In the engineer-to-order world, companies build unique products designed to customer specifications. Each product is complex with long lead times and requires a unique set of item numbers, bills of material, and routings. Unlike standard products, the customer is heavily involved throughout the entire design and manufacturing process. In most cases, aftermarket services continue throughout the life of the product. That's why generic, off-the-shelf ERP systems will not work for ETO manufacturers. The nature of ETO manufacturing compared to other manufacturing styles presents its own set of challenges which must be addressed effectively if a company is to remain competitive. Some of the key differences between 'standard' manufacturing i.e. make-to-stock (MTS) style manufacturers, and their engineer-to-order manufacturing (ETO) counterparts include:
|Made to Stock / Just In Time Manufacturing||Engineer-to-Order / Make to Order Manufacturing|
|Uses a price list||Supplies estimates and quotes / tenders for a project|
|Wins a sale / receives sales order Purchases material to stock||Wins a contract / receives a job order; Purchases material to a project|
|Inventory is based on part number||Inventory is based on contract number / job order (i.e. top level demand)|
|Makes no or only a few engineering changes||Makes a significant number of engineering changes / variations|
|May make products having low value||Products / projects are typically higher in value|
|Talks about products||Talks about projects|
|Makes standard products||Products are unique|
|Refers to standard cost||Calculates actual cost|
|Product lead times may be days or weeks||Product lead times may be months or years|
|Ships from finished goods||Ships from WIP(work-in-progress)|
|Invoices on delivery||Receives stage payments(and retentions)|
|Measures cost variance from the standard cost||Measures cost variance from the original estimate|
Bridging gaps in the standard Oracle product
GAP 1: Order Management and Projects data must always be synchronized in an ETO environment to provide a consistent view of Bookings, Shipments, Backlog, Invoice and Revenue Recognition. The standard Oracle product does not synchronize data automatically, making it necessary to enter and maintain the same data manually in both Projects and Order Management.
GAP 2: Cumbersome and time consuming item creation and administration process in an ETO environment - several item attributes like categories, attachments, and cross references have to be made manually.
GAP 3: Manual creation of invoice and revenue events in Projects after shipment of the engineered product makes the process slow and error prone.
GAP 4: Standard Oracle does not consider the total cost of the engineered product including project engineering, miscellaneous and manufacturing costs. Revenue and COGS for projects must be booked in the same period as per the US GAAP matching principle, and corresponding WIP amounts have to be relieved.
Benefits of HCL's ETO Solution Standard
- Extensions built to fulfill gaps in the ETO solution are designed and developed using standard Oracle APIs or Interface tables wherever applicable
- Supports Oracle version upgrades
- All extensions can be deployed in an ETO implementation with minimal changes
- Designed on bolt-on components, does not affect standard programs, and can be enabled/ disabled as required
Speed of Implementation
- Pre-packaged design installation documents to accelerate speed of deployment
- Deployed across multiple locations with less than 10% changes