ETO Best Practices Archives

What Is Engineer To Order

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.

The ETO business model is valuable featuring customizations, flexibility, savings, and usually great customer support.

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

How Custom Manufacturers Can Improve Communication

Key Takeaways

Poor communication in manufacturing often leads to decreased productivity, safety hazards, increased errors, and low employee morale.
Due to the dynamic environment ETO manufacturers work in, Custom Machine Builders need to invest in and maintain a means of reliable communication. Doing so will help ensure efficiency and accuracy on every project.
The best ERP for small businesses is one that integrates with your other software systems, including CAD and accounting. The ERP should help you standardize communication protocols and enable cross-functional teams.

Improving Communication for ETO Manufacturers

Have you heard of the 5 C’s in communication? These terms are often used to describe what good communication is.

Clear
Correct
Concise
Compassionate
Complete

Think of it as a checklist for your emails, meetings, and more.

Effective communication is crucial in any industry, but it plays a particularly vital role in the manufacturing sector. With complex processes, diverse teams, and a continuous flow of information, optimizing communication can substantially enhance efficiency, productivity, and overall performance. In this article, we’ll explore the importance of communication in manufacturing. Furthermore, we’ll learn how to overcome communication issues you’re experiencing.

Why Invest in Totally Better Communication

Improving communication in ETO manufacturing is not just a matter of convenience; it’s a strategic necessity. The following are just a few areas in your organization that will improve along with your communication.

ERP BOM management: procurement needs to start sourcing materials as early as possible. Unfortunately, Engineers tend to withhold the BOM until the entire design is complete.
Overseeing vendors: if your parts are late, your project is likely to be as well. Purchasing needs to monitor materials and their vendors – but preferably without annoying the vendors.
Client relationships: the ability to articulate the value proposition of a product or service, understand customer needs, and address concerns is paramount.
Inventory management: Whether you’re fabricating parts internally, or expediting an order, your team will work more efficiently with ERP inventory management software.

The best ERP for small businesses is one that improves communication in manufacturing.

The Impact of Poor Communication in Manufacturing

According to a study by the Project Management Institute (PMI), 29% of project failures are due to internal communication problems. So, improving how your organization communicates isn’t just about the benefits above, it’s about avoiding problems caused by faulty communication. These could include:

Decreased productivity
Increased error rates
Production delays
Poor quality or workmanship
Safety hazards
Increased costs
Supply chain disruptions
Low employee morale

Communication in ETO Manufacturing

As we’ve seen, there are many good reasons for any organization to improve its communication skills. For Engineer To Order manufacturing companies, it’s especially important. Custom Machine Builders operate in a dynamic environment. Each product is tailored to meet specific customer requirements. Clear communication is needed to gather accurate specifications, ensuring customers get what they need.

Engineer To Order projects can be difficult to coordinate. ETO manufacturing involves multiple teams working on different aspects of the same project, at the same time. Without a solid communication system in place, it’s very difficult to coordinate such diverse teams. Finding an ERP that ETO manufacturers can work with makes this substantially easier. Total ETO, for example, provides full project visibility. Your team can track the project workflow and see reporting metrics at all stages of a project.

Additionally, Integrators, Panel Shops, and OEMs face a lot of change requests from their clients. This is one of the reasons why it’s difficult to manage the BOM. Engineering, for example, will release the BOM to procurement, but a week later the design changes. Procurement needs to know immediately to issue change orders. Improved communication, often through an ERP, facilitates the flow of information between engineering, procurement, and manufacturing. Your team can work confidently and efficiently, knowing each department always has access to real-time information.

How to Improve Communication in Manufacturing

The Harvard Business Review analyzed what was most needed to improve communication in the manufacturing industry. The study showed that timely updates, clear expectations, and responsive communication increase customer satisfaction by 25%… another great reason to invest in communication solutions. So, let’s explore how.

