Without an ERP designed for ETO, there will always be bottlenecks between engineering and procurement. Dynamic BOMs are necessary to improve efficiency.
Key Takeaways
- ETO manufacturers struggle without manufacturing ERP software. Challenges include change orders, accurate estimates, part tracking, and production planning.
- Custom Machine Builders thrive when their ETO workflow is dynamic. Using an ERP that integrates with CAD improves efficiency throughout your organization, especially in engineering and procurement.
- More than just BOM software, an ERP designed for OEMs will capture change order info. Sales will have access to essential estimating details. Additionally, full project visibility makes it easy to track changes to the BOM, ensuring information is shared across departments, including procurement, so they can get an early start on long-lead requirements.
Engineer To Order (ETO) manufacturers have the pressure of dealing with constant changes during a project.
It can be frustrating for an ETO company as they try to manage the bill of materials (BOM). Their customers don’t just make changes during the design phase, but all stages of a project. With the BOM in constant flux, procurement and engineering need to work closely together, especially when it comes to long-lead components. This synergy is necessary to improve your ETO workflow.
This isn’t the only challenge Engineer To Order companies face. We’ll explore a few of the top problems that are unique to ETO manufacturing.
ETO Workflow Challenges
Change Orders
As we mentioned, Custom Machine Builders face change orders on almost every project. That’s because the machine likely has never been built before and may never be built again. This means the customer must work closely with the engineering department during the design and build. Every change, however, can delay the completion of the project and increase its expense.
If an Integrator, Panel Shop, or OEM is working with static (traditional) BOMs, there’s usually a struggle between engineering not wanting to release the bill of materials, and procurement needing early access. Without the right manufacturing ERP software, these struggles compound.
Sales
Without having previously made a similar project, it’s difficult to estimate the manpower and parts required to complete it. Additionally, even if there has been a similar machine built, Engineer To Order manufacturers struggle to collect accurate and complete data. This makes estimating and quoting projects difficult, often resulting in wrong information for the client.
Production Planning
At best, production planning is difficult for ETO companies. The numerous uncertainties faced are known for adding costs and time to most projects. Every new build comes with varying components, complexities, and customization.
Additionally, allocating resources, including materials and labor, is a struggle without a flexible ETO workflow. It’s easy for a Custom Machine Builder to over or under-estimate resources. Unfortunately, having too much and/or too little can both end up costing the company. Without a reliable system in place, you also face a greater risk of supply chain disruptions.
Manufacturing
Whether fabricated internally or externally, Custom Machine Builders have difficulty tracking parts. The process is tedious and error-prone. Furthermore, ensuring proper inspections and following up on quality issues is an overly complicated process, despite their importance.
Improving Your ETO Workflow
ETO manufacturers, including Integrators, Panel Shops, and OEMs, thrive when the engineering environment is dynamic (sometimes referred to as “concurrent engineering”). This is only achieved when they’ve integrated an ERP directly with CAD. By making the BOM dynamic, Custom Machine Builders can eliminate the struggles discussed here, as well as additional problems in accounting, engineering, and manufacturing.
Unfortunately, Engineer To Order manufacturers can’t settle for any ERP. They need a software solution that integrates with CAD and accounting while also providing complete project visibility. When investing in manufacturing ERP software, ETO organization should consider the following:
- Is the system “interfacing,” or is it “integrating” with the CAD package?
- Can the designer create a graphically presented structured BOM with unlimited levels?
- After the entire BOM is released to purchasing how does the system handle design changes?
- Does the system automatically present the net effect of item changes to purchasing (resolving quantity changes)?
- Can the designer quickly find and copy BOM assemblies from other projects?
- Does the system free the designer from any other work other than producing the structured BOM?
As you can see from this list of questions, many elements of an Engineer To Order business require an ERP designed to meet their ETO workflow. In fact, a dynamic interface between engineering and purchasing is key to speeding up the order-to-shipment cycle.
Why Total ETO; a Manufacturing ERP Software Solution
A comprehensive manufacturing ERP software is a necessity for your Engineer To Order company. The right system will help your organization scale; taking on more projects without needing more staff. Some favorite features among Custom Machine Builders include:
- Capture change order information, including labor, material, and sales price changes, so they aren’t omitted or forgotten.
- Provide sales essential estimating information to secure and quote future projects.
- Track changes to the BOM at any stage of the project and ensure the information is shared across departments.
- Release parts to procurement in stages, including initial long lead requirements.
- Issue and revise RFQs and POs with just a few clicks.
- Allow buyers to cost out the BOM before purchases are made.
- Know where your parts are in their fabrication process at all times.
- Record and follow up on quality issues on the shop floor, from engineering, or for purchased parts with embedded non-conformance reports.
- Create simple views of WIP and use existing details for percentage complete revenue recognition.
The Total ETO Solutions page has a more thorough list of features that benefit your organization; from sales to engineering, procurement, accounting, and more. You may also find inspiration from these success stories with other Integrators, Panel Shops, and OEMs. However, if you really want to see the kind of impact Total ETO will have on your organization, book a demo and experience it for yourself.
Written by Taylor Dykstra
