Previous articles have clearly defined the concepts and features of product configurators, such as product options' selection rules, procedures, constraints, variants, and so on (see Product Configurators Pave the Way for Mass Customization and CRM for Complex Manufacturers Revolves Around Configuration Software). However, there is one feature that is sorely needed by some industries and businesses that has hardly been addressed by available software offerings. That feature is called intelligent part numbers capability, and is also known as meaningful part numbers or significant part numbers.
This capability has become the norm in the industrial automation sector amid companies like Rockwell Automation, Eaton, ABB, Siemens, General Electric (GE), Schneider Electric, and so on. Such manufacturing and supplying companies generate several billion dollars in revenue by selling thousands of product lines (each with hundreds of thousands of possible product variants). Some other businesses that have benefited from using intelligent catalog numbers are Motion Computing (seller of tablet personal computers [PCs]), Verity Software (now part of Autonomy), Marena Group (a garment provider), and a number of durable goods wholesale distributors.
Rockwell, for example, has over a thousand product lines, and each line has thousands of possible configuration variants or catalog numbers (some even have over a million). This translates into millions of possible commercial part numbers called stock-keeping units (SKUs). The industry norm is to consider each SKU as a standard part, which is quite difficult for humans and information technology (IT) systems alike to handle—and may even be a counterintuitive practice. Namely, a well-known truth and established, accompanying practice is that it is much more practical to forecast and manage inventories of product families than of individual items (that is, aggregated versus individual planning forecasting).
Since it is simply impractical to produce a paper-based catalog containing nearly a billion individual product numbers, industrial automation manufacturers and suppliers have made some rules for potential customers on how to create a catalog number when ordering a certain product variant. Further, often the catalog contains associated rules on how to deduce the price of any valid catalog number. In other words, only by leveraging intelligent part numbers are customers and trading partners able to effectively order products.
For a long time, some critics contended that intelligent part numbers should be avoided. This stance came from the belief that item numbers, as static master data, should be treated as sacred and remain unchangeable by the computer. Unfortunately, this type of conservative recommendation does not consider the realities of some trading environments. The resulting negative ripple effect such a rigid mind-set could have throughout an organization would affect its sales channels, and even its end customer.
Intelligent part numbering, therefore, becomes the industry's "must have" capability; its omission impedes the user enterprise's operation, sometimes to the extent of complete failure (see Find the Software's Fatal Flaws to Avoid Failure).
Then and Now
Before the advent of software configurators (which have turned into commercial sales configurator solutions), pedestrian means were the only way to order a product. Voluminous and costly paper catalogs were published with available options and, sometimes, with rules on how to construct feasible part numbers. It is not hard to imagine what would happen if a product family had ten feature options, and each option had ten choices. The result would be ten to the tenth power of potential part numbers. It is easy to see how things could spin out of control when it comes to thousands of products.
Obviously, it is not practical to list that many catalog numbers in a paper catalog. Thus, some meaningful part number schema has to be listed in catalogs instead. A customer, for example, can learn a defined part number schema that may use the following approach, where all positions are of variable length:
- first position for voltage;
- second position for horsepower;
- third position for amperage rating;
- fourth position for color; and
- nth position for material.
Where most commercial product configurators fall short, however, is when a fixed length in each position is required. It is quite important not to impose fixed lengths onto the customers. Why?
Here is an example of how coding might work in a hypothetical situation: the letter B could denote 480 volts, H could denote 208 volts, and DA could denote120/220 volts. Likewise, the number 5 could stand for 5 horsepower, the number 10 for 10 horsepower, and so on. Similarly, 10A might denote 10 amperes, and 20A, 20 amperes. For colors, blue (the default, let's say) might not require a code, but R could signify red, and G could signify green. Thus, if somebody wanted a blue 480-volt, 5-horsepower, 10-ampere contactor, the person would fax in an order for catalog number B510.
As this example shows, it is important to leverage configuration software that can generate intelligent part numbers without the limiting conditions currently found within most configurator software packages, such as fixed versus variable length of positions within a part number scheme.
Beware of Configurators with "Necessary but Insufficient" Feature Sets
The above example also illustrates another complexity in dealing with intelligent part numbers called the reverse configuration capability. Most systems that feature product configuration capabilities, such as enterprise resource planning (ERP), customer relationship management (CRM), or stand-alone sales configurators, typically will not recognize or acknowledge the B510 item number (or any other part number) as valid unless it has been manually configured. Someone has to have used the configurator and selected this choice or product variant at least once for the part number to be recognized. Only from that point on does B510 become valid.
