ETO Helps Get It Right the First Time

20 Sep, 2006 By: Thomas R. Cutler

Today's enterprise technologies pair with CAD so manufacturers can compete effectively in the world of engineered-to-order.

When project-based manufacturers are designing to the customer's specifications rather than configuring a design from a preset mix of common components, a collaborative environment becomes extremely important.

In the past, engineered solutions required lengthy bid generation processes before the fabricator could deliver a strong response to a proposal request. Interaction between engineering and manufacturing was hindered based on the lack of system tools and lack of integration between CAD and ERP (enterprise resource planning) systems. All this impacted customer response time and generated internal disconnects between engineering and manufacturing.

But today, technology is much improved. Building on today's process and system enhancements, many project-based and ETO (engineered-to-order) manufacturers have learned to excel in this complex environment. Bidding is less complicated and integrated tools dramatically improve the manufacturing process -- specifically, customer response time, design innovation, competitive pricing based on knowledge of similar past projects, and parts reuse when appropriate.

Improving the Process
A design link BOM (bill-of-materials) interface and AutoCAD BOM interface will reduce costs and improve throughput throughout a project-based manufacturing organization. Improvements are often realized as the engineering team focuses on engineering rather than double data entries. Engineering information is input into the CAD package and ERP system in a simplified interface. Ultimately, reduced engineering costs translate into lower cost of goods sold.

Reduced data entry errors generate significant cost savings -- even a single mistake in a bill of materials can result in scrap, excess inventory or late shipment of parts. New technologies also ensure accurate information in the drawing, descriptions and revisions. When information in drawings is clear and accurate, production confusion is minimized and reduces errors on the shop floor arising from conflicting information between work orders, sales orders and drawings.

According to Stephen Carson, executive vice-president with Visibility Corporation, "Rules-based generation of product structures, costs and pricing must be delivered in a flexible, guided interface through the use of embedded workflow. The embedded workflow allows for integration with quoting, order entry and engineering delivering efficient data entry and reliable generation of configure-to-order items."

Enterprise software must allow for knowledge capture and reuse, enabling manufacturers to accelerate product planning, design and production by more effectively aggregating and managing IP (intellectual property) assets. RPM (rules-driven product management) software solutions quantifiably improve productivity, design cycle times, quality and product innovation.

This flow chart illustrates a rules-driven product management cycle.

In keeping with lean manufacturing principles, engineering innovation generates an environment that allows manufacturers to develop new features and add to current product offerings.

Automating routine and repetitive engineering work done for sales and marketing teams -- product documentation is one example -- frees engineers to do higher value-added processes. Capturing design rules to automate engineering processes can shorten design time and leave more time to fully validate the design and evaluate design alternatives.

Get it Right the First Time
According to Frank Azzolino, president of aPriori Technologies, "With ETO, the key is to get it right the first time through, since there is often no long production cycle in which to redesign and get the product and cost right over time. A critical element of ETO is to discern very early on what the costs will be. This drives margin. In an ETO environment, you currently have two choices: Bid aggressively to win the deal and accept the risk of very low (or negative) margins, or bid conservatively to account for the risk of not fully understanding the impact of the customer's choices on cost -- and risk not getting the deal. The new third choice: Know the costs before you bid the job, thereby preserving margins while more effectively managing risk."

Given the regulatory environment in which manufacturers currently operate, these engineering costs savings facilitate compliance with company, legislative, industry, quality and design requirements. ETO environments present the requirement of capabilities key to operating lean principles such as:

  • reduction of design to build cycle times
  • concurrent engineering
  • phased management of project breakdown task structures into phases
  • use of work order hierarchies
Carson suggested, "Providing a formal process to capture essential product development knowledge and lessons learned, while automatically updating all engineering documentation, creates the foundation for continuous process improvement, the heart of lean manufacturing."

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