We know we talk a lot about Configure Price Quote (CPQ). But, what is a configurator, really? Obviously, it’s the C in CPQ, right?
But what does configuration really stand for?
Is it about modules, variants and selections?
Partly – yes. We need modules, variants and selections, but to your sales force and customers, they don’t really matter.
How we choose to describe the product in the configurator isn’t important for the end user. It’s just a way for our business consultants to structure the problem.
But structure is indeed important:
- It’s a way to provide the simplest possible maintenance in the long run.
- It’s a key to reducing the 100,000 old-school rules to 100 cutting-edge constraints.
- It’s a way to reduce a department to a single person.
- It’s the way to turn days into minutes when it comes to updates.
Is it about rules, constraints or product structure?
In a way it’s about rules, constraints or product structure, but that’s not how I see it anymore. We need constraints, but they’re just a tool to meet a critical business objective.
So, what’s the business objective? What’s the driver for the C in the CPQ project? Why do manufacturing companies need a configurator?
The reason is very simple. It’s about limiting selections.
By limiting the selections we make sure that we don’t sell anything that we can’t produce and deliver.
Why is limiting selections important?
Limiting selections is important because it’s so expensive to sell something you can’t deliver. Here’s why:
- Most likely there will be a negative margin on deals. That’s not ok.
- Most likely there will be delays in the delivery- and customer time-plan. That’s definitely not ok.
- Most likely the customer will choose another supplier the next time. That’s absolutely not ok. We all know that the cost of gaining new customers is remarkably high.
These facts are definitely not easy to live with – for any company. But if you can limit the selection at the point of sales, then there’s a huge potential for savings.
That’s what the C in CPQ is all about. How we do it isn’t the business objective, it’s just our clever way to minimize the TPO — the Total Pain of Ownership.
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