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by Per-Erik Eriksson - KonfigDesign on Jun 3, 2024 9:53:24 AM
We've seen it too many times, and you might be familiar with it too. The communication between sales and engineering often turns into a blame game.
"How hard can it be? It’s just a small color adjustment! This is what the customer needs, and we need to get them an offer ASAP!" - Sales Team
"Why did you sell this feature? You should know it requires time-consuming customization from our department. We're already overwhelmed with your endless requests. Why can’t you just sell what we already have?" - Engineering Department
As the need for customization increases, the Engineer-To-Order (ETO) approach creates a bottleneck in engineering, leading to this conflict. Many companies have learned to live with it, despite the significant trouble it causes in the long run. Growth is prevented by this engineering jam. Sales are hindered by complex rules and long lead times. And profits are affected by time-consuming manual processes and production errors. Can transitioning to Configure-To-Order (CTO) help resolve these issues? Let's explore in the following blog how CTO can make sales and engineering friends again, as well as improve cohesion of the entire business.
Different Role; Different Focus;
Same Shared Goal
The difference in personalities between sales and engineering is obvious. Salespeople focus on business and satisfying customer needs. Engineers focus on product details, design, functionality, and creating the perfect product. This becomes problematic when:
- Few salespeople know all the rules for customizing the product. The product catalog, whether printed or online, is often outdated, and the customization rules are hard to understand. This frustrates salespeople who want to give quick, positive answers to customers.
- Sales often have to disturb engineers for rule clarifications or, in urgent cases, promise customers customization without proper consultation.
- Engineering lead times are long, causing salespeople to disappoint customers and potentially lose deals.
- Engineering needs to be involved in most quote requests, creating a bottleneck in an ETO environment. Urgent requests disrupt ongoing tasks, leading to quick fixes and frustration among engineers.
- Engineers spend more time on sales and pre-production processes than on R&D. Most tasks are repetitive and time-consuming, leaving little room for product development.
An Unpleasant Situation
On the positive side, this frustration means that your salespeople and engineers are eager to excel at what they do best. On the less positive side, this causes serious business issues:
- Frustrated salespeople who can't sell effectively.
- Customers who need guidance to select features.
- Difficulties in introducing new salespeople due to the need for extensive product knowledge.
- Engineers questioning the value of their technical education and the risk of losing critical product knowledge when key personnel leave.
- Hindered sales growth due to the need for more engineers to handle increased quote requests.
- Quick fixes and lack of product development reducing profitability and competitive edge.
- Manual processes leading to product discrepancies and increased costs.
So, what can CTO do to help?
Rules Rule!
The Configure-To-Order (CTO) approach means not everything needs to be 100% customizable to meet customer requirements. Customization within set limits is still customization. With CTO, it’s possible to configure and order products without involving engineering, and sometimes even without sales. This might not apply to all products initially, but it can ease the burden on both sales and engineering.
A key component in CTO is managing rules:
- Which product features are available.
- How product features can be combined.
- How different choices affect the product’s appearance.
- How the production BOM (Bill of Materials) is impacted by different selections.
- How different selections affect pricing.
Most importantly, someone with product knowledge needs to maintain these rules continuously as the product evolves, and the rules must be accessible and updated for everyone. Otherwise, you'll end up back at square one.
These rules can form the basis for creating sales tools for both salespeople and customers. Ironically, these limitations actually give sales teams more freedom to sell without needing to consult engineers. There are tools available today that can visualize products in 3D, allowing even end customers to order complex products successfully by themselves.
Rules also enable automation in the quotation and order processes for requests within the set limits. We've seen lead times for quotes reduced from weeks to minutes, with zero engineering time required. This leads to a happier life for both departments.
But what about cases outside these rules?
Is the Purpose of CTO to Kill ETO?
Our view is that product configurators and process automation should be applied to what can be reasonably automated. The rest can remain as engineered customization.
For many companies, CTO enables them to work effectively with ETO for the necessary customizations. In a successful CTO implementation, engineers will have more time for customization and product development. There will always be a need for engineers!
Where to Start?
Transitioning from ETO to CTO means implementing some rules and limitations to automate sales and engineering processes, at least for some products. Start by defining your current situation:
- How does your sales process work right now?
- Who is responsible for each step when creating a quotation or order?
- Which systems are being used?
- How much time does each step take?
- What are your product rules?
Transitioning to a CTO approach can help make sales and engineering friends again. By managing customization within set limits and automating processes, CTO reduces bottlenecks and improves efficiency. This shift allows both teams to focus on what they do best, which boosts collaboration, productivity, and customer satisfaction.
Only when you understand your current state can you decide on the first steps toward a new, desired situation. Each company's situation is unique, and a CTO implementation will likely be unique as well. The transition will take time, but you can start now!
Do you want to learn more about this topic?
Get in contact with KonfigDesign here.
*This was a special-guest blog authored by KonfigDesign CFO Per-Erik Eriksson. KonfigDesign is a Swedish provider of qualified product configuration services within PLM (Product Lifecycle Management) and partner of Elfsquad.