Operations Strategies, Application and Business Process Design, Process Implementation, and Mass Customization
Customer Driven Manufacturing
How Manufacturers of “Build-to-Order” Products Reduce Cycle Times
By Aligning Sales and Customers Needs With The Factory
Do you ever lie in bed at night wondering why things take so darn long to happen at your company?
Do you wonder why, after you’ve waited so long to get that big order from your customer, you can’t ship it when you want to or need to?
Manufacturers of “build-to-order” products find there is a major disconnect between Sales, Engineering, and Manufacturing. You might ask, “And, just what is the source of the disconnect, Dave?”
Sales does not sell your configurable products (a) in the way that Engineering defined the product nor (b) in the way that Manufacturing builds it.
And, why is this?
To borrow a quote from the legendary film Cool Hand Luke, “What we have here is a failure to communicate!”
If your marketing requirements specification doesn’t clearly and concisely state your configuration and configurability requirements from the perspective of Sales and your Customers (and not just Engineering and Marketing’s perspective), you are opening Pandora’s Box for Sales and your Customers. Confusion created early on continues to spill over long after the product is released.
As a result, your Order Services team looks like anguished volleyball team bench warmers behind 12-2 in an important match. These folks sit watching helplessly as orders are batted back and forth between Sales, your Customer, Engineering and Manufacturing.
The end result of an ineffective process? Gridlock. Delays. Frustration. Lost selling time. Decreased customer satisfaction.
What can you do to correct this problem? Implement Customer-Driven Manufacturing.
Customer-Driven Manufacturing (CDM) is an integrated business process for dealing with configurable products. CDM focuses on the problem from a refreshingly new perspective: CDM is focused around the way your Customers and Sales think about your products.
You must address 4 major areas for any successful CDM effort:
1. Product Structure
You must align the features and options associated with your products (the bill of material structure) such that they map directly to the elements your Customer is purchasing.
This means structuring your price list and your products consistent with how Sales and your Customers think about the products.
This realignment may affect how your factory builds your products. As the build philosophy is “add-only,” you won’t have to remove items only to replace them with other items. Efficiency increases as your cycle times decrease.
2. Configurator Tool for Sales
Create a stand-alone, laptop configurator tool that supports quoting, forecasting, order submission, and contains a comprehensive electronic product catalog with all the technical information needed to properly describe your product.
3. Business Processes
Define or renovate your business processes to support the integration of new features and options, product enhancements, special customer requirements, etc., in the Configurator.
Train your entire team-Sales, Engineering, Order Services, Manufacturing and Customer Service-about the new tools and business processes. Make these changes part of your company’s culture.
Automating Your Price List Isn’t Enough
Why would you want to do something just for Sales when you could have an integrated process favorably impacting all major functions in your company?
Taking shortcuts (skipping any of the 4 areas mentioned previously) will prevent you from realizing quantum reductions in cycle time, e.g., from days or weeks to hours or minutes. Building a tool for Sales that is not integrated with your factory fails to recognize the central issue-there is tremendous value in having everyone in the company working off the same page.
If there isn’t a one-to-one mapping of the features and options that Sales uses to the product structure that Manufacturing uses, then you are back in the game of interpreting Sales and Customer requirements for the factory. You understand all too well the inefficiencies associated with this interpretative process.
Building a configuration process (not just a configurator) is the start of a journey, not a final destination. This process acts as your company’s air traffic control system. It helps control the arrival of new products and the departure of old products. It helps you manage pricing (direct vs. OEM) and pricing effectivity dates.
It helps you properly set expectations about what is salable and what is not. It takes the guesswork out of determining what is released and what is not. And, best of all, it allows you to start creating a buildable backlog well in advance of a product’s release from Engineering.
Applications Alone Aren’t Sufficient
I often hear executives suggest that the solution to their problem is as near as purchasing a configurator application. Sorry, but there really is no such thing as an “off-the-rack” configurator, just as there is no such thing is an “off-the-rack” manufacturer of “build-to-order” products.
If I were to stop by your office this afternoon and drop off a box with a configurator application in it, would the contents alone resolve your operational difficulties?
The answer is “no.” I remind you of the last time you implemented an MRP/ERP system. Did your MRP/ERP system help you run your business more efficiently the moment you installed it? Or, did it raise a number of business process issues that had to be addressed?
All the firms that I have helped have (out of sheer necessity) developed their own configurator application.
Until recently, I’ve only known of one company offering a tool to configure “build-to-order” products. But, this company only sought customers who were willing to spend a minimum of $500,000 on software licenses for the customer’s Sales organization. To add insult to injury, writing a check for $500,000 didn’t even give the customer a usable application.
But, there is good news on the horizon! There are new configurator application tool kits that help manufacturer’s of “build-to-order” products develop custom configurators. This could be the cost-effective solution that we’ve all been waiting for.
What’s It Costing You?
The inefficiencies associated with “build-to-order” products cost you a small fortune in time and money. Customer-Driven Manufacturing is about business process simplification. It reduces your burden and lets your team focus on activities that truly add value for the Customer.
Gardner & Associates has helped clients ranging from semiconductor to capital equipment manufacturers resolve their special needs associated with “build-to-order” products.
Don’t let your inefficiencies be a “cost of doing business.”
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Gardner & Associates Consulting
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