By integrating CPQ applications that deliver quoting accuracy, speed, and scale with ERP and PLM systems, more perfect orders are shipped the first time and products are managed over lifecycles to greater sales levels, not just one-off transactions.
One of the most proven ways to increase sales of configurable products is to close the product configuration gaps that exist between engineering, marketing, and production teams. The smaller the gap, the more perfect orders are delivered. CPQ applications and the sales teams they support place a high priority on quoting and pricing productivity alone. Creating quotes and getting price exceptions out faster are automating mediocrity if engineering and production’s configuration constraints aren’t also reflected in every quote produced. The solution is to integrate front-office systems with their back-office counterparts and excel at selling, producing and delivering the best products possible.
How Product Configuration Gaps Happen
Ideally, every quote needs to reflect buildable products that are profitable and designed to last. Integrating ERP, PLM and CPQ systems together on a common Configuration Lifecycle Management (CLM) platform eliminates the disconnect between front-office selling systems including CPQ and CRM and back-office systems including PLM and ERP systems. CLM platforms create and actively maintain a single source of product configuration data over complete product lifecycles, removing the roadblocks to selling the most buildable, profitable and reliable products.
Solving the many challenges reflected in the following figure of a next-generation luxury car that is configurable to specific customer needs underscores how for any manufacturer to succeed there must be a single trusted source of configuration data that scales across each products’ complete lifecycle.
Steps You Can Take To Close Product Configuration Gaps
Product configuration strategies fail when the differences between buildable, orderable and salable product configurations aren’t understood or agreed on company-wide. Getting engineering, manufacturing and marketing & sales to all rely on a single source of configuration data that spans each product’s lifecycle is key to making new sales happen. The following are steps your company can take to close product configuration gaps and start selling more and producing more perfect orders:
In defining a business case for integrating CPQ, CRM, ERP and PLM systems, set challenging business goals supported by a scalable CLM platform first.
When front-office and back-office systems can communicate in real-time, entirely new opportunities open up for how product configurations, selling and pricing are optimized to drive greater sales. More robust product definition tools that handle rules effectivity and inheritance can react to customer need in real-time and change control and release management workflows all improve. Providing channel-specific configuration content and flexing product configuration engines to support low-volume assemble-to-order (ATO) to complex engineer-to-order customer orders is more accurate on a CLM platform because a single system of record is being relied on. In addition to all these benefits, when a CLM platform is unifying the front- and back-office systems there’s an audit trail of the entire Quote-to-Cash (QTC) process.
For the first time, it’s possible to be profitable selling highly configurable project-based products managed with PLM systems while streamlining low-margin, high volume product orders via CPQ to ERP integration.
Manufacturers who have adopted CLM platforms to unify their front- and back-office systems have more control and can increase the quality and turn-around time for their most complex project-based product orders while streamlining the production of low-margin, high volume products. When a single source of configuration data for the complete product lifecycle is available, it’s possible to balance the requirements of the most complex and highest volume products in real-time across all production centers.
CLM platforms make it possible to balance time-to-market and time-to-customer with greater precision across the entire spectrum of products sold today and planned for the future.
CPQ and CRM systems excel at supporting time-to-customer by reducing product configuration complexity down to the bare minimum of what’s needed to make transactions happen. PLM systems excel at time-to-market and are essential for enabling successful new product introductions. When a CLM platform provides a single system of record or source of truth for the complete product lifecycle, the contradictory directions of CPQ and PLM can be alleviated and instead focused on increasing product line sales and profits. Reducing the friction between time-to-customer and time-to-market saves valuable time and reduces operating costs as well.
Eliminating the confusion between technical and commercial constraints and having them coexist in a single system of record increases sales by reducing quoting and ordering errors.
Only by adopting a CLM platform that unifies front-office and back-office systems can a manufacturer successfully intermediate between the technical constraints inherent in PLM-based definitions of products and commercial constraints in CPQ and ERP systems. By having technical and commercial constraints aggregated in a single source of configuration data that scales across product lifecycles, CPQ applications will be more effective in selling the most profitable, buildable and reliable products. And production planning to fulfill orders will become more streamlined and less error-prone as all constraints, product models and their parameters, often called feature families, are the single system of record the entire manufacturing operation relies on. Manufacturing becomes more efficient, a higher percentage of orders are delivered exactly meeting customers’ specifications, and product quality gets stronger when a single source of configuration data for the complete product lifecycle.
PLM systems are designed to provide a partially defined configuration space or area that is heavily biased towards technical features. CPQ and CRM systems are designed to provide configuration options that are entirely commercially-based, focused on making as many transactions happen as possible. Using a CLM platform to fully define the configuration space or area for an entire company alleviates much of the bias and confusion that front-office (CPQ & CRM) and back-office (PLM & ERP) systems have inherent in their designs as systems. By creating a single source of configuration data for the complete product lifecycle using a CLM platform manufacturers attain greater levels of selling scale, the speed of fulfillment while simplifying their internal production processes.