Historically, manufacturing has been notorious for its “take-it-or-leave-it” business model, stretching back to Henry Ford’s famous position that customers could have any color of Model T they wanted, as long as it was black. For decades, the formula for profitability in discrete manufacturing was in creating make-to-stock inventories of products with as little variation as possible.
Technology has changed that long-entrenched paradigm, seemingly overnight. With the advent of B2B e-commerce, social media, and online portals for customer engagement, B2B buyers are now in direct contact with the manufacturers, leading to unprecedented levels of options at the point of order. To keep pace with the demand for custom orders, manufacturers are employing tactics such as late-stage assembly, modular design, and “mix and match” components. They are reengineering production workflows, capacity planning, inventories of raw materials, and shop floor cycles for greater agility. To achieve the needed flexibility in their processes, many are turning to advanced robotics that can “learn” different tasks as well as more responsive material handling and order fulfillment systems. Those who try to make do with outdated, inflexible legacy systems designed for a traditional manufacturing environment are struggling to compete and may even be at risk for going under.
This 3-part blog series uncovers common product configuration challenges that industrial manufacturers face and describes how leading manufacturers are modernizing their product configuration processes in three key areas – sales and marketing, engineering, and supply chain and manufacturing. In this blog post, part 3, we will discuss the importance of having a flexible, predictive, and adaptive supply chain that is integrated with the rest of the organization to support product configuration.
Download the Best Practices Guide: How to effectively design, sell, and deliver configured products
Supply chain and manufacturing are where the rubber meets the road in delivering configured products. Manufacturers who haven’t innovated often create manual quotes that lead to manual entry of production and supply chain requirements, leading to an increased potential for errors. In an ideal world, a manufacturer’s automated quotation, creation of the production bill of materials, and operations would all be integrated. Without a flexible, predictive, and adaptive supply chain, manufacturers face these common challenges:
- Lack of visibility into what is coming because systems aren’t integrated
- Engineering and manufacturing Bill of Materials (BOM) are often inconsistent
- Lack of visibility into the various options, features, and materials make forecasting difficult
- Product costs exceed the sales price
- Unable to meet contracted delivery dates
- Unable to achieve favorable relationships with suppliers
In order to optimize the supply chain for configuration, there must be a link between sales, engineering, and planning systems for complete visibility into what is coming. Engineering BOMs and manufacturing BOMs must be consistent, drilling through to planning, and they must be automatically generated based on the quote or estimate from the sales cycle. Forecasts must be built intelligently based on probability factors devised for the various options, features, and materials that need to be supported. To lessen the burden on manufacturing, go all the way back to design and ask yourself: At what level can something be partially built in a make-to-stock fashion and simply added to when a new configured order comes in?
In a perfect world, supply chain planning would have full visibility into demand factors and AI-assisted probability analysis of the need for materials. The optimal amount of sub-assemblies can be built ahead of time enabling a smaller impact on the line as new deals are won. Purchasing schedules can be automatically informed to ensure the availability of materials when they are needed. This will ensure that customer needs are met, costs are kept in check, and quality is maintained.
To learn more about achieving product configuration success, we encourage you to read our comprehensive Best Practices Guide: How to design, sell, and deliver configured products.
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