The manufacturing of unique products and the consumer demands for increased variants and features and options are requiring the need for change within business operating software. If you are still focused on core ERP to make efficiency improvements, cost reductions and streamlining your supply chain, you are only going to get half way to optimal success. You must start looking forward to how you are interacting with your customers and meeting their demands for unique products. The new millennial buyers are thinking differently and expect their products to be built the way they want. Let’s take a look at what you should be looking at for the future if you are going to lead the market through the offering of configured to order products, versus becoming commoditized and marginalized.
Cross Systems Integration
For properly handling configured items, the master fabrication and assembly control software moves from the ERP system to the CPQ (Configure Price Quote) software as it will be responsible for assembling all pertinent information about the final configuration and its assembly methods. This will include component data such as item master information, parametric data so to allow for fitment and assembly rules to execute, drawing and dimensional data, catalog data and commercial data such as pricing and CRM customer data. Historically on a standard, non-configured item this information would come together in the ERP in multiple areas such as sales, BOM and routings. Since the configurator will need all this information for dynamic selection, the requirement for the configurator to have more open and universal integration capabilities is critical. It would not be uncommon for a CPQ system to connect to the following systems in an organization: CAD, PLM, Pricing, CRM, Document Management, and manufacturing work center resources (for routings). If within the configurator you want to offer delivery information to your buyers, planning and scheduling systems access would also be needed.
Real Time and Speed
As the need for configuration in real time is critical to meeting the desires of contemporary buyers who expect instant results, the need to have all of these supporting systems providing high speed access is required. Technology access via a multitude of methods is also desirable of an ideal CPQ system as these support systems may be written in a number of different technologies. Web Services, ODBC, direct SQL are just a few of many options. Along with the data access, these systems also have various security models that must be supported by the CPQ solution. As in-context data is important such as for customer specific pricing or specific item and catalog options, the need to maintain consistency across all these systems is needed or the CPQ system will need to support crossover data to rationalize the master data. Again this can introduce complexity and maintenance unless the CPQ system is architected to handle this.
Engineering and CPQ Rule Control
CPQ systems also must take into account the need for configuration controls as now the CPQ system is in reality your core engineering system. With discrete items, the ability to have Engineering change notices is typically handled in the ERP or PLM system. Proper sign offs and change control is demanded to meet quality measures stipulated in ISO rules for certification. With CPQ, this now moves to the CPQ rule base. The need to have a check-in check-out policy of rules and support information is needed, as a change in a rule will affect the final configured product. Ideally this change management system needs to be part of the overall change management system within the organization including the PLM and ERP systems that CPQ is integrated with.
Now that we have reviewed the system prerequisites of what is required for supporting CPQ, lets next take a look at the human driven processes that would be beneficial to streamlining and optimizing your results of CPQ.
If you are going to offer a product that is configurable, you need to start with engineering the product for configuration which will include the design taking into account possible choices. Building the assembly in CAD in a modular approach can be beneficial for reuse as a best practice. This will most often be where the master data for a Configure price quote system can pull from. Other options would include ERP item masters and distinct item master tables. Within the item data it is helpful to have the following information available:
• Item number – unique identifier.
• Item Category (which option choice sub group will these items be classified?). This may be more than one, so having this defined can streamline the CPQ call to the data when the lookup is done within the CPQ engine.
• Links to images and related item information that the CPQ engine can use.
Once you have items under control the next step is to determine how the item options will actually be assembled. The need to define how you will move from the engineering BOM to assembly BOM will help in defining the manufacturing rule sets. Top configurators will not only output the configured BOM but a configured routing. By having the item categories defined as to where those items will physically be assembled – workstations, resources and rates (time to assemble) will yield a better result as to actual build costs. This information typically will be coming from the ERP system as to master information.
Pricing is one other area that is critical as sell price can include customer specific pricing, rule based discounting based on CRM or ERP master sales data and of course the specific configuration options. To make this work well, the CPQ system needs to have real time access to the CRM or ERP price information in real-time.
Summing It Up
As we can see, creating a configured item manufacturing typology does require upfront prep – to get the integration and touch-points correct, but the value and benefit can be significant. If you could increase sales by 20-30% by offering more choices and increasing customer satisfaction by delivering exactly what they want to buy, it definitely can be worth it. The key to success is to quote straight forward. Be sure you are investing in a CPQ (Configure Price Quote) Solution that can integrate to and access your organization’s master data, have a easy to understand rule and configuration language, and one that has tight engineering controls. The other factor is working with a configuration implementation expert that can help craft rules and layouts to make sure your customers or internal sales resources can easily and efficiently make the right choices for features and options with little to no chance of error.
Learn more at https://www.cpq-configurepricequote.com/