Employee training: It’s great to start new staff off by teaching best practices and standards to your new employees. However, your current team will need proper training, too. When you invest in a program that focuses on improving communication skills, it should involve both technical and soft skills. For ETO manufacturers this should include how to collaborate and share information in your environment.
Standardize communication protocols: It’s a great feeling when your standard operating procedures are improved. By clearly defining your processes, you eliminate ambiguity. To do this, you need a strong internal communication strategy. This ensures that staff understands their roles and responsibilities. A manufacturing requirements planning (MRP) system is a great tool for staying on track. Being able to, for example, add notifications for key staff as each department completes its tasks, takes away any guesswork.
Establish communication channels: We have so many ways to communicate now, but for some reason, communications continue to fail. Knowing which platform or apps to use is part of establishing communication channels. It’s also important, however, to consider when you communicate. Regularly scheduled meetings, both formal and informal, are always recommended. They help ensure a project progresses as it should. They’re also a great environment for addressing concerns, sharing updates, and finding more ways to improve.
Enable cross-functional teams: Encourage cross-functional collaboration by arranging a team that includes representatives from various departments. This builds a holistic understanding of your manufacturing processes. It also creates empathy and patience throughout the organization, as your departments now understand the struggles everyone is facing.
Consider company culture: Promoting a culture of open communication pays off in many ways. Employees need to feel comfortable expressing concerns and ideas and providing general feedback. Many organizations find it beneficial to provide a channel for anonymous feedback.

Practicing good communication in manufacturing can assist all organizations, big and small. Adopting these strategies can help create a more efficient and collaborative environment, something all Custom Machine Builders value. Plus, the improved performance throughout will set your team up for exponential growth.

When Integrators, Panel Shops, and OEMs focus on communication in ETO, they will see improved efficiency, accuracy, and profitability. That's what will make it the best ERP for small businesses.

Can an ERP/MRP System Help

Yes, big time!

The best ERP system for Custom Machine Builders is one that will match their workflow. When Integrators, Panel Shops, and OEMs implement an ERP or MRP system, communication improves almost instantly. The caveat is ensuring the platform is designed for ETO manufacturing. With Total ETO, your team can:

Integrate directly with SOLIDWORKS, Inventor, and other popular CAD systems.
Route parts between various tasks, tracking both internal and external processes. That means you’ll always know what parts have arrived and which ones you’re still waiting for (in real-time).
Ensure parts are inspected and check who completed the inspection. Additionally, it’s easy to record and follow up on quality issues on the shop floor, from engineering, or for purchased parts with embedded non-conformance reports.
Set project milestone dates for key events.
Easily link files to the project for quick reference without creating duplicates.
Add notifications for other employees as each department completes its tasks.
Cost out the BOM before purchases are made.
Record and track estimates to competition for accurate percentage complete revenue recognition. Subsequently, this also allows you to provide sales with essential estimating information. That means you can better quote and secure more projects.

Each one of these features improves communication in ETO manufacturing. Above all, they improve your teams’ morale, efficiency, and accuracy. Want to see why Total ETO is the best ERP solution for small to mid-sized Custom Machine Builders? Book a demo and experience it for yourself.

Written by Rebecca Rivard

The Importance of Software in ETO

Key Takeaways

Engineer To Order manufacturers require ETO software that can assist in R&D, streamline communication, and centralize data.
Manufacturing software for small businesses has become more popular in recent years. However, it’s still hard to find compatible software in ETO.
Studies have shown that Custom Machine Builders who try too hard to repurpose software for repetitive manufacturers end up losing time and money to make the tech fit their unique workflow.

Engineer To Order companies naturally generate a unique workflow. Their complex innovation requires uniquely tailored managerial approaches to streamline all these diverse processes.

Often, this requires plant managers to adopt and redesign paradigms and business models from other sectors, such as iterative manufacturing. Transforming repetitive processes, however, into support for Engineer To Order products can create more problems than solutions.

An R&D-Heavy Sector

Engineer To Order manufacturers heavily rely on the research and development phase. Each product is unique and requires extensive R&D. Before production starts, manufacturers must ensure to create and follow the necessary processes.

Not all enterprises can ensure no data goes missing during product construction. Engineer To Order companies require streamlined communication and centralized data storage. Having this data together in an accessible spot for every department increases productivity and reduces errors. Your team can optimize their workflow and complete more projects in less time. AutomationMag emphasized the importance of integrated manufacturing software for small business, tracking the entire process. Engineers can focus on product configuration without missing crucial information.

Dismissing Existing Tools

Much like the unique products built by ETO manufacturers, the processes these companies use are also one of a kind. Because of this, Custom Machine Builders can’t simply rely on the same tools and systems used by iterative manufacturers.

