Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

7.4.3 Approach for Repeatable Engineer-to-Order

Intended learning outcomes: Describe a typical engineer-to-order business process and its permanent enabling process. Explain role of the permanent engineer-to-order enabling process.

This archetype would include elevators or buses, for example. As with the “Basic” engineer-to-order, a product family is often developed for the production environment on a make-to-order basis and a mass customization production type. If necessary, the result of the configuration process is adapted according to the customer order. This approach is naturally only suitable for product families that only need partial customer-specific adaptation.

Since these are often “engineer-to-order” jobs, the level of competition is high. On the other hand, there is often repetition, at least at process level. This fact can and must be used for a high degree of standardization and automation. For example, in the segment of skyscraper elevators, the elevator in the top floor must fit with the architect’s personal concept. The “engineer-to-order” process requirements are thus similar to those of the fashion sector. In addition, selling the “non-standard” (i.e., “engineer-to-order”) elevator on the top floor is often the order winner for the many “standard” (i.e., “make-to-order”) elevators in the whole building. Therefore, the specific engineering of the top floor elevator is not adequately remunerated. Thus, the engineer-to-order process must be fast and efficient.

At the fundamental level, the use and integration of product configurators in the ERP and CAD software systems can help automate the tendering and ordering process from end to end. Expertise and experience with suitable technical methods and tools (e.g., product configurators) are used in the individual sell, engineer, and make processes. Even as early as the sales process, configuration allows for an initial cost calculation and for a virtual product, which allows the customer to experience something as close as possible to the physical product.

Fast and efficient engineer-to-order also imposes high organizational requirements. And that is a key reason why customer-specific adaptations are normally not handled by product design, but as a separate process by a department that specializes in carrying out customer-specific adaptations. Figure shows a typical engineer-to-order business process in a company.

Fig.       A typical engineer-to-order business process and its permanent enabling process (compare [Schö12]).

The sales phase (including quoting) is followed by receipt of the customer's order, followed in turn by design, production, and delivery. In practice, fast and efficient engineer-to-order calls for the consistent, long-term use of an enabling process. Figure calls this process a permanent engineer-to-order enabling process. Queries from the ongoing engineer-to-order business process are answered through a form of know-how transfer. If additional know-how is gained during order execution, it is fed back to the enabling process in the form of lessons learnt. At the organization level, this means expertise and experience of dealing with the customer’s engineer-to-order requirements. This in­volves the business models between the company and external customers and suppliers, but it also means the “business model” around the internal customer-supplier relationships between sales, engineering, and production, at all levels. At process level, this means expertise and experience of managing how the company works with external customers during the product specification and manufacturing phases, but also how internal customers work with suppliers. Another point is know-how of user interaction with the product in a virtual status, i.e., before and during the physical manufacturing.

Whilst in the classic mass-customization culture it has been possible over the years to concentrate the mass-customization expertise across fewer people and to focus on the design pro­cess (and, to an extent, on the sales process), a quick and efficient engineer-to-order system needs this expertise shared amongst more people, and it must in turn be extended to the workshop. So we can talk here of a distinct engineer-to-order culture.

For companies that consider mass-customization products as their “standard” products, it is notable that an engineer-to-order (“non-standard”) customer order (all too) often results in a new parameter, which controls the new customer-specific components. The overhead of introducing the new para­meter is only covered if the same customer orders their special variant several times. To solve this problem, we observe that “non-standard” products will use the principles of commonality and of modular product concept that have led to increased productivity in the case of mass customization. Here, these principles can and must also be applied for parameterized component families, because components of product families are sometimes families in their own right. However, their parameters may have a different name or semantic structure than that of the product family, perhaps because the component family already existed beforehand for another product family. Transforming the parameter values from the product family efficiently to those of the component family increases the commonality of the component family. This often helps in avoiding new parameters or components. One more thing: The increased commonality of the component family also encourages product innovation.

Therefore, an important role of the permanent engineer-to-order enabling process is to carefully determine the parameterization for product families, particularly for component families. This task includes (1) determining and maintaining the component families and their set of parameters, (2) increasing re-usability of parameterized component families, thereby ensuring their commonality, and (3) encouraging colleagues to use existing parameters or to suggest sensible enhancements (especially for the value ranges). This task is some­what more difficult than the comparable task of ensuring that single components used for newly constructed products can be re-used. The leaders of the teams that carry out these centrally organized tasks are very experienced product or process developers. They understand the reasons for the existing parameteriza­tion, and can follow the thinking of their colleagues when developing. They also have excellent social skills, to encourage colleagues to support their standardization efforts.

Course section 7.4: Subsections and their intended learning outcomes