Key Takeaways
- Engineer To Order (ETO) is a design and build process that was shaped to fill a void created by mass production. An ETO workflow allows a manufacturer more flexibility and customization.
- The ETO design process is collaborative with the client and design/engineering team working together on the solution. Also known as “iterative design”, this process makes it difficult to manage the bill of materials (BOM).
- ETO manufacturing software, such as an ERP designed for Custom Machine Builders eliminates their struggles, including the engineering/procurement bottleneck, no data for estimates, part tracking, and project visibility.
What ETO Is and Isn’t
Since the Industrial Revolution, manufacturing has been a dominating industry, growing and evolving to make more products in less time. Standardization was a key factor. The ability to mass-produce products made them more affordable, creating more demand. There are several downsides to mass production, though, which more and more businesses are experiencing. At the top of the list is a lack of flexibility and customization, which meant many customers weren’t getting exactly what they wanted. This gap in customer satisfaction made way for a new type of manufacturing, known as “Engineer To Order”.
To help define Engineer To Order, it can be helpful to start with what ETO is NOT. Many manufacturers fall into the “Make to Order” (MTO) industry, sometimes also known as “Build to Order”. In this production method, we build goods only after receiving a confirmed purchase order. This means the manufacturer already knows the parts and labor requirements for each build.
Engineered To Order environments don’t have the same luxuries that come with repeatedly making the same product(s). Instead, their processes are a little more complicated and require an innovative and experienced team.
Engineer To Order is About Collaboration
When designing a one-of-a-kind solution for a manufacturer, engineers in an ETO shop work alongside the client. With a shared goal of building a product that satisfies all their requirements, collaboration is necessary.
Collaboration is what leads to the innovation and utility of the end product. Unfortunately, these customized solutions also make Engineer To Order the most costly production process. Meeting the unique needs of a customer is also time-consuming for both the customer and the original equipment manufacturer (OEM). However, it’s this hard work through collaboration that has solved many problems and inspired plenty of leading-edge technologies.
The ETO Design Process
Engineer To Order manufacturers adopt a process of gradually creating and improving a design. Each change is in response to assessments with the client and their needs. This is known as iterative design. Without knowing the final specifications, or materials required, engineers in an ETO environment often work very closely with their customers. This creative process can be exciting and lead to stronger client relationships.
However, an erratic workflow like this is often inefficient. It can be frustrating for all Custom Machine Builders, including Integrators, Panel Shops, and OEMs. If you’re Engineer To Order, then the workflow below is probably very relatable.
The ETO Manufacturing Process
Engineer To Order processes are more complex than what typical manufacturers of standardized products face. A successful project requires complete visibility. Otherwise, it’s easy for mistakes to compound; leading to lost profits, wasted time, and irritated staff. Since every ETO project is unique, the workflow for every project is unique. The following, however, can give you a more detailed idea of how Engineer To Order machine builders proceed with a project.
1. A request for quote (RFQ) or request for proposal (RFP) is often the first step. The customer provides as much info as they can to ensure their goals are met.
2. When the ETO firm has a good understanding of its customer’s needs, the official partnership begins with a purchase order from the client.
3. Design work follows, which requires working closely with their client as design plans can change often.
4. Engineering starts to build a BOM, this is one of the pain points where ETO manufacturers suffer. A bill of materials can be hundreds of items long, with some parts taking months to order. Many engineers find themselves manually entering each part number which is time-consuming and typically leads to multiple errors. Additionally, since the supply chain isn’t as reliable as it used to be, procurement always wants the BOM as early as possible.
5. As the OEM finalizes the design work, manufacturing may already be starting to build part of the project. During this time, it’s common for the customer to reach out with more changes and additional requests. Working with Dynamic BOMs, like those created in Total ETO, helps ensure each change is captured correctly.
6. In an Engineer To Order project workflow, it might be necessary to source additional materials, at any stage. This can lead to serious bottlenecks without the right ERP.
7. After the machine is assembled, electrical work, including controls and programming, is done. This also includes debugging and final tweaks before the machine is accepted and shipped to the customer.
As you can see, the workflow faced by most Custom Machine Builders is constantly changing. The right ERP software can mitigate these challenges though. When procurement and engineering can work with Dynamic BOMs it saves both departments time and money. Total ETO makes Dynamic BOMs possible by integrating with popular CAD systems including SolidWorks, Autodesk, and Onshape. Curious? We’d love to show you firsthand how Dynamic BOMs will improve your processes… click here to request a demo.
Engineer To Order Manufacturing Complications
The talent and skill needed to make custom products aren’t just needed during the design phase. Skilled workers are needed throughout the organization since the complications of working in an ETO environment are felt throughout the organization:
SALES: Estimating and quoting projects accurately is difficult without knowing the parts or man hours that will be required. It’s quite common in ETO shops to have no original design to help estimate costs.
PROCUREMENT: Buyers need access to the bill of materials as early as possible, to prevent downtime from waiting for parts.
ENGINEERING: The client often requests multiple changes to the design, so engineers need to hang on to the BOM as long as possible.
MANUFACTURING: Tracking parts as they flow through both internal and external processes is tedious and error-prone. Ensuring proper inspections and following up on quality issues becomes overly complicated, despite their importance.
