Supporting Speed of Delivery for ETO and CTO Manufacturers
Despite the vast potential of US manufacturers, many of them won’t achieve it without first ratcheting up their investments in the right technology. While some larger US manufacturers have upgraded to newer technologies, making the switch remains a challenge for growing companies that remain stuck in what MIT calls “low-technology equilibrium.” Facing this challenge right at a time when demand for customized goods is at an all-time high, engineer to order (ETO) and configure to order (CTO) manufacturers need unified technology solutions that help them run their businesses efficiently and stay in the “speed of delivery” race.
“If one manufacturer can build the product within six months and another can have it ready within two months, the latter is going to win the order. When manufacturers have the software they need to engineer and configure more—and to do it within a shorter timeframe— everyone wins," said Marc Bastnagel, CPA, Practice Manager, Myers-Holum.
Harnessing Opportunity and Overcoming Challenges
Many ETO and CTO manufacturers use spreadsheets for core activities like inventory management and outside applications for ecommerce sales. As customer demand for their products escalates and as the number of different product configurations expands, managing these complexities while staying profitable has become increasingly difficult for manufacturers.
Operating more like professional services firms versus traditional manufacturers, ETO and CTO manufacturers have complex software requirements. Knowing this, Myers-Holum (NetSuite Alliance Partner of the Year for North America) delivers an ETO and CTO-specific ERP system with NetSuite as a core foundation plus NetSuite CPQ - a configure, price, and quote solution that integrates seamlessly with NetSuite ERP.
NetSuite CPQ ties directly into the interface for opportunities, quotes and sales orders. Items, customer data, bills of material (BOM) and routings are also shared between the systems, meaning they can be managed in a single application.
“We extract different aspects of a NetSuite implementation for a professional services company, a manufacturer and/or an installer, and bring those best practices together to meet the needs of the ETO and CTO manufacturing firm,” said Stephen Wolff, Managing Partner at Myers-Holum. For companies that also offer service and maintenance for their products, Myers-Holum addresses recurring revenue requirements associated with those activities right within the ERP system. The single package becomes a holistic solution for any CTO or ETO manufacturer.
Meeting Growing Demand for Self-Service
Using NetSuite as a foundation, Myers-Holum helps manufacturers meet their customers’ growing demand for “self-service,” supporting those who want to be able to go online and place an order without having to pick up the phone, send an email or work directly with a sales rep.
Without a unified ERP system in place to manage this activity, manufacturers may lose insight into associated costs and risk mispricing orders. Multiply this problem over thousands of orders and the bottomline impact can be significant. For example, substantial upfront costs are allocated to designing products according to a customer’s exact specifications. Then, manufacturers must price out all of those features correctly—a task that’s become somewhat of a moving target thanks to the current supply chain disruptions and product shortages, which are also driving prices up daily.
Using the pricing solution with NetSuite, customers can view renderings of their products before they’re even made, review pricing quotes and place orders with little or no human intervention. For orders that fall under a certain pricing threshold, buyers can go online and see which “off-the-shelf” products are available and which come with a predefined set of modifications.
Helping Manufacturers Hit Their Targets
Once in place, NetSuite helps ETO and CTO manufacturers:
- Better track and report costs
- Understand profitability on every custom job
- Gain new insights into both gross and net margins
- Onboard new customers quickly
- Process new orders faster and get items into production as quickly as possible
- Gain a competitive advantage
NetSuite also gives ETO and CTO manufacturers extremely granular details on every transaction. Armed with this information, companies can make better decisions regarding both their current and future workloads. For example, one manufacturer gained clear visibility over the profit margins for its individual projects as soon as it implemented NetSuite.
Tech That Keeps Companies Working and Serving Their Customers
Facing more competition, persistent pandemic impacts and an ongoing labor crunch, ETO and CTO manufacturers can turn to technology for help with automation. Those that ignore this may be left behind, a point that was made clear during the COVID-19 pandemic.
“Many companies that were using outdated, on-premises technology couldn’t operate effectively during the pandemic, which isn’t going to be the last major disruption we see,” Marc Bastnagel, CPA, Practice Manager at Myers-Holum said. “On the other hand, engineers working for companies with advanced, cloudbased platforms in place were able to continue working and serving their customers.”
Made to Order: NetSuite Supports Speed of Delivery for Engineer to Order and Configure to Order Manufacturers
Find out how ETO and CTO manufacturers use NetSuite ERP to support customized, dynamic and highly complex manufacturing processes and improve business operations.
This guide delves into how companies streamline manufacturing, installation and service processes as well as manage recurring contract and revenue recognition.