Are You ETO?

What ETO is and isn’t

Since the Industrial Revolution, manufacturing has been a dominating industry, growing and evolving to make more products in less time. Standardization was a key factor. The ability to mass-produce products made them more affordable, creating more demand. There are several downsides to mass production, though, which more and more businesses are experiencing. At the top of the list is a lack of flexibility and customization, which meant many customers weren’t getting exactly what they wanted. This gap in customer satisfaction made way for a new type of manufacturing, known as “Engineer To Order."

To help define ETO, it can be helpful to start with what Engineer To Order is NOT. Many manufacturers fall into “Make to Order," also known as “Build to Order." In this production method, we know the BOM before engaging with the customer and getting a confirmed purchase order. This means the manufacturer already knows the parts and labor requirements for each build. 

Engineered To Order environments don’t have the same luxuries that come with repeatedly making the same product(s). Instead, their processes are a bit more complex and require an innovative, experienced team. 

Engineer to order is about collaboration

When designing a one-of-a-kind solution, engineers in an ETO shop work alongside the client. With a shared goal of building a product that satisfies all their requirements, collaboration is necessary.

Collaboration is what leads to the innovation and utility of the end product. Unfortunately, these customized solutions also make Engineer To Order the most costly production process. Meeting a customer's unique needs is also time-consuming for both the customer and the original equipment manufacturer (OEM). However, it’s this hard work through collaboration that has solved many problems and inspired plenty of leading-edge technologies.  

The ETO design process

 Engineer To Order manufacturers adopt a process of gradually creating and improving a design. Each change is in response to client assessments and their needs. This is known as iterative design. Without knowing the final specifications or materials required, engineers in an ETO environment often work very closely with their customers.

This creative process can be exciting and lead to stronger client relationships.

However, an erratic workflow like this is often inefficient. It can be frustrating for all Custom Machine Builders, including Integrators, Panel Shops, and OEMs. If you’re Engineer To Order, then this workflow is probably very relatable.

ETO manufacturing process

Engineer To Order processes are more complex than what typical manufacturers face. A successful project requires complete visibility. Otherwise, mistakes can compound, leading to lost profits, wasted time, and irritated staff. Since every ETO project is unique, the workflow for every project is unique. The following, however, can give you a more detailed idea of how Engineer To Order machine builders proceed with a project.

1. A request for quote is often the first step. The customer provides as much information as possible to ensure their goals are met. A concept design is often presented to the client to provide direction to the solution, with an estimated price.

2. When the ETO firm has a good understanding of its customer's needs, and the scope is agreed on, the official partnership begins with a purchase order from the client. 

3. Design work follows, which requires working closely with the client, as design plans can often change.

4. Engineering starts to build a BOM. This is one of the pain points where ETO manufacturers suffer. A bill of materials can run to hundreds of items, with some parts taking months to order. Many engineers find themselves manually entering each part number, which is time-consuming and often results in multiple errors. Additionally, since some parts can take months to arrive, procurement always wants the BOM as early as possible.

5. As the design work is finalized, manufacturing may already be starting to build part of the project. During this time, it’s common for the customer to reach out with more changes and additional requests. Working with Dynamic BOMs, like those created in Total ETO, helps ensure each change is captured correctly.  

6. In an Engineer To Order project workflow, it might be necessary to source additional materials, at any stage. This can lead to serious bottlenecks without the right ERP.

7. After the machine is assembled, electrical work, including controls and programming, is done. This also includes debugging and final tweaks before the machine is accepted and shipped to the customer.  

As you can see, the workflow most Custom Machine Builders face is constantly changing. The right ERP software can mitigate these challenges, though. When procurement and engineering can work with Dynamic BOMs it saves both departments time and money. Total ETO makes Dynamic BOMs possible by integrating with popular CAD systems including SolidWorks, Autodesk, and Onshape.

Engineer to order complications

The complications of working in an Engineer To Order environment are felt throughout the organization:

• Sales: Estimating and quoting projects accurately is difficult without knowing the parts or man hours that will be required. It’s quite common in ETO shops to have no original design to help estimate costs.
• Procurement: Buyers need early access to the bill of materials to avoid downtime while waiting for parts. 
• Engineering: The client often requests multiple design changes, so engineers need to hold onto the BOM for as long as possible.
• Manufacturing: Tracking parts as they flow through both internal and external processes is tedious and error-prone. Ensuring proper inspections and following up on quality issues becomes overly complicated, despite their importance. 
• Accounting: T&M (time and material) invoicing is arduous, as is tracking work-in-progress.
• Management: Without complete project visibility, it can be difficult to track a project and ensure it’s on time and on budget. 