ACCOUNTING: POC revenue recognition is arduous, as is tracking work-in-progress.
MANAGEMENT: Without complete project visibility, it can be difficult to track a project and ensure it’s on time and budget.
Engineer To Order Benefits
Custom manufacturing is growing around the world. Demand keeps multiplying in most sectors for customized or Engineered To Order solutions. The aerospace, semiconductor, chemical, medical, packaging, and panel industries are leading the way and showing off what it means to be ETO.
The ETO business model is valuable with improved customer service and flexibility. The ability to respond to an ever-changing market is also driving success for Engineer To Order manufacturers. When we take a closer look at the benefits of ETO, we can really understand the potential for these organizations.
CUSTOMIZATION: Above all else, the ability to customize machines, panels, etc for their clients is what makes Engineer To Order plants special. Tailoring a product for a sole customer means their solutions will meet the customers’ specifications. Such success can lead to customer satisfaction and loyalty. The customization and unique projects also drive employees at ETO manufacturers. Many builds require great creativity and innovation while providing challenges that ETO teams thrive on.
CUSTOMER SUPPORT: Engineer To Order machine builders are known for providing superior customer service. Their close working relationship with each client allows them to better understand their needs and their business. Personalized solutions fit the customers’ needs better, improving their overall satisfaction.
FLEXIBILITY: Production cycles can be more forgiving in an ETO shop, with shorter lead times. It’s this flexibility that allows Custom Machine Builders to respond quicker to any last-minute changes.
POTENTIAL SAVINGS: When an Engineer To Order organization has the correct tools to support their business, including an ERP designed for them, it creates opportunities to save. ETO offers scalability. OEMs don’t typically require R&D, beyond the design phase, which is expected with new standardized product design.
How the ETO Solution was Built
With the Engineer To Order industry starting to take off in the 1990’s, it was time for Custom Machine Builders to work together and find a solution that would benefit all Integrators, Panel Shops, and OEMs.
Dennis Parass, a Custom Machine Builder based in the Toronto area coined the term “Engineer To Order”. Handling Specialty, his shop, delivers custom-engineered material handling systems for the aerospace, entertainment, and transportation industries. Parass recognized flaws in their processes but also found a gap in the marketplace. There were solutions to help manufacturers of standard products but none for customized machines.
So, just before the new millennia, Parass recruited his son TJ, an engineer, to help solve these problems by designing ETO software. In this interview with Denis Parass, we learn how the concept of Engineer To Order was born, along with the Total ETO solution.
In its infancy, this Engineer To Order software grew from helping one Custom Machine Builder, to five, to dozens. It’s success helped launch Questica, a Canadian software company that continued to expand the ETO solution for 20 years. As more Integrators, Panel Shops, and OEMs subscribed, we added additional features and benefits. Meeting each clients individual needs like this helped the software flourish and become a huge factor in each Custom Machine Builders success. By 2018 the software had grown so much, it became it’s own full service solution for ETO manufacturers. This is when Questica ETO became Total ETO.
Engineer To Order Best Practices
Standardization: Each project may be unique but standardizing processes whenever possible will increase your efficiency. Areas to consider standardizing include some design elements, quality control, and manufacturing procedures.
Communication: Clear communication between sales, engineering, procurement, and manufacturing are a must. Research from the Project Management Institute shows us that one in five projects fail because of ineffective communication. It’s also important to consistently communicate with your clients, ensuring they’re up-to-date on the project and are on board with its progress.
The Right Tools: Finding the right manufacturing software can greatly improve your ETO workflow. From computer-aided design (CAD) systems to ERPs, choose platforms that integrate, so you can simplify your processes. It’s also important to have a system in place to deal with the constant changes ETO companies face. Engineering, procurement, and manufacturing are especially affected by changes to the BOM.
Risk Management: Thanks to their customized nature, most ETO projects come with some risk. Your team needs to be proactive to limit disruption. As described above, finding the right tools, and consistent communication can reduce some risk. Minimum standards in quality control and a culture of continuous improvement can also make a difference.
Improved ETO
When an ETO manufacturer implements an ERP system designed for them, the list of complications shrinks, while the benefits grow. As you can see, it’s important for an OEM to partner with an ERP that matches their workflow. Working with Dynamic BOMs greatly reduces delays, which are often problematic and expensive. The Custom Machine Builder also saves money on materials with a Dynamic BOM. Engineering can release parts to procurement in stages, allowing them time to find the best deals, especially for long-lead requirements.
Project management is difficult for most in the ETO space. However, with the right ERP, you should be able to:
- Track your project workflow and see reporting metrics at all stages.
- Set project milestone dates for key events.
- Link files to the project for quick reference and without creating duplicates.
- Add notifications for key staff as each department completes its tasks.
- See project costing, material status, build capability, and more in predesigned reports.
- Use internal change orders to accurately track your percentage completion and compare it to your original budgets.
- Find projects easily, based on any criteria.
An ERP designed for ETO manufacturers such as Total ETO improves efficiency, accuracy, and profitability throughout the organization. If you’re Engineer To Order and need the above features to remain competitive, book a free demo today. What you’re missing out on will surprise you.
Written by Rebecca Rivard