In contrast, Webcom Inc.'s WebSource CPQ quote-to-order (Q2O) suite (see Software as a Service beyond Customer Relationship Management and Sales) has quite a different approach. The solution consults the embedded part number schema and the rules to check whether the new part number is even possible. If it is possible, the suite validates it and tells the prospective customer exactly what part it is, what its features are, and its price.
Another example of the significance of configurable part numbers can be seen through a seemingly simple product like a control switch. There are regulatory norms within the US National Electrical Code (NEC) as well as safety standard agencies, such as Underwriters Laboratories (UL), Canadian Standards Association (CSA), International Electrotechnical Commission (IEC), etc., in which, for example, the switch has to be green if its use is to turn something on (the contact is within the open electric circuit, whereby pressing it closes the circuit), and red if its use is to turn something off (conversely, the contact is within the closed electric circuit, whereby pressing it opens the circuit). Further, for it to be an emergency shutoff switch, it not only has to be red, but it also cannot be flush with the wall. Rather, it must protrude from the wall, or have a mushroom head, such as those seen in gas stations, industrial plants, etc.
When the customer is ready and wants to order a control switch, it is necessary to specify the color (red or green), the shape (concave or convex), the number of contact points (two or three), the material used (plastic or metal), the safety features (hermetically sealed [for inflammatory environments]), and the material (subject to the electrical signal power needed for turning the switch on or off). While these specifications sound involved, the fact is that such an item would cost only about $10.00 (USD). Thus, if the customer describes the item's specifications by phone or fax, the sales order clerk would "eat up" (use up) the entire profit margin by the time the order is finally captured.
Further, in the case of human error (due to misunderstanding, for example), the ensuing damage (due to returns, rectification orders, etc.) would erase margins met by a number of correct orders. Thus, the intelligent numbers capability allows the supplier to put the onus on the trading partners or customers to educate themselves in order to create correct catalog numbers for ordering purposes. The manufacturer's job is then only to accept the correct part number's order, make the item, and deliver it. The typical catalog number for the control switch described above would look like this: 800T-A1. This means that the order consists of seven alphanumeric characters (instead of several lengthy sentences) that unequivocally identify the part.
Another ability that sets WebSource CPQ apart from most peer products is that the above mentioned B510 example can be confused with a 480-volt, 51-horsepower contactor. However, the system should also be smart enough to look ahead and discern that 5 and 51 are valid horsepower options, but that 0 is not a valid amperage option. Therefore, the system should choose the 5-horsepower option.
In other words, intelligent part numbers are great mechanisms for avoiding mistakes, since the people dealing with them tend to know the schemas. When customers are building devices and see B510, they should know that they need the 480-volt, 5-horsepower, 10-ampere part. The precise specifications that B510 stands for leave very little room for error. When ordering these parts, customers should also realize that the price for B510 will be in the neighborhood of, for example, $1,000 (USD) versus the price for B100010 (a comparable 1,000-horsepower contactor), which should cost about $20,000 (USD). All these facts should be confirmed by the sales configurator.
The Importance of Bidirectional Configuration
If the ordering system does not have the reverse configuration capability, without human intervention, the IT system can only process sales orders for catalog numbers that have already been ordered. In other words, someone has to manually configure these products and their catalog numbers, which is costly, time-consuming, and error-prone—a painful undertaking as a whole.
Further, to overcome the problem of the lack of reverse configuration capability, companies have to somehow produce forecasts, and to that end, estimate which catalog numbers (from millions of possibilities) the companies believe (or hope) they are most likely to sell. The companies then painstakingly select thousands of SKUs, configure them and their numbers (automatically with software, or even manually—ouch!), and preload their ERP and back-office systems (including those from SAP and Oracle) with these numbers and product variants.
Yet, as Murphy's Law would have it, it has often been reported that the very first sales order to arrive is, ironically, for the catalog number that has not yet been configured (that is, the system does not recognize it and refuses the order capture). Given the lack of commercially available systems for intelligent numbering in the past, most of the industrial automation companies mentioned above have had to design their own configuration software. The "best in class" solutions so far have been the Rockwell's Raise and Eaton's Bid Manager legacy products. However, these products were written in outdated development technologies, and both giants have meanwhile implemented, at some divisions, WebSource CPQ. Moreover, there are hundreds of industrial automation firms that have long been suffering in silence from the above mentioned system shortcomings, and that are still unaware of available, off-the-shelf, intelligent part numbers solutions.
This is part one of the series Can We Intelligently Use Part Numbers to Configure and Order the Right Products? In the next part of this series, rule-based, constructed catalog numbers will be discussed.