The article Engineer To Order Production Planning and Control shows us when ETO manufacturers attempt to repurpose existing information and communication technology or software used by repetitive manufacturers, it often leads to a host of problems. The needs of these organizations are vastly different. Iterative manufacturers know what materials they need well in advance and keep significant volumes of stock to ensure uninterrupted production.

Engineer To Order organizations rarely keep stock except for raw materials and leftover parts. Each job requires unique parts, making future needs unpredictable. That’s why these organizations are often called “job shops” for their project-specific part purchasing.

As projects are unique, they create challenges during the pricing and estimating phase, sometimes requiring engineers to begin preliminary designs. Some custom design manufacturers go as far as designing the entire BOM to get preliminary costing data, so they can be extra precise when quoting. All of this means extra attention is needed when tracking actual and committed costs. All costs must be attributed to a project and sub-projects, sometimes even down to the specific assembly, to get a better understanding and control of costs and budget to actual comparisons.

Implementing a Solution

As the “Engineer To Order Production Planning and Control” article noted, there are limited frameworks for managing production in Engineer To Order companies. Fortunately, Total ETO provides manufacturers with a solution to streamline all the information required to create custom products. With an exceptional implementation time frame and at a reasonable cost, small to mid-sized Engineer To Order companies can get the software up and running quickly and affordably without having to wait on extended downtime or rely on in-depth training. Such innovative manufacturing software for small businesses allows managers and workers on the floor to easily familiarize themselves with the program quickly, providing a great return on investment.

Learn more about Total ETO by requesting a demo today!

Written by RJ Ahuja

5 ways Engineer To Order Manufacturers can Optimize Their Supply Chain

Key Takeaways

In ETO manufacturing, bottlenecks between procurement and engineering can be detrimental. It’s important to give procurement early access to the BOM to keep the project running smoothly.
Don’t think of optimizing the supply chain as a big overhaul. Instead, remember that you’re streamlining your processes and improving your workflow.
Find ways to automate your processes. Not only does it free up your staff, but it also reduces errors. The best ERP warehouse management system is one that fits your ETO workflow and speeds up each project.

If the engineering department of an Engineer To Order manufacturing company acts as the brains of an organization, then the shop would most certainly be the backbone.

The materials and parts in the shop prop up the business and it’s these pieces that allow the production line to build the final product. Any congestion in the supply chain or bumps in the overall efficiency in procuring materials will ultimately slow down the manufacturing process and even create unexpected downtime at Engineer To Order (ETO) job shops.

Unfortunately, some custom design manufacturers keep procurement in the dark until the drawings and designs are 100% complete. Due to the manual process of collecting the bill of materials (BOM) from spreadsheets and the ever-changing requirements that ETO organizations deal with on a daily basis, engineers prefer to perfect the BOM before signing off and letting procurement start gathering required materials.

However, without an optimized procurement and supply chain in place, the company can suffer. This makes it imperative for manufacturers that build Engineer To Order products to run a streamlined and efficient procurement workflow to boost overall productivity across the entire enterprise.

Managers at ETO manufacturers can incorporate these tips to improve workflows and efficiency:

1. Don’t hesitate to reorganize

Although overhauling might seem like a waste of resources, a quick reorganization can ultimately streamline the workflow and boost the overall efficiency of the workers. This leads to additional cost savings and potentially a bump in profit margins.

While there are numerous ways to effectively organize, each company will have to determine what best suits its needs.

2. Require vendor delivery commitments

One of the biggest obstacles to maintaining an efficient supply chain is delayed deliveries. If a shipment of materials arrives late, it creates a backlog of products and potentially leads to a flurry of confusion. By instead communicating to vendors when materials are required, there are fewer surprises and inconveniences for both sides. This is difficult for ETO manufacturers, though, because part tracking, both internal and external, is either non-existent or unreliable. Procurement software can help, especially when it’s combined with an ERP warehouse management system.

3. Automate as much as possible

Manual data manipulation techniques and spreadsheets can slow down and introduce human error into the process. Implementing automation can reduce the level of data errors and boost efficiency. This, like procurement software, helps confirm you buy the right parts and materials. It also ensures you receive them at the right time for the best prices.

4. Implement a highly specialized ERP system

Total ETO, an ERP system designed for Engineer To Order companies, utilizes a separate engineering screen. They manage entire projects and individual jobs by displaying a structured bill of materials hierarchy instead of a flat BOM. Being able to visualize the BOM, ETO manufacturers have more flexibility to the materials and modifying requirements for changes. Total ETO integrates with any CAD system to collect BOM and vital part information, further reducing double entry.

