Why Engineer to Order Needs ERP

  • 15 June 2016
  • CTND
Categories: ERP


The engineer-to-order approach requires a company to think on-the-fly and design and manufacture products to particular customer specifications. The complex end-product requires a great deal of communication both between internal departments and with external customers to ensure the final results meet the original design.

Each part of this process involves its own set of challenges, and the ability for a company to anticipate bottlenecks, think creatively, and work swiftly to meet changing design specifications or scope is vital to satisfying customer requirements and reducing internal costs.

Engaging Customers

Engineer to order requires a high level of customer engagement and participation throughout the manufacturing process. As information changes throughout the evolution of each particular product, communication with the customer is key and the exchange of data must be correct, expedient, and transparent throughout separate teams. ERPs help ease the flow of communication by offering a cohesive representation of data and seamless digital transactions between departments, from the shop floor all the way to accounting. ERPs can also streamline the bidding, invoicing, and revision processes to help get customers on board faster and ease the burden on the accounting department.

Anticipating Needs

Because each project comes with an entirely new set of unique requirements, a business must be able to communicate with new and existing vendors, and anticipate the ability to source and order items required in a timely and predictable manner at a reasonable cost. As specifications and scope evolve throughout the project, the revision process must be well-communicated and easily adapted to through quick and effective communication, and the ability to quickly transfer these changes to applicable vendors so that only the parts necessary are ordered and paid for. An ERP system can house all vendor communications and orders and track data in a central location to allow for current negotiations and historical reporting that help predict future needs.

Managing the Revision Process

The revision process is inherent in the engineer-to-order process, and the ability to manage this process and communicate effectively throughout the chain of command and back to the customer must be well-defined. An ERP system provides the robust reporting tools that help companies report real-time, project-specific data back to the customer to help revision requests remain both timely and accurate. These revision requests can then be communicated back to relevant departments and shared easily without the need to manually copy and reconcile specifications and requests between one system and another.

Communicate Contractual Changes and Obligations

In addition, these companies must be able to communicate contractual information about what changes are acceptable during different phases of the project, and confer what this means in terms of the initial agreed-upon budget with the customer. It’s important for this type of information to be available to individuals interfacing with the project on all levels, as communication breakdown can predetermine project failures. An ERP system can help these business track their time and expenses at every point in the project, and help add initial detail to the project that can be referred back to in order to help define acceptable and anticipated changes along the way.

Engineer-to-order businesses have special needs throughout their manufacturing process, not all of which are shared by the business community at large. Whereas most businesses that use an ERP system also find benefit in the ease of data sharing and communication, these two aspects are critical for the engineer-to-order business. An effective ERP system can help this unique type of business keep close tabs on projects throughout their evolution and help mitigate costs along the way to keep both business and customer in scope and on time.

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