An oft-heard misunderstanding is that Configure To Order (CTO) leads to a less diverse range of products on the market than Engineering To Order (ETO). The truth is quite the contrary: CTO leads to less internal diversity – fewer different article flows, fewer different engineering activities, and therefore lower costs and shorter delivery times – but to more external diversity. That has everything to do with the working of the human mind; in this case, the mind of sales.
For sales in a company with an ETO strategy, it seems that the sky’s the limit: whatever configuration the customer wants, the Sales can offer it. After all, the sales are not restricted to a limited number of standardized modules from which the customer must choose a configuration, as is the case with the CTO strategy. The sales, however, rarely utilizes the unlimited possibilities provided by ETO. They prefer to offer a configuration that has proved successful in the past, one they have sold before, with a limited number of changes. This enables them to stay in their comfort zone. But in doing so, however, the range offered to the customer is limited. Much more limited than that of the ‘CTO Sales’. I know of several practical examples where, during the implementation process of CTO, sales suddenly say in surprise: ‘I had no idea we could offer so many options!’
This brings us to my second point: Engage sales in that CTO implementation process from the very first moment. Quite a few consultants, often with a technical background themselves, put Engineering in the lead, merely giving sales a say at best. That is exactly why many implementation processes are disappointing or even fail. Without the knowledge of sales, there is a good chance that a set of modules will be chosen that cannot adequately respond to the wishes of the market. And then, time after time, specials are needed, with all that ‘ETO unrest’, which is precisely what everyone in the company wanted to be rid of. Moreover, early and close involvement with CTO of course also ensures that the sales understand and embrace every detail and offer the customer a motivated presentation of the configuration options.
Finally, to be honest, involving sales from the start does not automatically mean that you will arrive at the exact set of modules the market wants. After all, sales doesn't know everything about the market. So, introduce an intermediate step: offer the market a set of modules, but simply keep the engineering and construction process behind it ETO. If it emerges that customers demand something different, this has virtually no consequences. As soon as it is clear which modules are most in demand, the engineering and construction process can be made CTO.
Follow our LinkedIn company page to stay informed of all our blogs.