Page 91 - DCAP302_ENTERPRISE_RESOURCE_PLANNING

Unit 4: Manufacturing Perspective of ERP

Understandably reluctant to refuse orders, what ETO’s are forced to compromise is delivery – notes
lead times stretch and due-date performance plummets – which not only hurts the bottom line
with excessive expediting costs and lateness penalties, but also jeopardizes customer relationships
and market standing in the long run.
4.13 Configure-to-order

Configure-to-order (CTO) represents the ability for a user to define the component make-up
(configuration) of a product at the very moment of ordering that product, and a vendor to
subsequently build that configuration dynamically upon receipt of the order.
Configure-to-order (CTO) is a method of manufacturing which allows you, or your customer,
to select a base product and configure all the variable parameters associated with that product.
Based on the configurable items on each quote or order, Configure-to-Order (CTO) systems
typically generate the manufacturing routing and/or bill of materials based on features and
options such as color, size, etc.
Configure-to-order, or CTO, is a manufacturing technique which facilitates customers in
configuring the features of a general product according to their specific requirements at the time
an order is placed. Providing customized goods presents manufacturers and vendors with a
unique advantage to stay ahead of the competition. The CTO product or service is assembled or
provided after the order is confirmed by the buyer.
The CTO process is a highly critical one as it requires great expertise to cater to personal demands
and provide complete customer satisfaction. The processes and applications are extremely
complex and can affect business functions such as customer service, supply chain management,
bills and order accomplishment. The vendors who provide CTO services have to ensure that their
solutions and services display comprehensive and cutting-edge capabilities that can handle the
movement of materials in the supply chain.
An expert CTO service provider has deep knowledge of the latest processes and applications
pertinent to the CTO environment. They can easily integrate the processes with other important
business functions. Their services can handle low-volume-high mix through high-volume-low-
mix orders. The solutions help customers to configure desired products through websites also.
The designing team and technicians work based upon the specifications of the design as ordered
by customers. Then software tools are introduced for the customer to implement the design. The
CTO providers also have to ensure that customers are provided with regular updates on the
status with real-time information.
Web-based solutions help customers with order processing and quotation functions by enabling
self-service requests. They also maintain the pricing and configuration roles. These tools allow
customers to create and test configurations online as well as execute an easy and simplified
ordering process. It is a well-invented model with extensive operational qualities that cater to
mass customization while maintaining deadlines. Those providing CTO services are professionals
with commendable experience in configuring, testing and debugging abilities for many different
products, such as PCs, servers, switches, hubs, video, peripherals, voice, imaging products, parts
and accessories.

Task Take a real life example and apply assemble-to-order cycle in this example.
(like “Preparation of McDonald’s Burger”)

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