Year 3 for ETO Institute.

A big problem for engineer-to-order (ETO) companies is that they have many unique requirements that build traditional ERP systems unsuitable. The engineer-to-order sell is relatively small and the companies themselves also tend to be small. The result is that the larger ERP software companies are more focused on the needs of the larger and more numerous repetitive manufacturers.

In the manufacturing software industry the terms are clearly recognizable. The differences between make-to-stock, assemble-to-order, contruct -to-order, and engineer-to-order are clearly understood.

These distinctions are not so clear for those in manufacturing evaluating software systems for the first time. There is generally a mismatch in how they describe their business. Companies may describe themselves as job shops or even make-to-order when they are really engineer-to-order.

Software vendors do not help the situation. Many vendors do not want to eliminate themselves from opportunities so they cast their net as wide as possible. They claim to support a multitude of manufacturing styles when on closer examination they are best suited to one.

The term engineer-to-order (ETO) denotes a style of manufacturing rather than a explicit industry segment. Other synonymous terms are project-based or custom manufacturers. ETO companies typically have explicit characteristics about the way they conduct business that differentiate them from discrete or repetitive manufacturers.

According to Thomas R. Cutler, spokesperson for the ETO Institute, ETO companies contruct unique products constructed to customer specifications. Each merchandise requires a unique set of merchandise numbers, bills of material, and routings. Estimates and quotations are required to win business. Products are complex with long lead times, typically months or even months. Unlike standard products, the customer is heavily involved throughout the entire develope and manufacturing process. Engineering changes are a way of life. Material is purchased not for inventory but for a specific project. All actual costs are allocated to a project and tracked against the original estimate. Once complete, the item is typically installed at the customers site. In most cases, aftermarket services continue throughout the life of the product.

The ETO Institute (www.etoinstitute.org) is an independent organization committed to helping North American engineer-to-order (ETO) manufacturers compete more effectively in an increasingly competitive global environment. Our resources section provides a list of articles and white papers focused on manufacturing and, in particular, engineer-to-order. The bulletin board provides a forum for organizations to share ideas and information and to discuss challenges and business issues.


Thomas R. Cutler
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www.etoinstitute.org
954-486-7562