In a world where speed and customization have become strategic issues, industrial companies need to adapt their production methods to gain in competitiveness. The transition from an Engineer-to-Order (ETO) model to a Configure-to-Order (CTO) model is a major step forward in optimizing costs, reducing lead times and improving customer satisfaction.
What is the transition from ETO to CTO?
The Engineer-to-Order (ETO) model is based on the design and manufacture of fully customized products, with strong engineering involvement for each order. This process, although adapted to specific customer needs, results in long lead times, high costs and increased management complexity.
By contrast, the Configure-to-Order (CTO) model is based on products that can be configured from standardized modules. Engineering designs a flexible product platform upstream, enabling customers to customize their solution without starting from scratch with each order. The result: a more agile offering, lower costs and greater business scalability.
The transformations to be implemented
1. Product standardization and modularization
- Definition of a modular product architecture.
- Creation of a catalog of standardized components.
- Set up configuration rules to ensure product consistency and feasibility.
2. Evolution of internal processes
- Automated generation of quotations and sales offers.
- Overhaul of order management to integrate configuration logic.
- Aligning production with ademand-driven assembly logic.
3. Digitizing tools
- Implementation of a CPQ (Configure-Price-Quote) to speed up sales and make them more reliable.
- Integration of CPQ with CRM and ERP for improved order management.
- Deployment of an online configurator to give customers greater autonomy.
4. Organizational redesign
- Redefinition of roles: engineering moves from a single design role to one of product platform management.
- Training sales teams to sell configurable solutions.
- Adapting production to a more agile and flexible logic.
Impact on digital transformation
The transition from ETO to CTO is an integral part of the digital transformation of industrial companies. Here are the main impacts:
- Automated sales and pricing: with a CPQ, offers can be generated in minutes instead of days.
- System interconnection: better alignment between CRM, ERP and PLM enables seamless data management.
- Enhanced customer experience: with an interactive configurator, customers can explore options independently.
- Supply chain optimization: anticipating production needs and reducing stocks of specific parts.
The gains achieved
1. Faster sales cycles
- Faster, more accurate quotes.
- Reduced decision-making time for the customer.
2. Cost reduction
- Less engineering work on each order.
- Economies of scale on standardized components.
- Fewer errors and rework.
3. Improved customer satisfaction
- Shorter delivery times.
- More transparent and predictable pricing.
- More flexibility at no extra cost.
4. Increased scalability
- Ability to respond to more requests without a proportional increase in resources.
- Easy expansion into new markets.
Conclusion
The transition from an Engineer-to-Order (ETO) model to a Configure-to-Order (CTO) model is a major strategic move, enabling industrialization of the offering while retaining a high degree of customization capability. By structuring the offering around standardized modules and digitizing processes, companies can accelerate growth, reduce costs and enhance the customer experience.
At ITCelerator, we support industrial companies in this transformation, by implementing CPQ and CRM solutions tailored to their needs.
Want to find out more? Contact us for a demo and let’s talk about your project!
