Configure-to-Order Manufacturing: Why It’s the Key to Scalable Customization

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 creates bottlenecks. It slows down sales cycles, strains engineering resources, and makes it harder to scale and build predictability into the sales process.

That’s why many manufacturers are re-evaluating their mix. Configure-to-order (CTO) offers a more efficient way to deliver customization that doesn’t require reinventing the wheel with every order. 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)?

Instead of building from scratch or relying on cookie-cutter stock, CTO models use a set of predefined modular components that customers can mix and match at the time of sale. That means tailored products without the engineering headache. Think of it like LEGO for manufacturers: the parts are already designed, tested, and ready to go. Customers get exactly what they need more quickly.

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.

CTO sits in the sweet spot between two other methods: ETO and made-to-stock (MTS). With ETO, every project kicks off with a custom design and engineering process, making it slow, expensive, and hard to scale. And MTS is fast but rigid: products are built in advance with no room for customization.

Why CTO solutions are gaining traction

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

• Faster quoting and delivery: Manufacturers can quickly generate accurate quotes and fulfill orders faster with predefined components than with ETO.
• Improved operational efficiency and scalability: Repeatable modules and standardized logic make it easier to scale operations and support global growth.
• Lower engineering overhead: 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.
• Better cost and margin control: With fewer unknowns and less variability, manufacturers gain clearer insight into costs and pricing.
• Meaningful customization: Customers get tailored solutions that meet their needs without delays or compromises in quality.

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.

The challenges of shifting from ETO to CTO and steps for transitioning

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 the 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.
• Prepare for process shifts across teams.
  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 nonconfigurable products to determine when CTO is feasible and when ETO is still necessary.
• 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.
• Balance standardization with flexibility.
  Manufacturers must also strike the right balance between standardization and customization. While CTO is sometimes seen as limiting flexibility, thoughtful modular design can still deliver tailored experiences. The key is setting clear boundaries and education on what’s configurable and what requires a custom solution.
• Use ETO and CTO where each makes sense.
  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.

How CPQ supercharges 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.

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.

Schedule a Demo