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The orchestration of CPQ and variant configuration

Tailor-made and customized products are already standard practice in many industries, and this is also increasingly true for the B2B sector. Many providers of CPQ solutions and variant configurations are competing for this growing market. However, the acquisition of a software solution alone is not enough. For a lean and efficient process from product configuration to delivery, a whole orchestra of systems, rules and interfaces must work together.

Let's start with the CPQ solution mentioned above.

Let's start with the above mentioned CPQ solution. This tool forms the user-friendly front end for the sales employee and the end customer. Like the name CPQ, meaning "Configure, Price, Quote". As the name suggests, the user can configure and assemble an individual product based on rules. The user does not need to have in-depth product knowledge. In addition to complex sets of rules such as: "If component A is combined with feature B, then option C is mandatory and option D is optional, but options E and F are not possible", predefined decision paths also guide the user step by step through a sensible configuration path. The price of the resulting product variant is calculated and an individual data sheet is generated. A 3D engine visualizes the result as a photorealistic rendering or technical CAD model. At the end, the customer holds the offer in their hands and can immediately order their individual product.

variant management

The term variant management is used to describe methods and procedures that aim to find the optimal balance between the number of variants offered and the complexity of design, manufacturing, and procurement. The goal is to maximize the fulfillment of individual customer requirements while minimizing costs and maximizing scalability of operations.

So far, so good. What is interesting now, however, is what happens next:

Once the customer has ordered their individually configured product, this "unique production order" must go into production. This means that certain components must be kept in stock for production, an individual parts list must be generated and specific production instructions must be created for people and machines. The same applies to quality inspection. These tasks and functions are not performed by the CPQ solution but by the central merchandise management system. A configurator front end is therefore not enough - the ERP system must also be able to handle configurations. This creates a paradoxical situation: complex rules now have to be stored, linked and coordinated in both worlds.

But the product information management- short PIM- and the associated tools continue to play a role, because they provide the customer with important, general and comprehensive product information along their customer journey. They inform the customer about the basic features and benefits of a product and pave the way for the purchase decision - right up to the "jump" into the CPQ system.

It is obvious that the products must also be technically configurable and modular. Therefore, the tools and systems of product development and design, i.e. PDM (Product Data Management), PLM (Product Lifecycle Management) and CAD (Computer Aided Design), are also involved in the successful realization of product configuration. This is because product development is always the source for all rules that are subsequently implemented and required in CPQ and merchandise management. Product development also determines which variants are technically possible and sensible and defines which components are required for which configuration. And with the corresponding 3D and CAD models, it ensures that a visualization of the configuration can be generated.

You see: Many different systems and specialist departments must be interlinked so that individual product worlds can be created. Simply one system for Variant configuration, a CPQ systemwon't be sufficient.

But how can this "Orchestra of Systems" be brought together into a harmonious sound?

Read next: 5 Strategies for a successful implementation of variant configuration

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Contact us to orchestrate your unique situation. We look forward to providing you with exciting insights into industry-specific features and best practices, as well as customized recommendations for your organization.

Senior Consultant Lucas Wehlmann

Want to learn more about holistic and customer-centric variant management, variant configuration, and CPQ - specific to your industry?

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