The unique hold-and-release system allows engineers to release long lead items and completed assemblies to procurement early. But they’re still able to hold back assemblies that remain in the design phase. The BOM is not static, meaning engineers can continue to change designs and required parts even after releasing to procurement. Total ETO reconciles these changes automatically to flag and highlight items that need attention from procurement quickly.

By getting this information to procurement quickly and efficiently, they’ll spend less time on clerical work. When more time can be spent sourcing goods you’re more likely to get the best prices and delivery. This makes a big difference, allowing projects to ship more quickly and more profitably. Most ERP warehouse management systems can’t make the same promises, and procurement software has limited functionality.

Custom Machine Builders have always been innovative, their creativity and commitment to problem solving is impressive. Conversely, it’s also impressive to see what an ERP designed for Engineer To Order manufacturers can do. It’ll be more compatible with Custom Machine Builders than a typical ERP warehouse management system. Experience it yourself, request a demo today.

Written by RJ Ahuja

How to Determine if Your Engineer To Order Company Needs an ERP System

Key Takeaways

A configurable enterprise resource planning solution creates greater transparency and accountability. Yet few ETO manufacturers are taking advantage of this tech.
If a Custom Machine Builder plans to scale, an ERP designed for their workflow helps staff handle the changes ahead.
If eliminating spreadsheets and redundant clerical work sounds like something your organization may benefit from, then an ERP system should be the first option you explore.

Running a custom design manufacturing business requires executives and managers to effectively and properly allocate the company’s resources in an efficient and timely manner. Failure to do so may result in lost revenue and client cancellations.

Implementing a configurable ERP system combats misallocation of capital, time, and materials. ERPs provide transparency and accountability tools. However, a recent study found only a quarter of respondents used ERP systems. Jim Wagner from Sikich expressed concern about low ERP adoption in manufacturing.

“The persistence of manual processes in the industry is troubling. Technology can help companies grow more efficient, lower costs and better serve customers. It has the potential to transform the industry and drive success, but companies need to make full use of it to realize gains” explained Wagner.

As global competition continues to increase, Engineer To Order manufacturers should not discount the many benefits an ERP system provides for these companies. The following examples are a starting point for manufacturers to determine whether they need an ERP system.

Scaling Opportunities

An Engineer To Order manufacturer that has no plans to rapidly scale up production might be content with its current resourcing situation. On the other hand, a company poised to quickly expand operations needs to have the tools in place to handle the drastic change it may experience during this scaling process.

New workflows will need to be introduced for employees; the company’s supply chain may need to be expanded, with additional vendors brought into service and a greater volume of goods being built; but more importantly, the organization’s resource allocation will need to be overhauled – in some cases significantly – to cover an increase in revenue, overhead and orders that accompanies a major expansion. As noted by TGO Consulting, an ERP system brings an organizational value to a company that is extremely worthwhile.

However, even without an immediate plan to scale operations, it doesn’t mean the company won’t benefit from an ERP system. Often, the biggest obstacle to business expansion is the lack of available resources necessary for scaling, whether that includes purchasing more material to build a greater number of products, hiring additional employees, or dedicating money to a marketing campaign, among numerous other routes. However, having a robust ERP system in place can potentially allow the ETO company to ensure current projects are on schedule and within scope. With this ability to drill down and get granular data about the status of projects, there’s a greater chance of finding ways to cut costs and turn a profit, thus allowing the company to grow and succeed.

Too Many Spreadsheets Being Used

A company that needs to use several different spreadsheets to manage various aspects of operations may find itself having to use different stop-gap measures and other workarounds to conduct business. Do you use one spreadsheet to track items ordered and another to track receiving? Having to open one spreadsheet to read data, then convert the data to a different format to put it into a different spreadsheet and email it to a coworker, who then uploads it to his or her manager, not only wastes time but also opens the possibility for information corruption, mishandling or loss. A configurable ERP saves plenty of time and frustrations here.

Custom design manufacturers facing any of these problems can benefit from implementing Total ETO, the only enterprise resource planning solution specifically designed for the Engineer To Order sector.

Learn more about Total ETO by requesting a demo today.

