Engineer to Order manufacturers have the pressure of dealing with constant changes during a project.
It can be frustrating for an Engineer To Order (ETO) company as they try to manage the bill of materials (BOM). 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 isn’t the only challenge Engineer To Order manufacturers face. We’ll explore a few of the top problems here that are unique to ETO manufacturing.
Change Orders
As we mentioned above, Custom Machine Builders face change orders on almost every project. That’s because it’s likely the machine 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.
Sales
It’s difficult to estimate the manpower and parts required to complete a project, especially one that has never been built. Additionally, even if there has been a similar machine built, Engineer To Order manufacturers struggle to collect accurate and complete data. Estimating and quoting projects is difficult and often wrong without that information, though.
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. 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.
Manufacturing
Whether fabricated internally or externally, Custom Machine Builders have a hard time 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 the ETO Process
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’re able to integrate 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 an ERP, ETO firms 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?
- How are pre-releases of BOM items (long lead items) to purchasing and production handled by the designer?
- After the entire BOM is released to purchasing how does the system handle design changes?
- Can the designer quickly find previously purchased items (with costs) from a master file and “click and drop” all this information into the assembly BOM?
- 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?
- Does the system automatically produce key reports without additional work by the designer?
- Does all BOM information go to purchasing without any need to re-enter data?
- Does the system allow procurement to purchase similar items from several jobs on one P.O.?
- Does the system provide project materials cost information when materials are ordered rather than when materials are received (so managers can react to cost overruns early in the project)?
As you can see from this list of questions, many elements of an Engineer To Order business require an ERP designed to meet their workflow. In fact, a dynamic interface between engineering and purchasing is key to speeding up the order-to-shipment cycle.
Why Total ETO
Comprehensive software for managing your material resource planning is a necessity for your Engineer To Order company. The right system will help your firm scale; taking on more projects without needing more staff. Some favored features 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.
