Engineer-to-order (ETO) manufacturers have the pressure of dealing with constant changes during all stages of the project.
ETO companies face several unique problems compared to build-to-order firms. The major challenge is created by the need to deal with the impact of continuous changes.
- Customers often request changes to the order during the design process (and occasionally after the design has been issued to purchasing and manufacturing) affecting design time and purchasing efforts.
- Engineering often needs to release the design piecemeal to the plant in order to meet deliveries requiring special efforts to manage the Bill of Materials (BOM) interaction with purchasing.
- The plant often identifies areas where the design needs to be changed, requiring Engineering to modify the drawings and the BOM and purchasing to change material orders.
This dynamic engineering environment (known as concurrent engineering) requires a purpose built Business Information System (BIS) that allows the ETO firm to rapidly modify and manage the impact of design changes at any time in the order-to-ship cycle.
An ETO firm seeking to qualify the suitability of an information system should investigate the following key topics in the areas of engineering and purchasing:
- 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?
- How are partial releases (release of some, but not all, assemblies) to purchasing and production handled?
- After the entire BOM is released to purchasing how does the system handle design changes initiated by the plant or the customer?
- How does a designer “hold” certain BOM items and assemblies and allow the release of others to purchasing?
- Can the designer quickly find previously purchased items (with costs) from a master file and “click and drop” all this previous 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?
- Can the designer easily add new BOM items with special attributes (such as “repairable item”)?
- Does the system free the designer from any other work other than producing the structured BOM?
- Does the system automatically produce the key reports without any additional work by the designer, such as: Cutting List – Spare Parts List – Where Used Distribution List – Parts-Where Used, Summarized BOM – Structured BOM – Items on Hold List – Preliminary Costs?
- Does the system automatically produce a preliminary cost report of the structured and summarized BOM during the design process (to inform designers if the actual materials cost meets the estimated cost)?
- Does all BOM information go to Purchasing without any need to re-enter any information?
- Does the system eliminate virtually all Purchasing need to enter data?
- Does the system allow Purchasing to purchase like items from several jobs on one P.O.?
- Does the system provide project materials cost information when materials are ordered rather when materials are received (so managers can react to cost overruns early in the project)?
There are many other aspects of an ETO business that require a system specifically designed for this type of manufacture. Above all, the key and core requirement to speeding up the order to shipment cycle is a dynamic interface between engineering and purchasing.
How Total ETO can help
Comprehensive software for managing your material resource planning (MRP) is one of the best investments you can make for your ETO job shop. With the right team in place, you are sure to see a return in no time at all. Read one of our success stories or set up a personalized demonstration to find out more about how Total ETO can help you streamline your engineer-to-order business.