Written by RJ Ahuja

How Total ETO can Boost Engineer To Order Competitiveness

Key Takeaways

Data that was previously inaccessible or untraceable for ETO manufacturers is now readily available.
Incorporating additional tech such as RFID tags into materials during shipping can help collect even more data.
A configurable ERP gives Cusotm Machine Builders more agility and flexibility. This is important to maintain stability in the ever-changing industry landscape.

A constant state of disruption characterizes the manufacturing industry. As more disruptors continue to enter the market, Engineer To Order manufacturers must pivot quickly to deal with the shifting industrial landscape to stay ahead in this competitive environment.

The Global Manufacturing Competitiveness Ranking anticipates the U.S. will surpass China, for No. 1 spot, within the decade. The survey’s authors cited U.S. manufacturers investing more in technology and innovation, driving this increase in competitiveness.

“While manufacturing may be slightly down in the U.S, the long-term trends are positive.” Deborah Wince-Smith, president and CEO of the Council on Competitiveness continued; “We predict that the U.S. will overtake China and become the number one manufacturing nation within five years.”

Big Data gets Bigger

The increasing interconnectedness of materials, people, and operations allows companies to track and analyze a vast new subset of data. This data was previously inaccessible or untraceable. However, highly specialized systems are becoming more popular. They’re giving big data a more prominent role in daily operations for all companies, including Engineer To Order manufacturers.

According to a recent report from SCM World titled “The Digital Factory: Game-Changing Technologies That Will Transform Manufacturing Industry,” one of the main factors to impact manufacturing in the immediate future will the usage of big data. The report noted 57% of respondents think real-time factory performance analysis will be a main driver of big data. Meanwhile, 53% of respondents cite real-time re-planning, including materials requirement planning and factory scheduling.

A lot of big data analytics relies on the continued growth and adoption of systems across all industries. One way companies can collect and use this big data is by incorporating RFID tags into materials during shipping. They can also utilize intelligent equipment with networked sensors and software. With access to this crucial information, manufacturers can make more accurate purchases, boost productivity, trim waste, and ultimately increase revenues.

More ETO manufacturers are anticipating using big data analytics to streamline operations and boost productivity. Companies that fail to take advantage of this information might find themselves falling behind competitors who do.

Three-Dimensional Disruptions

One of the trends currently impacting every sector in the manufacturing industry is the adoption of 3-D printing. According to the report “3D Printing comes of age in US industrial manufacturing” recently published by PricewaterhouseCoopers, 71.1% of manufacturers have implemented some form of 3-D printing.

According to the source, only 17.4% of manufacturers are experimenting with 3-D technology for integration into regular operations. This is down from 28.9% two years ago. 31.4% of respondents are using this method for prototyping, while 6.6% employ 3-D printing for producing end-products.

Shifting to 3-D printing should only continue to increase among companies that build uniquely designed, Engineer To Order products. Printers are becoming more accessible and easier to use. Additionally, prices are falling, making this method increasingly attractive to manufacturers. Furthermore, it’s noted that most manufacturing executives anticipate significant growth of 3-D printing in this sector in the coming years.

The print-on-demand feature may be especially compelling for engineer-to-order companies that want to reduce inventory and streamline their supply chains. Further, due to the nature of the specially tailored product designs offered by Engineer To Order manufacturers, the virtually limitless possibilities afforded by 3-D printing options open the door for a whole host of new product offerings. However, it’s important that these companies keep pace with their peers and other competition. Not all ETO manufacturers will be able to make use of 3-D printing. This makes it particularly important for these companies to find other ways to boost their competitiveness.

Configurable ERPs

New technologies and innovations intensify manufacturing competition. Engineer To Order manufacturers need the right tools to stay successful. Implementing a configurable ERP system ensures agility and flexibility, which your team needs to compete.

According to Industrial Distribution, due to the nuanced complexity of manufacturing companies that consist of hundreds of unique processes, from warehouse management to production, having an ERP system that conforms to the company rather than forcing manufacturers to alter their operations to fit the ERP system creates more long-term benefits and increases the chances for success. This keeps the ETO manufacturer competitive and allows the company to remain flexible enough to rapidly pivot to address a changing industry landscape, or quickly scale operations to meet higher demands.

