Transforming your company’s mindset from just measuring transactions to measuring yourself by your customers’ success is the catalyst – the essence – of how to succeed with configure-to-order strategies.
From the manufacturers I’ve spoken with and visited, it’s clear configure-to-order strategies are responsible for entire product lines being saved, new customers gained, and costs of incorrect orders reduced. It’s also responsible for increased inventory turns, greater profit per order and reduced selling costs. All of these are great results, and it leaves one wondering what is the galvanizing force, the factor that leads to such great outcomes Many of you with engineering backgrounds may think it is a series of metrics, analytics, dashboards or a methodology is at the core of these accomplishments. In fact the people factors that matter the most, and that lead to transforming entire companies.
In order to find out what sets these high performers apart from the rest, I looked at a series of manufacturing companies who are excelling with their configure-to-order strategies. Here is what I learned:
- Configure-to-order is revolutionizing the culture of the highest performing companies, making them more customer-centric . What a difference between the companies making this strategy work and those that are failing; you can literally feel it when you visit their production centers and meet supervisors, managers and directors running production operations. The ones who are making configure-to-order strategies work tell you stories of how this strategy alone saved tens of thousands of dollars in any given month – and they have the figures memorized – which shows this is a core part of who they are as people and what their companies stand for. One aircraft parts supplier located in Southern California has scorecards on their Intranet site that show how much profit was generated by configure-to-order replacement parts for Boeing. Bonuses are tied to these figures, they are watched more than any other in the company. It’s because everyone can connect their efforts to customers succeeding that this revolution is happening so quickly today.
- People LOVE to be on a winning team – the best configure-to-order strategies make this happen, by feeding, strengthening, and celebrating wins all the time. This was also immediate and strong in the aircraft, aerospace and defense and medical products companies I’ve visited recently. There is a pride – even a swagger – about being part of the configure-to-order teams in production that deliver exceptional profits and beat customer deadlines.
- Invite customers to the plant when their orders are produced and make them the Rock Stars of the visit, not your Management Team or CEO. Plant managers will often say no to customer visits when orders are being produced. They fear micromanagement and critical feedback. But they miss the critical point of building trust with their best customers as a result. One manufacturer of specialty vehicles I visited has their customers’ logos flashing across a 32” flat panel TV screen in the lobby. The customers, many of them from smaller cities and towns in the U.S. and Europe, felt like rock stars. The names of the chief of police, fire chief, council members, mayors, and state government leaders were all up on the screen too. This company has a 99.95% acceptance rate of vehicles on final walk-through too. Why? Because the customers, many of which have authorized spending more on this equipment than their homes cost, see they are incredibly important and valued. They matter, their opinions matter, they are listened to. Ever since taking this approach in their customer center where finalized configure-to-order vehicles are reviewed, customer satisfaction has also climbed steadily too.
- Measure and audit customer satisfaction on every configure-to-order project using Web-based surveys that tie back to who built the order and when. Post customer satisfaction ratings by production team including time series graphics of their performance to customers’ expectations, provide recognition to teams who consistently surpass customer satisfaction levels, work to make this part of your company’s culture. That’s what the top-performing companies do. This does more than generate enough statistics to generate a Six Sigma analysis – it infuses ownership of each step of the configure-to-order process with each team member. It makes their jobs meaningful and connects what they do to customers. It’s very powerful and it takes a lot of courage for a company to do this. But the results – they are amazing.
- When creating scorecards and analytics to measure configure-to-order performance only choose the top five metrics that matter to everyone and measure collaborative performance. This finding came from visiting several manufacturers who had gone through a “boil the ocean” experience with analytics. Having had too many metrics, these manufacturers chose configure-to-order analytics that captured collaboration and coordination over just a single departments’ performance. The result: less political infighting and more shared responsibility to customers’ satisfaction.
- Drag-and-drop configurators and 3-D modelers of configure-to-order products are the bright shiny objects in manufacturing right now; use discretion in how fast you roll them out. It’s not the veneer of these applications that makes them incredibly valuable, it’s what they do through real-time integration with ERP systems, supply chain management, pricing and distributed order management that really matter. Visiting with manufacturers just rolling these online tools out to their sales force for configure-to-order and engineer-to-order strategies shows an evolving best practice: populating proposals and orders with delivery dates and service contract rates in real-time and validating the viability of building the configured product – all in real-time. Drag-and-drop and 3-D configurators can generate an exponential increase in margin, providing they streamline the production process rather than burden it.
- The best performing configure-to-order strategies are in companies who have continual improvement hardwired in their DNA. These companies never stop working to improve their configure-to-order and engineer-to-order processes, from fine-tuning rules and constraints to creating entirely new user experiences within applications for sales, channel partners and resellers. Succinctly put, they realize that success with these strategies is continually changing and never done.
Bottom line: The more every person involved in the configure-to-order strategies in your company understands what the customer expects of them, the greater the potential for profitable growth.