CRM For Complex Manufacturers Revolves Around Configuration Software

The Situation

The software needs of the complex manufacturing industry require functional products bundled with rapid implementation resulting in quick Return-on-Investment (ROI). Complex manufacturers produce products that are of high variation, have complex features and options, and vary in end-user configuration. They consequently invest significant dollars in product design and have lengthy sales and manufacturing business processes, often requiring collaboration between the customer, sales representatives, and critical back-office experts.

These systems must facilitate the real-time transfer of information and complex product knowledge for collaboration across the extended enterprise, and should especially be suited to organizations that seek to maintain complex selling relationships, such as businesses whose sales functions rely on channel partnerships or a distributed sales force. To that end, a manual process that took anywhere from a day to several days should now be accomplished in about one minute with the appropriate use of technology.

This technology should provide the "intelligence" required to support the mass customization of products and services at the point of sale (POS). By providing intuitive rule creation and maintenance in an enterprise environment, companies could quickly and cost-effectively capture critical sales, engineering, and manufacturing knowledge for deployment across sales channels. When products or services present customers with a complex set of choices, or where product components and pricing elements are subject to rapid change, requiring sales teams to have access to up-to-date configuration and pricing information, a CRM solution for complex manufacturers comes into the picture to enable sales people and partners to establish smart sales processes worldwide.

With an "e-product" companies with complex products and services could capture and distribute critical sale and product configuration knowledge across all sales channels. It could support direct and indirect sales channels. It could also feature a comprehensive interactive selling system for both networked and mobile users. Each sales agent could organize customer, product, pricing, and external information so that it is immediately accessible by anyone involved in the sales opportunity.

The Market

Despite current seemingly never-ending difficult economic times, the growth of contract manufacturing has still continued. This expansion has been fueled by a number of factors, among them the advent and a wide adoption of the Internet and consequent rise of e-commerce, as well as the trend in manufacturing toward mass customization, all resulting with pleasing the customer and significantly reducing all elements of the lead time, but without serious sacrifices of the manufacturer. Further, while the commercial complex manufacturing industry may also suffer nowadays owing to the painful recession, it is quite the opposite case in the defense and other government-related industries, partly in light of possible confrontation with rogue countries abroad. Many enterprise applications vendors have spotted the opportunity and have lately been scrambling to address the exacting requirements of the project-based complex industries.

As already indicated, complex manufacturers, such as, e.g., aerospace & defense (A&D), high-tech or electronic manufacturers, must handle complex production processes and large, complex supplier networks. Sophisticated customer interactions (e.g., order/contract definition and management applications) are required, while customer service needs are also oriented toward hands-on contract management and cost reporting. Frequent changes force contract supplier engineers and OEM engineers to be in a constant collaborative communication throughout the design and production cycle of the unit. One of the most manual functions in a supplier organization have traditionally been the sell-side Request for Quote (RFQ) management, which usually revolves around a few key expert individuals that have direct knowledge of the product or who can manually pull together the diverse information sources into a unified document, as contract proposals include quotations, pricing, detailed product information, data sheets, and CAD drawings.

On the other hand, in almost all industrial manufacturing segments, the pressure to reduce lead times has become a constant and ever-expanding concern. Depending on product complexity, some parts/sub-assemblies might be quoted immediately, while others have to be highly specified. Developing a contract proposal requires many levels of checking and re-checking customer process requirements and facilities capabilities, as well as preliminary design work and sourcing of specific components or materials. The process typically goes through much iteration every time the customer uncovers a new requirement or constraint. The labor-intensive nature of this process has often resulted in lengthy estimating cycles, which have in turn often translated to lost business opportunities.

By harnessing an enabling technology to make everybody work smarter rather than harder, complex manufacturers could e.g., reduce the time it takes to create contract estimates so that the same number of people could generate more proposals faster and thereby handle more sales opportunities without expanding staff. The combination of outsourced manufacturing with increasingly common configure-to-order (CTO) or build-to-order (BTO) production environments is further making unit-level data management an increasingly high priority for contract manufacturers and the companies that retain them.

Winning enterprise applications will demonstrate deep industry functionality and tight integration with best-of-bread bolt-on' products in a particular vertical. Software that combines industry-specific functionality with the flexibility to accommodate each company's unique processes goes a long way toward improving the functional fit and the speed of implementation, with accompanying quick ROI. This also means adding sector-specific, fine-grained front-office capabilities such as billing for utility companies or, the provision of customer communication solutions and services, centered on the lifecycle of customer interaction, including pre-sales, ordering, fulfillment, servicing, and up-selling situations, outside of the conventional realm of an ERP system.

