What’s unique about sales and product configuration in the heavy vehicles manufacturing industry (or in other words – CPQ for vehicle manufacturing)?
I might be the person that has analyzed and spoken to most truck manufacturers in the world in relation to CPQ for vehicle manufacturing. I’ve met 7 out of the 10 largest truck corporations in the world. I thought I might summarize the unique requirements of this industry:
All truck manufacturers are heavy users of semi-old legacy systems. They have all been configuring their products since the ’80s or ’90s. This means that whatever system (and specifically CPQ) you introduce – needs to be heavily adjusted to fit into the existing system landscape. Many of these systems are very specialized – and sometimes uniquely built for the manufacturers. Since they are often old, good APIs may be missing.
Systemized BOM usage
It’s quite common generally in the manufacturing industry to separate Engineering BOMs from Manufacturing BOMs. It’s also getting common to introduce a Service BOM. Since truck companies have been working with configurable products for so many years – they’ve systemized the usage of multiple BOMs.
One thing that most truck manufacturers use is the concept of a Sales BOM (they might call it something else like ‘Variant Codes’). The idea is to separate the ‘As-sold’ BOM from the ‘As-delivered’ BOM. This also separates engineering updates of BOM-items from Sales. So only when engineering updates actually changes the function the customer receives – that’s the Sales BOM item is updated. This decreases the need for maintenance of CPQ during the product lifecycle.
The needs of the customers differ quite a bit between markets, due to environmental, regulatory, or cultural reasons. Local market offices have a big influence on all the three letters of CPQ (configuration logic, how to price the product, and the look-and-feel of the quotes).
This means that the global configuration needs to be created differently for each market – with market unique defaults and optimizations. Local accessories may be needed in addition to being included in the CPQ.
A truck is nothing without its body. And bodybuilders are usually local, specialized, and (most often) small companies. Ideally, the customer should be able to configure the vehicle and the body in one CPQ – but that requires a tighter co-operation between the two types of manufacturers.
As a bare minimum, the CPQ needs to allow for sharing CAD-drawings for the bodybuilder before the truck is actually built. An easy workaround is of course to limit the configurability – and use semi-standardized drawings – but that limits the sales. Note that this does not only apply to mechanical CAD but also circuit diagrams etc.
There are a number of calculations that need to be done as a part of the sales configuration (e.g. turning radius, weight distribution per axle, powertrain optimization). Some of these calculations are simulations. Let’s take the powertrain optimization: the optimal combination of engine, gearbox, and axle gears for specific usage of the vehicle can’t really be configured. Essentially you have to use heuristic rules to find the most likely good combinations – and then run an external simulation of the combinations. This means that the CPQ has to be ‘open’ for including these calculations – during runtime.
A truck consists of a large number of configurable options (500+), and each option can consist of many alternatives (20+). This means that the theoretical number of configurations is even larger than the most complex configurations. Most manufacturers solve this by creating ‘sub-models’ – a sub-set of the product which they let their sales reps offer. However, one big issue with this approach is that quite often neither the customer nor sales rep knows exactly which model is the optimal one.
Traditional guided selling just doesn’t do the trick – because you might not be able to know the best model until you’re halfway through the configuration. The trick here is to let the user configure the whole product family at the same time – and let the configurator help the user find the optimal solution – not necessarily a predefined model.
There are a lot of unique complexities in CPQ for the vehicle manufacturing and truck industry. These challenges are further complicated by the ongoing COVID-19 pandemic. With less time spent with actual customers in-person, vehicle manufacturers must find ways to engage and optimize their sales processes. With CPQ for vehicle manufacturing, it’s easier than ever to connect the end-to-end buying and selling journey through integrations, visualization, guided selling, and more. Learn more by scheduling your specialized demo with our truck manufacturing experts today!
This originally appeared on CPQ.se written by Patrik Skjelfoss Principal Business Consultant at CPQ.se
Before co-founding cpq.se Patrik worked with Tacton CPQ for 13 years focusing on Heavy Vehicles and Manufacturing Equipment.
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