New Product Introduction

What Is a Custom-Engineered Product?

July 20, 2020

Custom-engineered products fill previously unmet needs, so they require a high level of collaboration and information management to control the process from conception to delivery to the customer.

As the world’s technological challenges grow more complex, so must the products that meet those challenges. Custom-engineered products fill previously unmet needs and therefore require a high level of collaboration and information management to control the process from conception to delivery to the customer.

Teams that are able to deliver custom-engineered products that meet specific needs on tight timelines and delight customers have an undeniable advantage in the market.

High-tech, contract, semiconductor, tier 1 auto, specialty chemicals, and industrial manufacturing are some of the fastest growing engineer-to-order categories, but custom engineering can cover a broad range of industries. For instance, some custom solutions our customers make include:

  • Mattress and upholstery fabrics
  • Meat grinding and processing machinery
  • Thermal management solutions for technology
  • 3D sensing and imaging equipment

In this post, we’ll define custom-engineered products, talk about how they’re made, unique challenges in the process, and how custom engineering is different from configure-to-order or make-to-order processes.

What is a custom-engineered product?

Custom-engineered products are variable products that require additional customization to meet customer needs, usually identified in an initial proposal or in the order fulfillment process. Manufacturers often refer to their custom-engineered products as Engineer to Order (ETO) products.

Manufacturing custom-engineered solutions is a team sport. Sales, engineers, purchasing, operations and finance must all work in close collaboration to ensure the product meets exact specifications on the customer’s timeline. The more the team understands and captures initial customer expectations, then meets those expectations, the more successful an Engineer to Order company will be.

Products that are engineered to order provide a special service the customer quite literally would not be able to find elsewhere. Their unique value (and the opportunity for continuous improvement) makes them a satisfying challenge for the problem-solvers who deliver them well.

How custom-engineered products are made

High-performing ETO companies tightly integrate their people and processes, which helps them overcome organizational disconnects and improve collaboration to deliver high quality on a deadline.

How custom-engineered products are made
A typical ETO workflow. Note that each arrow and swim lane presents a potential for miscommunication, with many siloed systems, spreadsheets, emails and manual processes.

Most custom-engineered products follow a standard timeline:

  • The customer requests a custom-designed product
  • Company decides how to design and manufacture it
  • How much does it cost?
  • How long will it take?
  • Company returns to customer with a quote
  • Company continues to deliver throughout process including responding to frequent changes to design, costs and commitments
  • Product ships and company invoices customer

It’s crucial for the sales, operations and engineering teams to work together to identify product specifications, costs and schedules before beginning production, to reduce and be better equipped to handle the inevitable curveballs during the production process.

Challenges of custom-engineered products

The two biggest challenges ETO companies must address early and often is customer churn and low margins. The two issues intertwine: A bad customer experience such as poor communication and unexpected changes can slow down the design process or alter cost estimates.

These twin dangers pose a threat to legacy ETO companies with siloed teams, whose market share is being chipped away by nimbler startups who can collaborate with more agility on customer requirements, product updates, schedules and costing estimates.

When custom-engineered products are made inefficiently using chaotic or antiquated processes, it wears on morale.

Poor product collaboration does more than hurt a company’s bottom line. Low-functioning ETO companies often suffer from employee turnover due to last minute requests and frequent overtime. When custom-engineered products are made inefficiently using chaotic or antiquated processes, it wears on morale and bandwidth, along with creating a poor customer experience.

Companies seeking to begin or improve their custom-engineered production processes should start by connecting their customer record to their product record on a cloud platform every stakeholder can access, so that there aren’t disparate workflows or conflicting sources of truth that slow down delivery and block companies from winning new business.

‘Engineered to order’ versus ‘Configured to order’

The manufacturing industry has almost as many terms to describe custom products — such as engineered products or tailored products — as they have actual custom products, along with nuanced terms to describe the different methods for creating custom products.

The main difference to note when understanding custom-engineered products is the difference between products that are engineered to order versus configured to order.

Custom engineered products versus configured to order products
Custom-engineered products and configured-to-order products differ in process, complexity and team involvement.

Configured-to-order products require less input from engineering and operations, and are:

  • Usually modified off of a mass-produced base product to meet customer requirements
  • Easily quoted due to low cross-team involvement
  • Ruled by a standard pricing process

Custom-engineered products require a more involved cross-team process, having:

  • More complex and unique specifications that cannot be met via configuration
  • No set pricing expectations due to the complexity of the product

Why do custom-engineered products matter?

High-functioning ETO companies with great cross-departmental collaboration can compete for market share and generate high profits other companies simply can’t touch due to their ability to respond to customers quickly under high pressure and deliver complexity on a deadline.

In a survey conducted by Tech-Clarity, more than 200 companies reported the custom engineering challenges they’re seeing and how top-performing companies set themselves apart. In their findings, less than a quarter of respondents were considered high performers based on a series of performance measures that contribute to their profitability.

Top-performing ETO companies are twice as likely to report that collaboration is “very easy.”

These top performers who are able to match quality and cost control with the speed the market demands are more than twice as likely to have integrated processes to create custom-engineered products, and twice as likely to report that collaboration is “very easy.”

Complete alignment on proposals and quotes between sales, operations and engineering is only possible when those teams are able to access all needed information on one platform to create a single source of product truth and collaborate in real time.

Read more in Tech-Clarity’s full eBook, Bringing Custom-Engineered Products to Market, to discover best ETO practices that drive higher performance and profitability.

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Author

Joanna Rutter

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