Engineer to order benefits

Custom manufacturing is growing around the world. Demand keeps multiplying for customized or ETO solutions. The semiconductor, chemical, medical, packaging, and panel industries are leading the way and showing off what it means to be Engineer To Order.  

The ETO business model is valuable with improved customer service and flexibility. The ability to respond to an ever-changing market is also driving success. When we take a closer look at the benefits of ETO, we can really understand the potential for these organizations. CUSTOMIZATION: Above all else, the ability to customize machines, panels, etc, for clients is what makes Engineer To Order special. Tailoring a product for a single customer can lead to customer satisfaction and loyalty. The customization and unique projects also drive employees at ETO manufacturers. Many builds require great creativity and innovation while providing challenges that ETO teams thrive on. 

• Customer support: ETO machine builders are known for providing superior customer service. Their close working relationship with each client enables them to better understand their needs. Personalized solutions better fit customers' needs, improving their overall satisfaction.
• Flexibility: Production cycles can be more forgiving in an ETO shop, with shorter lead times. It’s this flexibility that allows Custom Machine Builders to respond quickly to any last-minute changes. 
• Potential savings: ETO offers scalability. When an Engineer To Order organization has the right tools to support their business, including an ERP designed for them, it creates opportunities to save. Additionally, OEMs don’t typically require R&D beyond the design phase, unlike new standardized product designs. 

How the ETO solution was built

 With the Engineer To Order industry starting to take off in the early 90’s, it was time for Custom Machine Builders to work together and find a solution that would benefit all Integrators, Panel Shops and OEMs. 

Dennis Parass, a custom machine builder based in the Toronto area, coined the term “Engineer To Order." His former shop, Handling Specialty, is known for delivering custom-engineered material handling systems for aerospace, entertainment, and transportation industries. Parass recognized flaws in their processes but also found a gap in the marketplace. There were solutions for manufacturers of standard products, but none for manufacturers of customized machines. 

So Parass recruited his son, TJ, an engineer, to design ETO manufacturing software. Together, they worked with other custom manufacturers, growing the software to meet their ETO needs, solving more and more challenges. 

Engineer to order best practices

• Standardization: Each project may be unique, but standardizing processes whenever possible increases efficiency. Areas to consider standardizing include some design elements, quality control, and manufacturing procedures.  Communication: Clear communication between sales, engineering, procurement, and manufacturing is a must. Research from the Project Management Institute shows that one in five projects fails due to ineffective communication. It's also important to consistently communicate with your clients, ensuring they're up-to-date on the project and are on board with its progress. 
• The right tools: Finding the right manufacturing software can greatly improve your ETO workflow. From computer-aided design (CAD) systems, to ERPs, choose platforms that integrate, so you can simplify your processes. It's also important to have a system in place to deal with the constant changes ETO companies face. Engineering, procurement, and manufacturing are especially affected by changes to the BOM.
• Risk management: Thanks to their customized nature, most ETO projects come with some risk. Your team needs to be proactive to limit disruption. As described above, finding the right tools and consistent communication can reduce some risk. Minimum quality-control standards and a culture of continuous improvement can also make a difference. 

Totally better ETO manufacturing software

 When an Engineer To Order manufacturer uses an ERP system designed for them, the list of complications shrinks, while the benefits continue to grow. It’s important for an OEM to partner with an ERP that aligns with its workflow.

Delays, which are problematic and expensive, are greatly reduced, procurement also has time to find the best deals, especially for long-lead requirements.

Project management is difficult for most in the ETO space. However, with the right ETO manufacturing software, you should be able to:

• Track your project workflow and see reporting metrics at all stages.
• Set project milestone dates for key events.
• Link files to the project for quick reference and without creating duplicates.
• Add notifications for key staff as each department completes its tasks.
• See project costing, material status, build capability, and more in predesigned reports.
• Use internal change orders to accurately track your percentage completion and compare it to your original budgets.

An ERP designed for ETO manufacturers, such as Total ETO, improves efficiency, accuracy and profitability across the organization.  If you’re Engineer To Order and need the above features to remain competitive, book a free demo today. You’ll be surprised to see what you’re missing out on.