To meet the growing demand for customized products, not only do different business units and departments need to work together, but the IT and system landscapes also need to work together. To do this, it is crucial to know which tools and systems need to be networked with each other and which strategies make sense for a successful entry into the infinite product worlds of variant configuration.
1 - Think about the basic system landscape within your organization.
If many systems are to work together optimally, it must be clarified which systems are responsible for which information. Your company must therefore give fundamental thought to the IT strategy and the underlying IT architecture. It is best to start from the status quo, because the introduction of CPQ and variant configuration should not be in complete contradiction to the existing systems in merchandise management, logistics and production planning. Above all, check the capabilities of your existing ERP system - many merchandise management systems often have their own modules for variant configuration, which may overlap with the functions of a CPQ configurator. The aim is to create as little redundancy in function and data as possible.
2 - Bring sales, product development, manufacturing, and product management together from the start.
In the world of Variant Configuration, a lot is possible, but not all of it makes sense. The competing demands of sales ("maximum customer benefit"), product development ("everything that is technically possible"), and production ("mass production and low manufacturing costs") must ultimately be reconciled. And it has to pay off. The goal is to maximize the fulfillment of individual customer requirements while minimizing costs and maximizing scalability. To achieve this, the maximum scope must therefore always be contrasted with an optimized scale that ensures cost-optimized production, product development that is as simple and standardized as possible, and reliable procurement.
Your existing sales channels are another consideration. If you sell your products in high volumes through online stores, digital marketplaces, or intermediaries, having your own product configurator isn't always helpful. The issue of customization and variant configuration does not end at your doorstep. Your retail partners need to be actively involved in your considerations, for example by integrating your CPQ logic into the retailer's website. Another option is to create "preferred variants" of frequently requested configurations, which can then be produced in larger quantities like standard products and sold by the dealer. These preferred variants can still be delivered through existing platforms and channels.
The other limitation is the depth of the desired customization. With custom manufacturing, you leave the realm of MTO (Made-to-Order) or CTO (Configure-to-Order) and cross the fine line into ETO (Engineer-to-Order). Engineer-to-order means that highly customized products must be developed to meet very specific customer requirements. Although they are often based on existing components and modules, they are still uniquely designed and manufactured for that customer. Variant configuration of any kind makes no sense here, because these are full-fledged development projects with completely independent processes.
3 - Start small.
To get started with variant management, you should take several small steps to gain important experience. So it makes sense to start with a simple pilot project that can then serve as a blueprint for customizing other product categories. Choose a product category with simple logic and relatively few configuration options, but invest all your energy in considering and solving all aspects of product configuration throughout the process chain. Set a goal of creating a fully functional end-to-end prototype. In the spirit of a minimal valuable product (MVP), this should include a cross section of all systems and organizational units involved:
- Higher-level product key systems and codes
- Constructive product data from product development, including rule sets and 3D models
- Product information in PIM for critical, cross-variant information and media
- CPQ configuration and quotation processes
- Order processing, manufacturing and assembly including parts lists and work plans
- Product data governance and higher-level product master data management
- Rules and regulations in the various systems
- Rule-based feature expression, data sheet generation and visualization
- Prototypical interfaces between the systems involved
In this way, your company will gain important processes and experience that will be crucial for the successful implementation of future expansion stages.
4 - Define an overarching product data governance team with authority over product data structures, product characteristics, and rule sets.
The reason is obvious: If rules, product characteristics, and product information in multiple systems are all contributing to a common goal, the information in all systems must be optimally aligned. This Product Master Data Management(PMDM) team ensures that product keys, options and properties can be exchanged smoothly between systems, and defines which rules are maintained in which systems.
5 - Make variant configuration a long-term success
Even in the new world of Variant Configuration, there is still work to be done by an established team within your organization. Instead of manually maintaining the master data and properties of a large number of standard product variants, millions of configurable variants can now be generated using sophisticated rule sets. But these rules must also be managed by highly skilled people.
These tasks require both in-depth product knowledge and a high degree of abstraction. The configuration experts ensure the continuous development of the configuration models. Because as products change, rules and regulations must also adapt and change. As a result, configuration management personnel are responsible for a central core of their operational business. Make sure you have the capacity to handle this important task.
Customization that pays off
When CPQ and Variant Configuration are approached correctly and holistically, nothing stands in the way of a successful launch into infinite product worlds. The five strategies in our guide are based on our practical experience from numerous customer projects in product information and configuration management. Of course, there are many more best practices, industry-specific features, and individualized recommendations that we are happy to share with you.
All Information for the free download
Read our CPQ white paper for all 5 strategies and other important thoughts on how to get started with Variant Configuration. Please note that the paper is currently only available in German. If you require the information in English please reach out to us.
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