As technology has progressed, managing the many moving parts of the modern manufacturing landscape has become increasingly more challenging. Just as in other arenas of human endeavor, however, challenge has prompted innovation. Among the most important developments for manufacturers has been the development of strategies for the prompt fulfillment of customer orders. Alongside strategies for supply chain responsiveness and production floor efficiency, this is one of the key aspects of what is commonly known as “lean manufacturing.”

Across multiple industries that employ a lean approach, order fulfillment strategies frequently revolve around variations on the concept of “made to order,” or MTO. At its most basic level, MTO is as familiar as a McDonald’s restaurant: A customer orders a Big Mac, and a crew member puts it together using ingredients at the ready. While the success of this approach is limited by the crew’s ability to keep pace with order volume, significant flexibility around customization is also built into the process. Customers wanting pickles left out of their sandwiches, for instance, receive their orders with the same timeliness and quality control as those opting for the standard version.

Another lean strategy that is perhaps less familiar is “engineer to order,” or ETO. Unlike MTO, which starts with fixed design specifications (the “standard Big Mac” in the illustration above), ETO includes the entirety of the design process. While this is far more challenging, the payoff is potentially far greater. From a customer standpoint, this would be like working with McDonald’s to craft an entirely new sandwich. It may involve new ingredients, new production methods or even retooling with new equipment geared toward meeting the customer’s unique needs. Customer collaboration begins at the conceptual level — even before questions of materials and processes are answered.

Both MTO and ETO can benefit from software systems designed for enterprise resource planning (ERP). Typically comprised of an integrated suite of applications, an ERP system links together disparate silos within an organization through a shared storehouse of continuously updated, actionable data. ERP enables company-wide integration of business processes such as inventory and supply chain management, resource tracking, sales and marketing, and customer relations. As the complexity of operations increases, so too does the value of ERP to an organization’s bottom line; deployment of ERP may be overkill for a small MTO shop, but it is more or less essential to a medium- to large-sized ETO organization.

Generally speaking, the focus of ERP in an MTO environment is on productivity: streamlining the production process through tasks such as plant scheduling, parts routing and machine loading. Because the design is set before a customer places an order, the number of variables is relatively small; for example, the bill of materials (BOM) generated at the start of an order is unlikely to change over time.

Figure 2: ETO includes the entirety of the design process.

But in an ETO environment, ERP is broader in scope. As noted above, the BOM has yet to be defined at the start of collaboration with a customer. It may need to be created in stages corresponding to different project milestones or product components; at each stage, designs will be developed, prototypes will be built and tests will be run before moving forward. A system for material requirements planning (MRP), considered a subcategory of ERP, may be employed for taking on-hand inventory, identifying additional needs and then meeting them by scheduling either production or purchase. There may also be multiple touchpoints for customer approval, and instances where things get sent back to the drawing board for revision.

Because there are many design paths that can be followed to create viable customer solutions, regular adjustments to the BOM are essentially a given. This can be further complicated by fluctuations to material availability within the global supply chain, which is highly susceptible to impacts from unpredictable variables. Consider, for instance, the level of disruption to the supply chain in the wake of the COVID-19 pandemic — a crisis that has also impacted production variables ranging from the health of plant workers to the overall financial health of organizations themselves.

While ERP cannot solve all of these challenges for ETO firms, it can certainly make them easier to manage.

It should be noted that, while early ERP systems were developed with large enterprises as their intended target, ERP software solutions are increasingly within the reach of smaller organizations. Recent market research, including reports published by Grand View Report and Market Study Report, has forecast significant growth in the ETO manufacturing software market over the next six to seven years; more offerings from providers of ERP solutions are likely to mean more options for ETO organizations of all sizes.

Already, in fact, there are numerous offerings available. There are two main types of ERP software, on-premise and cloud-based, and either can be used for ETO. Research and advisory firm Software Advice, a subsidiary of Gartner, notes that most ETO installations are done on-premises, although the decision to use a cloud-based approach is likely to be based on whatever IT infrastructure is already in place.

ETO managers wishing to learn more about ERP solutions can visit this comparison chart from Software Advice, this overview and comparison tool from peer-to-peer review site G2, and this specification guide and supplier listing from Engineering360.

And get to work on crafting that entirely new sandwich.