In todays environment of more engineer-to-order philosophies, companies are looking for manufacturing methods that are unique and that will allow for level of differentiation from their closest competitors to allow them to enjoy sustained margins. The topics challenging even the best of engineer to order companies lie in the areas of estimating, purchasing, building, testing, shipping, on-site tryout and debug and then final commissioning. These complex manufacturers need help to stay competitive over a sustained period of time. The modern technology offered by the best erp software providers and their legions of consulting resources continually comes back to the following key areas listed below.
Invest in new technology. While many ETO companies do not think twice about spending $250,000 on new equipment to make their plant more efficient, they balk at spending the same amount on ERP (Enterprise Resource Planning) software that will have a much more dramatic bottom-line impact than a single machine tool. The areas of technology are not only focused on costing and accounting systems, and includes CAD, project management, PLM, and Configuration software. The companies who view spending money on infrastructure as a competitive advantage typically outperform companies who elect to not spend the capital on further developing their infrastructure.
Focus on niche markets. Trying to compete without differentiation with a "commodity" machine builder is futile. Focusing on engineering a solution based on client needs creates product and industry sector distinction. Typically, the larger, more expensive machines need more services and support and generate an alternative revenue stream. That revenue stream can become the most profitable portion of their company as they require well trained technicians to service the complex equipment.
Lean thinking throughout the whole organization. Lean manufacturing cuts costs and inventories rapidly to free cash and resources, which is critical in a competitive world economy. Lean supports profitable growth by improving productivity and quality, reducing lead times, and freeing resources. For example, it frees office and plant space and increases capacity so companies can add product lines, in-source component production, and increase output of existing products. ETO manufacturers that begin to leverage lean concepts can enjoy gains of renewed economic growth by increasing sales while controlling costs.
New markets. Most ETO machine tool companies are small family-owned businesses that have traditionally relied exclusively or predominantly on the domestic market. Quite a bit of potential growth exists in overseas markets for ETO manufacturers. Even domestically, ETO manufacturers are finding alternative opportunities among smaller factories that require automation equipment. The more quick to adapt modern ETO companies are able to better adapt to the changes requested of their customers in a shorter amount of time, allowing them to take advantage of technology shifts long before their larger competitors have a feel for the change required.
Company executives often complain about the challenges of operating an ETO manufacturing business: too much regulation, the cost of health care, unfair competition from overseas. Waiting for the government to do something about these issues, these small, often privately owned companies will go out business and many have already vanished from the landscape. The ETO manufacturers that are going to survive are implementing some of the strategies described above. Truly lean and progressive engineer to order firms will always thrive, even during difficult economic times.
Invest in new technology. While many ETO companies do not think twice about spending $250,000 on new equipment to make their plant more efficient, they balk at spending the same amount on ERP (Enterprise Resource Planning) software that will have a much more dramatic bottom-line impact than a single machine tool. The areas of technology are not only focused on costing and accounting systems, and includes CAD, project management, PLM, and Configuration software. The companies who view spending money on infrastructure as a competitive advantage typically outperform companies who elect to not spend the capital on further developing their infrastructure.
Focus on niche markets. Trying to compete without differentiation with a "commodity" machine builder is futile. Focusing on engineering a solution based on client needs creates product and industry sector distinction. Typically, the larger, more expensive machines need more services and support and generate an alternative revenue stream. That revenue stream can become the most profitable portion of their company as they require well trained technicians to service the complex equipment.
Lean thinking throughout the whole organization. Lean manufacturing cuts costs and inventories rapidly to free cash and resources, which is critical in a competitive world economy. Lean supports profitable growth by improving productivity and quality, reducing lead times, and freeing resources. For example, it frees office and plant space and increases capacity so companies can add product lines, in-source component production, and increase output of existing products. ETO manufacturers that begin to leverage lean concepts can enjoy gains of renewed economic growth by increasing sales while controlling costs.
New markets. Most ETO machine tool companies are small family-owned businesses that have traditionally relied exclusively or predominantly on the domestic market. Quite a bit of potential growth exists in overseas markets for ETO manufacturers. Even domestically, ETO manufacturers are finding alternative opportunities among smaller factories that require automation equipment. The more quick to adapt modern ETO companies are able to better adapt to the changes requested of their customers in a shorter amount of time, allowing them to take advantage of technology shifts long before their larger competitors have a feel for the change required.
Company executives often complain about the challenges of operating an ETO manufacturing business: too much regulation, the cost of health care, unfair competition from overseas. Waiting for the government to do something about these issues, these small, often privately owned companies will go out business and many have already vanished from the landscape. The ETO manufacturers that are going to survive are implementing some of the strategies described above. Truly lean and progressive engineer to order firms will always thrive, even during difficult economic times.
About the Author:
Chuck R Stewart writes about business productivity for various publications. He specializes in helping customers in the area of engineer to order manufacturing, especially engineer to order software .
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