Other ERPs and MRPs claim to tackle ETO challenges, but in truth, they are built for the traditional manufacturing organization. Total ETO is the only ERP | MRP system built by and exclusively for Engineer To Order organizations. An affordable and configurable ERP and MRP system that’s intuitive and easy to use for small to mid-sized custom design manufacturers. Total ETO allows ETO companies to stay competitive in an industry constantly undergoing disruptions.

Learn more about Total ETO by requesting a demo today.

Written by RJ Ahuja

Matching ERP Solutions for ETO Manufacturers

Key Takeaways

The budget for many ETO manufacturers is currently stagnant or even shrinking. This is understandable, considering some Custom Machine Builders expect their revenue to shrink over the next couple of years.
An ERP solution is recommended for any manufacturer looking to scale, especially in the ETO space.
Trying to force a specialized business into a standard ERP doesn’t work. ETO manufacturers need an ETO solution.

ETO Manufacturers Still Face Many of the Same Challenges They’ve been Battling for Years.

For starters, the IT budgets for Engineer To Order manufacturers are not growing and are, in some cases, actually shrinking: The Gartner forecast for IT spending in 2016 predicted a 4.5 percent drop in IT spending among firms devoted to manufacturing and natural resources.

Similarly, the Spiceworks 2017 State of IT report projected that IT allocations would barely move between 2016 and 2017. Instead, it will rise from an average of $293,000 to $294,000 per company. There were a few other important constraints revealed about ETO manufacturer’s survey:

64% of respondents expected to hire no additional technical staff in 2017. Compared to only 30% who were planning on taking on more employees. This trend will put more pressure on ETO manufacturers and others to do more with less.
Budgets for both software and hardware have been decreasing with some of the funds being redirected to managed services.
60% of the companies surveyed expected to see increases in revenue in 2017. A moderate 20% predicted no change and 10% even stated their revenues would likely decline in the new year.

For ETO manufacturers in particular, this current trend of stagnant IT budgets is at odds with the technical investments they’ll need to make. Specifically, advanced analytics, robotics, and augmented reality are just a few of the ongoing developments many manufacturers will have to address.

Finding the right tools

An enterprise resource planning system has to be the focus when modernizing how ETO manufacturers do business. The ideal ERP system is easy to implement, integrate and pay for. This includes small and medium-sized Engineer To Order manufacturers. Unfortunately, many standard ERP solutions fall short on these counts.

Panorama Consulting demonstrated the shortcomings of the average ERP implementation in a recent report on enterprise resource planning. Almost 70% of ERP initiatives in the manufacturing sector went over budget in 2015. The two biggest drivers of these overruns are the expansion of project scope and the need for additional technology. While lower than the average for all industries, the typical manufacturing ERP system costs $2 million to set up, or 7.5 percent of the company’s yearly revenue.

The challenge and costs can be summed up neatly. Trying to shoehorn a specialized business into a general purpose ERP requires incredible effort. There’s also the time and cost to configure, customize, implement, and train. With this in mind, it is crucial that Engineer To Order manufacturers have other options available. They need a system built for them, not a traditional manufacturer or even a make to order manufacturer.

These Custom Machine Builders need something that is not only cost-effective and well-integrated but also built from the ground up for real-time insights and automation. Then, they will be able to avoid the errors and missed opportunities that often accompany old-fashioned methods of organizing, such as Microsoft Excel-based processes or general manufacturing ERP systems.

Total ETO: An ERP Designed for Custom Machine Builders

As many IT budgets reallocate resources to new services and look to trim ongoing maintenance costs, it is important for teams to have access to a modern ERP solution. An ERP that provides an excellent return on investment works well with other applications and replaces error-prone manual processes is necessary. Total ETO fulfills all of these key requirements.

Built by custom design manufacturers, Total ETO is very flexible and affordable for Engineer To Order manufacturers of all sizes. It offers an industry-specific platform that reduces manual liabilities and clerical errors. Moreover, it can be connected to any accounting system, such as QuickBooks or Sage, and CAD systems such as Inventor and SolidWorks.

IT budget growth may not move the needle much these days. however, with Total ETO, manufacturers can ensure they get the most out of their tools, reduce legacy liabilities, and remain competitive.

Learn more about Total ETO by requesting a demo today!

Written by RJ Ahuja

5 Financial Planning Tips for Engineer To Order Manufacturers

Key Takeaways

To craft a workable financial plan, take your time, consider categorizing costs, and remember that precision is not necessary.
Implementing an ERP solution is an easy way to track financial information. The right ERP will also help eliminate errors and miscommunication.

