Increased demand for customized products has led to a surge in Engineer To Order manufacturers in recent years.
Growing at an annual rate of 20 percent, Engineer To Order firms currently make up roughly 25 percent of North American manufacturing, as noted by Douglas H. Grabenstetter and John M. Usher in the article “Sequencing jobs in an Engineer To Order manufacturing environment” published in the journal Production & Manufacturing Research. As the market’s demand for customized goods grows, manufacturers in this industry must be able to respond to the shifting landscape.
Cutting lead times
Engineer-to-manufacturing is a unique industry due the nature of the R&D heavy design process. This initial lead time is necessary to create unique, often one-of-a-kind end products. In many instances, the final piece is something completely original that has never existed before and needs to be designed up from scratch. Growing demand for these goods is forcing manufacturing executives to find ways to expedite this process and reduce scheduling times.
“Properly sequencing jobs before the engineering function is a key way to reduce lead times.”
One way that Engineer To Order companies have attempted to keep pace with this increasingly competitive industry is by streamlining operations and finding ways to boost revenues through creating better workflows and cutting lead times. Since the engineering process can consume up to half of the total lead time, Grabenstetter and Usher recommended properly sequencing jobs before the engineering function as a key way to reduce lead times and maintain cost competitiveness in the Engineer To Order industry. Another way that the authors suggest in cutting down on engineering lead time is by combating administrative convenience, which they say stems from choosing methods that are too easy and familiar.
However, the article’s authors come to a perplexing problem: “How can scheduling capabilities which co-exist with existing ERP systems be developed for the highly complex Engineer To Order engineering environment while, at the same time, remaining realistic, robust, acceptable, and easily implemented?”
Total ETO, an ERP created in collaboration with five custom-design manufacturers, is especially suited to meet the unique demands of the engineering, accounting and production teams involved in the Engineer To Order sphere, providing a unique experience unlike other typical ERP systems.
Purchasing the unknown
Another way to respond to the rapidly scaling industry is by making more accurate bills of material and financial forecasts. Writing in LinkedIn, Peter Mol related how the problem with job sequencing during the design process can lead to a paradox during purchasing and production. Engineers tend to design products in the apparent logical order that allows for stability and ease of building, such as the setting up the firmament first, then the supports, next the moving parts and finally the electronic components. While this makes logical sense from an engineering perspective, it might not necessarily be the most cost-effective order for purchasing or production.
“Engineers tend to design products based on logical order, not purchasing efficiency.”
One component might require a much longer purchasing lead time, while a different element might need to be set up for production well in advance of other parts. Without the proper communication between the engineers and the purchasing and production managers, completion times fail to follow schedule, deadlines get missed and customers end up dissatisfied.
Since this engineering process relies on purely intellectual inputs and outputs as opposed to the physical nature of building the actual end product, it can be difficult to initially quantify the costs needed to complete the job. Because of this abstract nature of the ideation process, it’s highly important that Engineer To Order manufacturers rely on a simple, yet robust ERP system that configures the different cost estimates based on variable specifications, which can then be compared against each other.
How Total ETO can help
The lack of communication that occurs during the different phases of the Engineer To Order manufacturing process is in some part inherent to the industry and sometimes self-inflicted. Providing each team member with real-time access to the bill of materials reduces the incidence of misallocated resources, but still allows for flexible purchasing options. This minimizes the information bottleneck that weighs down workflows and lets designers create BOMs quickly and accurately. Further, with Total ETO‘s unique “hold and release” system, engineers can communicate long lead items and completed drawings to purchasing sooner so they can start procuring materials earlier, leading to better prices and delivery.
Learn more about Total ETO by requesting a demo today!