Instead of manufacturing already-completed designs, Engineer-to-Order, or ETO manufacturing companies, design products based on customer specifications. These products are often complicated, and clients are usually heavily involved in every step of the process, adding to the pressure!
Also, ETO manufacturers won’t know what materials or tools they need, nor the order-to-fulfillment lead times, until the order is made and the design work is underway. It can be a much more challenging environment for manufacturers.
An ETO ERP helps reduce costs, promote efficiency, and keep customers satisfied. Here’s a quick overview of the ETO process flow and why ETO has more advantages than Make-to-Order ERPs.
The ETO Process Flow
The ETO process starts with a request for a quote from a customer who explains what they need from the final product. The manufacturing company uses that information to create a design and quote, which often goes through several versions until everyone is satisfied.
Then, the process planning for the product begins, which includes documenting the design, ordering materials and parts, and setting up production schedules. Inventory management and change management are key here; they are dynamic parts of the process flow as needs and demands can shift rapidly.
Finally, when everything is ready, it’s time to move to the manufacturing process. Ideally, it is done so with precise costing, accurate and dynamic bill of materials, and reliable management of production, labor, and the shop floor itself.
Engineer-to-Order vs. Make-to-Order ERPs
You may be familiar with Make-to-Order ERP systems and wonder how they differ from an ETO ERP system. While they are both ERPs, with all of the benefits of centralized information and intelligent business decisions, each is made specifically for the specific type of manufacturing process your company uses.
Make-to-Order ERPs typically meet the needs of forecasting demand and managing the production process to ensure that that demand is satisfied with the right levels of inventory. Because the products a Make-to-Order company is creating are pre-designed, there’s no need to worry about product design and how it can impact timelines. This process-based type of ERP system is all about productivity and optimization of the plant floor.
An ETO ERP system handles the unique needs of an entirely different type of manufacturing. ETO manufacturers acquire supplies on an as-needed basis, often making changes throughout the process. They cannot accurately predict lead times. An ETO ERP helps optimize a project-based system. Using business intelligence and previous metrics, this ERP works to estimate costs and timelines.
A Make-to-Order ERP cannot be turned into an ETO ERP easily. It’s best to use an ETO ERP that was explicitly designed for that industry and application, built for your ETO needs from the ground up.
We can help you put the best ETO ERP system in place for your manufacturing environment. Call our team of ERP experts at Decision Resources, Inc., at 412.562.9660 or email info@decision.com.