Despite the importance of following an operating plan, some Engineer To Order companies opt not to use it.

Further, those who do draft a plan typically either do so incorrectly, or they use it as a suggestion. It’s typically quickly discarded when it becomes a burden or inconvenience. ETO companies should avoid this because financial planning is essential.

As noted by The Wall Street Journal, there are many reasons why managers get their plans incorrect. Whether it’s a disjointed process, a failure to account for major expenses or a general indifference to the plan. It’s important to keep in mind that financial plans are more than just numbers on a page or a screen. Instead, think of them as a numerical representation of a company’s priorities, strategic goals, and immediate steps to reach them. This means even the least financially savvy executives have no excuse for not establishing and following a plan.

Helpful Tips for Crafting a Workable Financial Plan:

1. Don’t rush it

These plans can steer operations, so we should consider every aspect. Top management should contribute by providing additional insight. Soliciting input from different departments ensures everyone has a voice in the process. Furthermore, it assures that critical projects or divisions won’t be underfunded. For ETO companies, such planning can be extra difficult because of the last-minute nature of every project. That doesn’t make it any less important, though.

2. Categorize costs

Divide the company’s expenses into distinct categories and then further break down these into subsections. According to AccountingTools, four of the main categories for manufacturing companies, including ETO organizations, consist of overhead, production, direct materials, and labor.

Overhead costs cover items such as administrative salaries, depreciation, rent, supplies, utilities, and other expenses necessary for regular business operations. The source noted that the overhead costs may potentially account for a large proportion of the company’s total amount of expenditures, so it’s important that these expenses are accurate and allocated for.

A simple equation derives direct material costs: Add raw materials needed for production to the planned ending inventory balance to get the total raw materials required. Subtracting the beginning raw materials inventory in stock from this number provides the raw materials to be purchased. Of course, this is a simplified version, but it essentially follows the same format.

Much like the direct materials, the production budget also includes a simple equation that covers the forecasted unit sales added to the planned finished goods ending inventory balance. The total production required is the product of this equation. Unlike iterative companies, ETO manufacturers typically do not subtract finished goods inventory from the total production required, so they manufacture the total number of products specified.

The labor budget involves the total hours of labor required to build the finished product. This helps manufacturing companies estimate how many employees they will need and provides a gauge for determining when layoffs might be necessary.

3. Precision is not a requirement

It’s not necessary to plan to the very last penny. The goal of the plan is not to accurately predict the exact number of sales or the amount of every expense. However, it is supposed to guide the entire operation, and the plan should provide direction to the company. This is a big relief for all manufacturers, particularly those in the ETO space. Trying to predict precise costs and revenue will only bog down the process and potentially give everyone headaches.

4. Compromises are key

The funding process does not approve every request, and creating a workable plan typically involves making a series of trade-offs. An Engineer To Order manufacturing operation needs to allocate its limited resources accurately. This means that adding a new, necessary expense to the plan might require removing another line item somewhere else. Compromising between many different factors and trying to find that balance can be tricky, and it requires the discipline to know when to make cuts and when to shift resource allocation for a better chance at reaching strategic goals.

5. Implement an ERP solution

Keeping track of all of this critical financial information can be difficult without the right tools. Furthermore, storing all the data in a single location or among several isolated systems can lead to errors, duplicated entries, and miscommunication. Even the smallest mistake or wrong entry can throw off a company’s alignment with its operating strategy.

Total ETO, a manufacturing-centric ERP solution, stores all this crucial financial data in a single repository. Managers can ensure that all orders, payments, and costs align properly with the project estimates and that they are meeting the strategic goals set forth, with real-time access to every expense and cost associated.

See the difference an ERP designed for Engineer To Order manufacturers can make, request a demo today.

Written by RJ Ahuja

Attracting the Manufacturing Workforce of Tomorrow

Key Takeaways

Almost 50% of the manufacturing workforce will be retiring this decade, and 80% of employers aren’t prepared to attract millennials and Gen Z.
ETO manufacturers rely on a team with highly developed, specialized training. This makes it likely that employers will need to invest additional time and money into training staff.
The new generation of workers expects their employers to be up to date with current trends and provide the right tools and technology.

