What is Product Configuration?

Product configuration is the process that companies, especially manufacturers, use to make a product, solution, or service fit a specific customer’s wants.

The customer can do this through eCommerce channels, which let them choose from a product’s available choices, or the salesperson or product engineer can set up the product based on what the customer wants.

Synonyms

• Knowledge-Based Configuration
• Product Customization
• Product Visualization
• Order Configuration
• Configure to Order

Why is it important to configure a product?

How a product is set up is essential for the customer and the sales team. When a customer asks for an order quote, salespeople can focus on helping customers who already know what they want. The customer also knows they will get an exact quote based on the products they need, as specified.

Everything works out well for everyone. It also makes it easy and quick for businesses to keep up with customers’ changing needs.

Advantages of Customizing Your Products

Product design has many benefits that can help the production and sales processes. Some of these benefits include:

• Making complicated products more accessible to understand: Some products, especially B2B ones, have a lot of features, choices, capabilities, and calculations that go into them, making companies think their product is too hard to sell online. For these complicated goods, product setup lets customers put them together by giving them choices. This is much easier than naming every possible variation in a vast product catalog.
• Faster ideation and completion: companies can cut down on the time it takes to go from coming up with an idea for a newly configured product to making a visual proof of concept and then actually making the product.
• Capture knowledge from product experts: A configurator can record and store the knowledge of the best product experts and make that information available to everyone. This way, anyone who is new to the job or doesn’t know much about technology can quickly give customers the best solution because they have all the information they need.
• Optimal specifications: salespeople can give customers the best and most exact price based on what they value most based on their needs.
• Quotes faster: product setup makes it easier for companies to make quotes that are more accurate and fit the needs of their customers. Quotes can be made faster.
• Correct orders: Even though complicated or highly configured product systems can have problems, a fully integrated system that mixes manufacturing with automatic product specifications cuts down on mistakes made by people, so customers can be sure that their order is correct.

Different ways to set up a product

There are several different kinds of product configurators, such as

• STO: Choose to order

This is where the customer can choose all the different parts of a product without any of them being based on any other parts. If you choose any of the individual parts, it doesn’t affect the supply of the others.

• Pick-to-order (PTO)

Customers have the freedom to choose all of the product’s parts, but they must also consider how the parts work together if they don’t have the help of a setup. A product generator in this form is the most basic type and is often found in online stores.

• CTO: Choose-to-order

In contract production, this is common because it lets the customer choose related parts based on a modular system. For example, a user might choose the processor, RAM, graphics card, needed software, and other things when they order a computer.

• ATO: Put together to order

This is a mix of contract manufacturing and make-to-stock. In the ATO approach, individual parts are made ahead of time based on what customers will likely want. After the order is received and the unique needs of each customer and the dependencies between parts have been taken into account, the final production takes place.

• MTO: Custom-made

Classic contract manufacturing means the goods are only made after the customer orders. MTO stores the different parts of the product ahead of time, and they only do more work on them after they get an order. This group of configurators is mainly used for Industry 4.0 and other times when fully or partially automatic production is needed.

• ETO stands for “engineer-to-order.”

There are so many ways to set up this product, so it may be the most difficult to understand. Because different parts of each order may need to be made just for it, ETO may ask for new rules and parts to meet the order’s needs. There still needs to be a separate production process with a bill of materials, even if the final product has some standard parts. Innovation configurators are another use for ETO configurators. They have many complicated modules, many possible solutions, and an infinite number of trial-and-error processes. Engineer-to-order configurators need a lot of help from the user during the setup process.

What Products Need to Be Set Up for a Large Business

To configure a product, salespeople must work with product experts to choose and arrange parts that allow the product to be made and sent to the customer in response to their particular needs. It can be done by hand by a salesperson or a sales engineer, or it can be done instantly by software that does all the work.

Configuration for Sales vs. Configuration for Products

Sales configuration, or CPQ (configure, price, quote), is a tool that many business-to-business (B2B) companies, especially manufacturing companies, use to sell their goods. This feature lets customers pick goods specifically made for their needs from a drop-down menu. Now, more businesses, even B2C ones, see how helpful CPQ is.

Product configuration takes CPQ technology to the next level by showing buyers a picture of their customized product as they make changes to it. People who use a product configurator can see their choices for goods in augmented reality (AR) and in real-time. This gives them a full, three-dimensional view of what they are buying.

Problems with the process of manually configuring a product

It takes a lot of time and resources to do product configuration manually. Salespeople have to talk to customers repeatedly to find out what they need and then look through sales catalogs to figure out which product setup will best meet those needs. Also, different salespeople might pick different setups for the exact needs, which could mean customers’ needs aren’t met.

How to make the process of setting up a product automatic

Companies don’t have to set up their products manually; they can use an automated way instead. This is where a customer or salesperson types in their needs, and the configurator then comes up with the best setup based on those needs.

In the case of the laptop, this is where the customer or salesperson types in the RAM, storage, screen size, and other options they want. The configurator then finds the best product setup based on these choices. By buying product configuration or CPQ software, a business can simplify the process of setting up a product.

How CPQ Makes the Process of Going From Sales to Production Smooth

A good CPQ software makes quotes quick and accurate, even for complicated sales, and makes the process of going from sales to production smooth. Here’s how.

Many manufacturing businesses use CPQ to make their quote-to-order (Q2O) processes more efficient. CPQ does this by making the order cycle more efficient. This means manufacturers can sell more, faster, and more efficiently and successfully.

One illustration is that the traditional Q2O process necessitates manual labor, which takes time and effort. It’s also hard to scale the process to meet changing customer needs; different methods and data can cause problems. When put together, these problems are big problems for companies that want to make more sales.

A good CPQ solution, on the other hand, lets manufacturers meet the wants of today’s customers.

• Simple ways to set up products
• No problems with prices
• Quick and easy creation of quotes
• Easy implementation of production plans

When making sales, these features give manufacturers the perfect base. By digitizing their manufacturing and sales processes, companies can use bright, automatic, and visual selling, which makes the sales cycle easier, shorter, and more efficient overall.