Matching Configurator Attributes to Business Strategy Jo Bramham & Bart MacCarthy
Author contacts: Jo Bramham, Research Fellow University of Nottingham Operations Management Group Business School Coates Building, University Park Nottingham, NG7 2RD +44 (0) 115 951 4730
[email protected] www.mcrcnottingham.org Bart MacCarthy, Professor Address as above +44 (0) 115 951 4025
[email protected]
Acknowledgments: We would like to acknowledge EPSRC (project GR/N11742/01) for their support of this work.
Abstract: Product configurators are information system tools that allow automation of order taking process for customized products. They offer important enablers for attaining the efficiencies of mass customization and managing the sales interface for a broad product range. Previous research on the relationship between configurator characteristics and context is fragmented. There has been little focus on understanding how configurator systems appropriate to the application can be designed and selected. This paper examines empirical evidence of configurators and provides a comprehensive analysis of available configurators according to their attributes. It describes the development of a framework for matching configurator attributes to business strategy. The link between different types of customizable attributes and configurator functionality is analysed. Selecting configurator types for different operational modes for Mass Customization is discussed. Directions for further work are also noted.
1.
Introduction
1.1. Background on configurators The demand for manufactured goods is increasingly dominated by customers wishing to tailor products to meet their individual needs. Tools are required to enable the processing of customer specific orders. These tools must provide a rapid response for fast quotation generation and transmittal of customer requirements to manufacturing operations for speedy delivery. Information systems are increasingly being used to provide automation of these processes for speed and efficiency. The product configurator is key to automation of sales processes. The configurator has additional importance because it may be one of the few information systems visible to the customer. The importance of information systems for attaining the efficiencies necessary for Mass Customization (MC) has been emphasised by Reichwald et al (2001) and Kelly (1996) amongst others. The relevance of product configurators to mass customization is stressed by many commentators (Forza & Salvador, 2001), (Franke & Piller, 2003), (Totz & Riemer, 2001), (MacCarthy et al, 2002), (Kruse & Bramham, 2003). 1.2. Research relevance Product configurators have been employed in one form or another for many years. Freuder (1998) notes their use over 20 years ago for configuring complex products. These early configurators were often designed in house to suit the context and the application. Today there are many configurators available from IT providers. An internet search for ‘product configurator’ can return 13,900 results! The configurator market appears to have exploded with the demand for customized products. Customer-centric technologies are now estimated to constitute 2.5% of a company’s annual revenue (Guptill, 2003). Configurators are often grouped with other customer relationship management (CRM) tools. There is much debate about the benefits of these tools. A survey commissioned by Farrell et al (2003) revealed the low benefits of CRM tools experienced in some sectors. Cost is not the only area of concern. Commentators highlight that order processes for configured products are still not achieving the expectations of customers. One example of this is can be found in the automotive industry where order fulfilment times for customized cars far exceed customer demands (Waller, 2002). The most discouraging reports suggest that despite the configurator providing a fundamental interface with the customer there is still scope for improvement in interface design. Customers are still confused by variety (Huffman & Kahn, 1998). Franke & Piller (2003) have identified an extensive research agenda to develop theory in this area. Despite configurators having being used for some time, problems still remain with their application. The dense configuration market needs to be analysed to understand if diversity exists in configurator software products. The failure of these software tools to achieve the demands of the business and customer may be due to technology constraints or due to inappropriate configurator selection for the application.
1.3. Research overview In this paper empirical data will be used to explore current practices with respect to product configurators and how configurators have evolved out of business needs. A detailed review of ten product configurators allows insight into the characteristics of core configurator elements. The configurator analysis explores how a match can be found between business strategy and the configurator. The research provides the foundation for the development of a decision support tool for businesses selecting or designing their configurator system. 1.4. Scope of the research This research is being carried out in the overall context of Mass Customization (MC). It is important to clarify from the outset what we mean by MC because there are many different perspectives on the phenomenon (as pointed out by Pilkington & Chong, 2001, amongst others). Mass customization is viewed here as customization on a mass scale with higher efficiencies than those associated with craft customization. This allows a broad scope of customizing strategies to be considered without compromising the breadth of the study by concentrating exclusively on ‘configure-to-order’. Configurators are increasingly used for configuring both services and products. For the purposes of this research, a focus will be maintained on product configurators used to configure manufactured products and associated service offerings. 1.5. Literature review A search of relevant material revealed two core sources of material on configurators: academic publications and papers produced by information system experts called ‘white papers’. This review is mainly based on academic publications. White paper evidence is used only where it takes a cross-sectoral perspective of the configurator market. 1.6. Configurator concepts Initially, an exploratory approach was taken to allow the key aspects of the configurator to be captured. This was based on the following questions: 1) How has the configurator been defined by existing theory? 2) What core elements of the configurator have been described? 3) What concepts are available to describe the influences on these core elements? It is firstly important to review the fundamental descriptions and definitions within this domain. Sabin & Weigel (1998) describe how configurators are tools for problem solving using organisational knowledge. Forza & Salvador are more specific in their definition of a configurator. The purpose of configurator software is in: ‘ensur(ing) the congruence of customer specifications and for automating the generation of some product documentation, such as the bill of material’, (Forza & Salvador 2002). An important distinction has been made between the product configurator which is provided for the customer and that which is solely for internal use. Franke & Piller
