Challenges of the Engineer-to-Order Manufacturer addressed by the 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 businesses themselves also tend to be small. The result is that the larger ERP software businesses 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 generate-to-stock, assemble-to-order, build-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 instant. There is often a mismatch in how they describe their business. Companies might describe themselves as job shops or even build-to-order when they are really engineer-to-order.

Software vendors do not help the situation. Many vendors dont 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 defined industry segment. Other synonymous terms are project-based or custom manufacturers. ETO businesses typically have specific 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 build unique products designed to customer specifications. Each product 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 years or even many years. Unlike standard products, the customer is heavily involved throughout the entire design and manufacturing process. Engineering changes are a way of life. Material is purchased not for inventory but for a defined project. All actual costs are allocated to a project and tracked against the original estimate. Once complete, the product is typically installed at the customers page . 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 understanding and to discuss challenges and business issues.

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