Maintaining a competent, industrious and invested workforce will be a growing challenge amongst ETO manufacturers in the coming years.

Many of these organizations are currently staffed by employees who are aging and planning on leaving their jobs. As the current workforce begins retiring, new workers will be needed to replace those currently on the job.

This is no small number either. According to the recent Thomasnet Industry Market Barometer of trends affecting the manufacturing sector, more than 80 percent of this sector’s workforce consists of baby boomers aged 45 to 65, with 49 percent of these individuals older than 55. The vast majority of these workers will be retiring within the next 10 years. Yet 65% of manufacturers have no plans to replace these highly skilled and experienced employees.

Tapping into the next generation

As noted in the source, millennials will compose approximately 75% of the workforce by 2025. Engineer To Order manufacturers cannot afford to miss out on the opportunity to attract these workers now. That way, over the next 10 years, these individuals will have the necessary experience to truly help the company succeed.

“Eighty-one percent of manufacturers have no plans in

place to attract millennial workers.”

Unfortunately, many manufacturers have not picked up this shifting trend. An astounding 62% of manufacturers said millennials only make up a tiny portion of their team. Additionally, 81 percent have no plans in place to attract this growing portion of the workforce demographic.

Further, not only are fewer millennials entering the manufacturing sector, many executives don’t even want this generation entering their ranks. According to the survey, 43% of manufacturing companies reported that they did not think millennials had the work ethic or discipline to succeed in this industry.

Whether this proves to be true or not, the labor pool is undergoing a dramatic transformation. Unless manufacturers attract this sizeable portion of the workforce, they will soon find themselves understaffed and outmanned. Fortunately, there are several ways that manufacturers can go about attracting the workers of the future, including the following:

Implement apprenticeship programs

Manufacturing companies, especially those that build Engineer To Order products, have extremely complex processes. They rely heavily on research, development, and specialized training. While millennials are graduating college at higher rates than their predecessors, many lack the training for these skilled positions.

Without providing a route from school to the company, many manufacturers miss out on attracting this crucial generation of workers. By implementing an inclusive apprenticeship program, manufacturers can get the first shot at the best and the brightest this generation offers. This can help ensure they retain their competitive edge for the next decade and beyond. ETO manufacturers need to invest into millennials and Gen Z’s to compete in today’s marketplace.

Create an innovative culture

While previous generations were content to clock in, work, and then clock out, today’s workforce prefers a creative approach. As noted in SMC Business Councils, this generation thrives in a supportive, encouraging environment. They appreciate regular feedback to stay on track and will ultimately prosper from their unique perspectives. Instead of insisting on maintaining an inflexible work environment, manufacturers must let young workers explore their outside-the-box solutions. By creating a company culture that allows for a more creative and innovative work environment, manufacturers can ultimately reap benefits. According to Fortune magazine, companies that hired more millennials and included more workplace innovation ultimately reported a higher profit.

Utilize the best tools

Millennials joining the workforce expect their companies to be up to date with current trends, and this increasingly means incorporating the technological tools available. As a generation of individuals who are experienced with using digital tools to optimize their daily lives – from online banking to ordering food on the Internet to using a smartphone for traveling – those companies that continue to use manual or tedious systems such as spreadsheets for their processes will find that millennials are not interested in performing work in this manner.

As noted in Manufacturing.net, millennials view technological integration in the workplace as a must. This is the first generation that has truly mastered the use of digital and technological tools and they expect similar tools in the workplace.

Total ETO is just what they’re looking for

Total ETO is known for flexibility. A configurable ERP system for Engineer To Order manufacturers provides this technological solution for millennials. Using this intuitive ERP system, ETO companies can integrate the platform with their CAD and accounting systems. Just imagine the spreadsheets and tedious data you’re eliminating. The software syncs up purchases, tracks receipts of goods and payable invoices, and automates everything from sales to shipping.

Not only does Total ETO streamline and automate the workflow for Custom Machine builders, it’s extremely affordable for small enterprises. Its unique configurable options easily match the way your company naturally does business, alleviating the need for workers to learn a complex new system while reducing the downtime typically associated with implementing ERP or MRP systems

By utilizing this system, ETO manufacturers can attract top talent to their company. With this intuitive software, companies can retain their competitive edge, remain industry leaders, or even bump themselves ahead of their peers.

Learn more about the Total ETO solution or request a demo today.

Written by RJ Ajuja