What is Engineer to Order (ETO) manufacturing

The ETO process: from concept to completion

1. Product Configuration: The ETO process begins with understanding the specific customer requirements. This needs detailed discussions to understand requirements and assumes that sales teams are aware of any limitations in design engineering and manufacturing.
2. Pricing and Quoting: Sales teams then calculate an estimated cost for the product based on the individual customization requirements. They provide the customer with a detailed quote that includes prices, delivery timelines, and, in some cases, drawings and 3D models.
3. Engineering and Design: The design engineering department creates CAD drawings of the product together with Bills of Materials (BOMs) and ensures that designs comply with any regulatory requirements.
4. Manufacturing and Production: Once the design is approved, the manufacturing process starts with sourcing materials, then production, assembly, and quality standard checks.
5. Delivery: The ETO product is delivered to the customer together with any relevant documents, training, and information on support services.

Challenges of ETO

ETO manufacturing presents several challenges:

Increased Complexity in Design and Engineering: ETO projects often involve highly complex design requirements that are configured to the unique needs of each customer. This complexity can bring challenges in design engineering optimization, and manufacturing efficiency.

Longer Lead Times: Customization can increase the lead time required for ETO products compared to standardized manufacturing processes. This can impact sales conversions, customer delivery expectations, overall customer satisfaction, and project scheduling.

Supply Chain Management: ETO manufacturing relies heavily on an efficient supply chain to source specialized materials, components, and resources. Managing the procurement process, ensuring timely delivery, and handling supply chain disruptions can be challenging, particularly when dealing with customized requirements.

Cost Estimation and Pricing: Estimating the cost of ETO products accurately is often challenging because of the volume of customizable options, variability in material costs, and uncertainty in design requirements.

Product Knowledge of Sales Teams: The complexity of ETO products requires sales teams to have a comprehensive understanding of design engineering and manufacturing capabilities. Sales reps must choose from thousands of product options–each with its own rules and dependencies. They then need to design products in a way the engineering department will understand. A lack of knowledge can lead to errors in quotes, longer sales lead times, and additional dialogue between sales and design teams.

Scalability and Efficiency: Scaling ETO manufacturing operations while maintaining efficiency and profitability presents challenges. Allocating the right resources, optimizing workflows, and taking advantage of automation technologies are essential to achieving scalability without compromising quality or cost-effectiveness.

Communication: The ETO process requires clear communication between sales, design, and production teams to ensure accuracy and efficiency. Communication challenges can impact workflow optimization and lead to costly errors.

Making ETO easy with CPQ

CPQ technology simplifies and automates the most complicated, time-consuming, and error-prone parts of the ETO workflow.

3D product configuration

CPQ makes complex configurations easy. Sales reps and customers can configure using a 3D configurator. This enables customers to see a real-time 3D visual representation of the ETO product, removing the chance of misinterpretation and improving the customer sales experience.

With in-built rules working behind the scenes, the configurator automatically checks for compatibility, adjusting options and pricing to a set of pre-determined rules. It ensures the final configuration is feasible for production.

Dynamic pricing and quotes

CPQ enables accurate pricing and quoting. As ETO products are visually configured, CPQ technology automatically calculates the cost based on the customized options chosen working on a pre-set pricing strategy. Prices update automatically with no need for sales teams to manually calculate complicated pricing options.

Instant and accurate quotes are generated, including any applicable discounts, together with drawings and 3D models. This reduces sales cycle times and increases sales conversion and customer satisfaction rates.

Design automation

Some CPQ technology solutions can automatically generate 3D models, specifications, BOMs, and CAD drawings, so the engineering department receives a complete and accurate breakdown of the customer’s requirements.

Seamless integration

The integration of CPQ with CRM and ERP systems provides a range of benefits that enable sales teams to work more efficiently, improve accuracy, and increase sales.

By streamlining workflows, enhancing visibility, and ensuring consistency across all customer interactions, businesses can optimize their sales processes and deliver an exceptional buying experience.