While the pure CRM suite vendors, particularly Interactive Selling Systems providers (e.g., Selectica, FirePond, Trilogy, Calico, Access Commerce, Pivotal, etc.) that offer some combination of CRM, Guided Selling, and Product Configuration capabilities as subsets of Order Management, have lately been re-architecting their offerings as to easily link to disparate back-office systems, several of the major ERP players have lately increased their CRM market presence mainly through the acquisition of former CRM application vendors, including Baan's acquisition of Aurum, PeopleSoft's acquisition of Vantive and J.D. Edwards' acquisition of YOUCentric (see PeopleSoft Buys CRM specialist Vantive for $433 Million and J.D. Edwards Fires Siebel, Hires YOU). In addition, Oracle, SAP, Cincom Systems and Intentia, to name only some, have painstakingly gradually introduced their own CRM application suites, which have been increasingly attaining the full-fledged CRM product statuses. With a possible exception of Cincom that has deep roots in complex manufacturing, the focus of these ERP vendors has, however, so far primarily been on providing contact and opportunity management and after-sale customer service/call center applications along with their traditional ERP offering.

Applications for customer interaction to satisfy to order' requirements have also been increasingly pursued lately, though, as very recently, mid-October, illustrated in J.D. Edwards' release of Advanced Order Configurator (AOC), the newest addition to the company's CRM product line, intended to accelerate the made-to-order (MTO) product purchase process. AOC reportedly offers automated catalog translation, compatibility with AutoCAD products, and a point-and-click Rules Manager, to provide sales representatives and customers the ability to visualize different variations of a product in real time. Additionally, AOC should enable users to review and verify product configurations from remote desktops and laptops, or via the Internet or direct enterprise network connections. The product will supposedly operate either as an independent application, or, more logically, integrated with its ERP siblings, J.D. Edwards ERP 8.0 or OneWorld Xe.

Product Configurators Are Key

From the above, one should be able to glean the high-level requirements for modern product configurators, which have become the pivotal enabling technology for simplifying complex ETO operations in the direction of mass customization, providing the ability to more easily configure individualized products and services at the point of sale with integration to back-office systems. Providing customers with exactly what they want is not exactly a new concept, but the idea of giving the customer ever expanding range of choices as early as possible has become the center of many various industries' customer-oriented activities, given that getting an accurate, customized product to the customer more quickly fosters competitiveness.

To that end, configurators strengthen the business of customer care by streamlining and accelerating the entire sales process, as well as by deploying uniform and accurate information at the point of sale. Since they facilitate the process of figuring out what customers want, they are becoming central in many traditional selling environments, as well as in e-commerce applications, since they can also be deployed over multiple channels, such as the Internet, and in LANs (local area networks), on desktop computers, or on laptops for sales personnel on the road.

While pundits have been debating whether the configuration software deserves to be a CRM module on its own, it is certainly a part of the much broader CRM class of products, which typically includes front-office applications for sales force automation (SFA), marketing automation, and field service/call center management.

In general, product configurators are software tools that streamline order entry process by asking the customer to select from a set of predefined options associated with a generic product line, and then apply predefined rules with constraints to correctly configure the particular end product. The configurator then populates the attributes of the newly configured end item (called the variant product), tests for any conflicts, and generates the variant product with appropriate bill of material (BOM), routing, and pricing based on preconceived rules and calculations.

As product configurators have evolved to include even more sales, marketing, and financial functions tangential to the product per se (e.g., pricing, cost analysis, sales commissions, available-to-promise (ATP), order status, etc.), the term "sales configurator" has increasingly been used to reflect their expanded role, as it may more accurately describe their extended role as tools that assist salespeople with not only building viable products, but performing related tasks, such as proposal and quote generation.

Common ROI goals for implementing a sales configurator include reduced lead times and unit cost, and eliminating manual intervention and errors in the order cycle, while the chasm between the front office (sales force) and back office (engineering or manufacturing), as a frequently cited business issue, is also prevented. That role is now being extended even further as configurators become linked with ERP, product lifecycle management (PLM), and other enterprise systems.

Any sound CRM strategy revolves around clear communication with the customer -- knowing what the customer wants, when he/she wants it, and what price is acceptable to both parties. In addition, configurators are crucial to sell-side of business-to-business (B2B) and business-to-consumer (B2C) eBusiness applications because they can be the foundation to self-service applications resident on a Web site and available for use by potential customers.


As a summary, the most common benefits complex manufacturers should be able to achieve by integrating configurators with their enterprise applications would be:

  • Product and/or parts reduction -- By discerning which items are being configured together, organizations can decrease inventory and remove slow-moving and non-standard items or parts from inventory, and should only stock items in high demand. Without a configurator, manufacturers would have to create an awful number of customized products straight from stock in anticipation of potential demand, which has become prohibitively impractical, while with a configurator, enterprises can have many components and raw materials identified, pre-assembled, and ready for the final assembly.

  • Efficient sales and operations planning (SOP) -- Provided integration of the configurator with other CRM and ERP applications, an organization can discern in real time the upcoming exact configurations and create more accurate forecasts and final assembly scheduling (FAS) from this data.

