing complexity with efficiency, CTO solutions deliver compelling benefits:

1. Faster quoting and delivery

Manufacturers can quickly generate accurate quotes and fulfill orders faster with predefined components than with ETO. In a traditional engineer-to-order process, every quote kicks off a mini project that pulls in engineering for feasibility checks, custom drawings, and manual estimation, which stretches lead times and slows down sales cycles.

In CTO manufacturing, product logic and modular options are defined upfront and sellers pull from a library of valid combinations instead of starting from scratch.

2. Improved operational efficiency and scalability

Repeatable modules and standardized logic make it easier to scale operations and support global growth. When every order is bespoke, operations teams struggle to plan capacity, inventory, and staffing, and it becomes difficult to standardize processes across plants, regions, or dealer networks.

By contrast, configure-to-order manufacturing can be replicated across multiple plants and channels. Because the logic is defined once and reused across deals, manufacturers can scale to more markets, more channels, and more sellers without adding proportional engineering or operations headcount.

3. Greater engineering efficiency and accuracy 

CTO minimizes the need for engineering resources on each order, freeing teams to focus on innovation and high-value custom work. Standardized components and logic also reduce the risk of design or configuration errors and costly rework.

Instead of reviewing every configuration, engineering defines the allowable combinations once in CPQ. From there, sales can configure valid solutions independently without risking non-compliant builds.

4. Better cost and margin control

With fewer unknowns and less variability, manufacturers gain clearer insight into costs and pricing. When every order is engineered from scratch, costing can become unpredictable and scope creep can quietly erode margins.

Configure-to-order manufacturing helps manufacturers bring more discipline to cost and margin control. Standardized modules typically have known cost structures, and predictable BOMs lead to more accurate costing and a better ability to quote profitable deals quickly and to forecast revenue.

5. Meaningful customization 

Customers get tailored solutions that meet their needs without delays or compromises in quality. A common concern about configure-to-order manufacturing is that it might limit flexibility, but in practice CTO is about channeling flexibility rather than eliminating it.

Customers can still choose key dimensions, features, and options that matter most, while the underlying architecture ensures these choices align with what can be produced efficiently and reliably.

In practice, many companies benefit from both an ETO and CTO model: highly complex or one-off projects may remain in the ETO domain, while more repeatable or core offerings transition to CTO. This dual-track approach allows manufacturers to preserve flexibility while reaping the operational efficiencies of standardization.

Engineer-to-order vs. configure-to-order: What’s the difference?

While ETO and CTO both aim to deliver results aligned with customer requirements, their execution differs markedly:

CTO doesn’t eliminate the need for ETO entirely; some projects will always require deep customization. But for many manufacturers, CTO opens the door to repeatable success and sustainable growth.

How to Transition from ETO to CTO (Without Losing Flexibility)

While CTO has advantages, making the transition from ETO to CTO isn’t always simple. For many manufacturers, the transition requires technical updates plus a complete rethinking of workflows, product architecture, and company culture.

• Modularize your product architecture.
  One major hurdle lies in modularizing the product architecture. CTO depends on a set of predefined components that can be configured based on customer selections. For manufacturers whose offerings were designed from the ground up as custom-built systems, restructuring those products into configurable modules can be a massive effort.
• Decide when to use ETO vs CTO and redesign processes.
  Beyond technical challenges, the transition to CTO also demands process shifts. Engineering teams must shift from bespoke designs to scalable logic, sales must adopt new tools for guided selling, and production may need to overhaul its processes for greater standardization. Begin categorizing orders by configurability, distinguishing between fully configurable, partially configurable, and non-configurable products to determine when CTO is feasible and when ETO is still necessary. ETO and CTO production can and should still exist together to balance flexibility with efficiency.
• Prioritize change management and buy-in.
  Change management is often the most difficult aspect. Success depends on getting buy-in across the organization, from leadership to engineering to the shop floor. Staff must embrace the new way of working as an opportunity for growth and innovation. Illustrating the benefits of implementing CTO, such as freeing up time for R&D, can be helpful in building a business case.

How CPQ supports CTO at scale

CTO doesn’t work without the right tech. That’s where CPQ software makes a difference. CPQ software powers scalable, error-free customization. With the right CPQ solution, manufacturers can deliver complex, customized products without bottlenecking sales, burning out engineering, or jamming up operations.

Here’s how:

• Product logic enforcement: CPQ ensures that only valid configurations are quoted, eliminating errors and rework.
• Automated outputs: CPQ generates accurate bills of materials, pricing, and production data instantly from the configuration.
• Sales empowerment: Reps can handle even complex customization independently without looping in engineering for every quote.
• Speed and accuracy: Sellers deliver faster quotes, make fewer mistakes, and earn higher win rates thanks to aligned data and logic.
• Cross-functional alignment: Everyone from product to sales to manufacturing works from the same rules and product data.

When choosing a CPQ solution to support CTO, look for tools that support both configuration complexity and ETO needs. For example, Tacton’s advanced configurator is built specifically for manufacturers dealing with intricate product structures and global operations.

Configure-to-Order (CTO) FAQs

What is an example of configure-to-order in manufacturing?

A common example of configure-to-order manufacturing is a heavy vehicle or industrial equipment builder that offers a standard platform with configurable options. Customers can choose from predefined engines, drivetrains, cab styles, or attachments, and the manufacturer assembles a tailored configuration from those validated modules. The result is a solution that feels customized but is built from a known set of components.

When should manufacturers use CTO vs ETO?

Configure-to-order manufacturing is ideal for core, repeatable offerings where speed, margin control, and scalability matter. ETO is better suited for one-off, highly complex, or heavily regulated projects where requirements are unique and demand deep engineering involvement.

Is configure-to-order the same as mass customization?

Configure-to-order is a practical way to deliver mass customization in manufacturing, but they are not identical concepts. Mass customization is a broader strategy for offering individualized products at scale. CTO is a specific production and sales model that uses predefined modules and configuration rules to deliver that customization efficiently.

What types of products are a good fit for CTO?

Products with repeatable subassemblies, modular architectures, or frequently reused design patterns are strong candidates for configure-to-order production. This includes industrial machinery, heavy and specialty vehicles, medtech assemblies, and many other complex manufactured products that combine standard components in different ways.

Do I need CPQ software to support configure-to-order?

You can implement CTO in a limited way without CPQ, but scaling configure-to-order manufacturing is difficult without it. CPQ centralizes product logic, enforces rules, automates outputs like BOMs and pricing, and gives sellers a guided way to generate valid configurations. This makes CTO more reliable, repeatable, and efficient across teams and regions.

Together, CTO and CPQ drive modern manufacturing

CTO is reshaping how manufacturers deliver customized products, striking the right balance between flexibility, speed, and efficiency. Leading manufacturers are embracing a different approach, using ETO for truly unique builds while shifting their repeatable offerings to CTO for faster, more efficient delivery.

To make that shift stick, you need the right technology to bring it all together: CPQ. Tacton CPQ is purpose-built for complex manufacturing, supporting both CTO and ETO models, so you don’t have to choose between flexibility and scalability.

Contact us to explore how Tacton CPQ powers CTO at scale.

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