  • Product lifecycle management (PLM) information management -- The format/information of the product can be synchronized/unified across all disparate systems from back-end supply chain, field service, engineering and production floor to front-end sales configuration. This provides faster time-to-market capabilities given less need for training of sales force. Knowledge management might be the most important asset of the value chain, and the way it is captured and packaged must be understandable to everyone.

  • Sales process simplification and acceleration through guided interactive selling Configurators help customers navigate the complexities involved in the sales process by allowing them to understand the range of available solutions, explore alternative options, and finally configure the most suitable one. Thus, salespeople no longer need to task themselves with being intimately familiar with the complexities of option-rich product families, since all the knowledge can be contained within the software allowing sales personnel to focus rather on other aspects of customer care (e.g., cross-selling).

  • Error elimination and productivity increase -- Configurators should preempt errors by confirming that the quoted variant is a valid configuration and no wrong parts have been put together. The earlier one can preempt errors, the more it saves the company money all the way through the life cycle of the product. The configurator offers the advantage of offering the same, invariable product and/or service knowledge every time, as opposed to sending out an army of different sales representatives with varying degrees of product/service knowledge. This reduction of errors translates into big savings for a company due to product errors in the form of returns, service calls, warranty, rework, and scrap, as well as lost customers.

  • Improved market intelligence -- By integrating the configurator with marketing analysis data mining tools, an organization can better understand what drives customer decision making, as well as what the customers' preference from an option standpoint. There is also the ability to discover market patterns, customer profiling and product association, as well as pricing and product discount differentiation based on geography, customer and volume, all creating opportunities for up-selling and cross-selling. Support for the acquisition and retention of profitable customers through a personalized approach to campaign management and through blending of inbound and outbound interactions - capabilities that enable organizations to support targeted marketing campaigns and pursue up-sell opportunities.

To meet customer requirements, and fully reap return-on-investment (ROI), front-office applications must be integrated to back-end enterprise processes. This integration, plus the availability of Web-based CRM suites, has allowed many to-order' manufacturers to obtain immediate response on quotations, proposals, configurations, pricing, and in some cases, even on delivery dates. The market has long realized that CRM systems not only require integration with ERP systems to reconcile data such as customer master data, but also the bigger issue of integrated inter- and intra-enterprise business processes. For make-to-order (MTO) and ETO products, the overall process starts with capturing customer requirements at the front end that can be dynamically converted into work orders, routings, and other procedures via product configuration engines.

Furthermore, configurators increasingly are required to provide a direct link with shop floor execution to, for example, add or change an operation, change the work center where the operation is performed, change the run rate on that operation, and change the set-up time, and they also need to produce special instructions or comments on the work order, sales order, or invoice.


On a more general note, while choosing the right enabling technology is crucial, a great deal of pain remains in solving many softer', people-related issues. Because a configurator touches many aspects of the business, all affected departments should be involved in the selection of the configurator and its capabilities. When a configurator is used on a high-volume Web site, a due diligence should be conducted to ensure the configurator engine and its environment are able to handle high transaction volumes (e.g., dozen thousands of customers online all configuring their items simultaneously). Product scalability issues should be assessed early on in evaluating a configurator solution, since subsequent problems may not be easily overcome at time of deployment.

Difficulties with configurator system maintenance appear to be the most troubling issue within dynamic environments with frequent products and parts change, frequent marketing campaigns and new products introductions (NPIs). To stay current a timely transfer of such data into the configurator is critical. But such high volume changes often make the manual input of the updated information into the system imposible.

Often, configurator maintenance is too difficult for domain experts, such as marketing and engineering personnel, to grasp. Therefore, it should be a concerted effort of many different domains of expertise, since, if the expert cannot input the proper knowledge into the configurator, it becomes a futile piece of software. Even worse, a configurator that cannot be kept in sync with a changing business environment can actually be a detriment to the business rather than a benefit. Exposing this information from back-office systems to the POS configurator must be done in a way that minimizes data redundancy and supports easy maintenance as product lines and options change over time.

It is also important that the configurator tool have sufficient expression capabilities to represent the problem and solve it. Often, the use of simple and convenient graphical tools goes a long way to facilitate configurator maintenance. Even if the company manages to motivate its staff to share knowledge, the endeavor will fail if the technology behind it cumbersome and not user-frendly.

Users also need to keep in mind that not many configurator and interactive selling systems are useful in all areas of the manufacturing business, which impairs their overall effectiveness in a holistic customer facing initiative. The major challenge is the seamless conveying of information to-and-fro engineering and production environments, once one gets past the interactive guided sales experience and has successfully configured order as a result. In general, most ERP systems with native product configuration functionality do not address the above-depicted intricate needs of the front office, whereas pure CRM solutions do not yet grasp integration issues to the back office.

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