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(2003) refer to configurators as ‘toolkits’ because they provide sets of tools for the customer to use themselves. However, Bottema & van der Tang (1992) view them as adding to production control functionality. The former requires emphasis on the customer interface. Exploration of the core elements of the configurator revealed a number of key elements. At a recent configuration workshop, configuration was described as: ‘designing an individual product using a set of pre-defined components or component types while taking into account a set of well-defined restrictions on how the components can be combined’ from [http://soberit.hut.fi/pdmg/ECAI200WS]. This emphasises the importance of rules set as a core configurator element. Many commentators refer to the generic product model which is defined by the rules set (Hvam & Malis, 2001). Forza & Salvador (2002) refer to the configurator system which includes the resources required to support the product configurator. This implies that the configurator in strongly connected with other business resources. They also point out that the impact of the configurator on order taking processes is not well understood. A review of configurator influences reveals that configuration is rarely mentioned without reference to modularity. Modularity has received much research effort in recent years and many publications have resulted from this. Some of the core theory in this area has been developed by Tseng and Jiao (see for example Jiao & Tseng, 2000). They use three ‘views’ of the product to describe different product descriptions. The functional and structural views are used by sales in presenting the product to the customer. The third view – the ‘behavioural view’ – is used by internal business function such as design and manufacturing. Academic attention has largely been focussed on specific case studies of configurator applications (Forza & Salvador, 2002). There is little evidence of cross-sectoral research which analyses the differences between configurators and their applications although a selected group of configurator software has been reviewed by Piller & Rogoll (2002). This study identified three key factors which should be considered by a business implementing a configurator: integration, updating and ‘personification’ but focuses primarily on customer demands on the configurator. Practitioner analysis of configurator tools includes Lieberman’s report (2002) on configurator functionality. This identifies two types of configurator based on the level of integration; that of the ‘add-on’ configurator and the ‘integrated’ configurator. The addon configurator has lower functionality because it is not fed ERP information on production status. Another practitioner report conducted by Gartner (Desisto, 2003) ranks configurator vendors according to their ability to execute the implementation of their configurators and according to their vision for future configurator development. Three leaders are identified: Oracle, Selectica and Siebel Systems. These leaders share the ability to provide complex configuration but otherwise have different strengths. This points to software diversity existing in the configurator market place. Two key conclusions have been drawn from this review of the literature. The first was that the differences in functionality of configurator tools are not well understood. Secondly, the relationship between configurator and strategy has not been fully explored by previous research.
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2.
Research frameworks and aims
The framework below has been informed by the literature review. This illustrates the configurator as a transformation process. This framework introduces contextual aspects which will be explored in the following section. It provides a context diagram for the enablers and mechanisms of the configurators with the enablers being shown above the process and constraints below the process. The environmental influences of the configurator process are market demands which will be filtered by the business strategy. The framework (see figure 1) shows the three core elements: customer interface, rules engine and integration with other information systems. The characteristics of these elements are referred to from here on as configurator attributes.
Business strategy
Rules engine
Influences
Supporting resources Quotation
Customer needs
Customer interface
Configurator process
Production information Influences Market demands
Integration with other IS
Figure 1 – Framework of the configuration process and context
2.1. Influences on the configurator A model of anticipated influences on configurator attributes as been developed incorporating the factors of information systems, customizable product offering and business processes (see figure 2). The three key influences have been chosen in order to ‘bound’ the scope of the research. They are not intended to be the exclusive influences on the configurator. 2.2. Strategy and configurators The literature review has highlighted the need for further exploration of the interdependencies of configurator elements and attributes and business strategy. A framework has been developed which shows the relationship between configurator processes and strategy (see figure 3). This uses a simplified view of Mass
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Customization strategy formulation and implementation based on the three key stages identified by MacCarthy et al (2003). Firstly, there is strategy formulation which requires identification of target market(s). The second level of detail establishes the offerings of the business. The third level involves the plans for realization of these offerings. From this strategic perspective it is clear that configurators are process enablers and belong to the third level. Although processes and operational or IS resources provide facilitation of the strategy they often constrain changes in strategy. Four themes of business strategy are highlighted. Product strategy relates to what to offer and also encompasses the rate of change of the product offering. The other three strategic themes are: IT strategy (e.g. ecommerce strategy), order fulfilment strategy (e.g. build to order strategy) and sales strategy. These will be explored in this research. Data stores
Inherent product characteristics
Product architecture
Customizable Product Offering
Information Systems
Communication
Configurator attributes
Business Processes Order taking
Manufacturing
Figure 2 – Influences on configurator attributes
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Market
1) Identify target market
Business strategy Strategic enablers
2) Establish product and service offerings
• Product strategy
3) Develop processes to enable the business strategy
• IT strategy • Order fulfilment strategy • Sales strategy
Constraints to strategy Realisation
Figure 3 – Business strategy formulation and implementation
2.3. Aims of the research The research aims to: • Identify the key configurator attributes through examination of empirical evidence. • Identify the business contexts in which specific configurators are being used. This will be achieved through examination of software tools available and investigating evidence of configurator applications. The expected outputs of the research include: • Derive theoretical configurator concepts and principles to provide a foundation for understanding configurator applications. • Develop theory on relationships between configurator types and business strategy. The overall aim of this research is to develop a classification system of configurator types based on the attributes of configurator tools currently available by matching the appropriate configurator attributes to the business requirements. 2.4. Propositions These propositions are based on the influences framework shown in Figure 2. Business processes - Configurator software can be divided into two categories based on the whether the customer impact on operational processes occurs within manufacturing by a production trigger or whether customer impact is felt upstream in design, engineering or related activities. The first type of software would be appropriate to build to order / configure to order manufacturers. The second type of software would be appropriate to manufacturers of customer driven variety such as engineer to order.
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Customizable product offering -Businesses with the highest rate of change of product range and pricing structure use different configurators to those with stable product bases. Information systems - E-commerce businesses will use different configurators to those using sales assisted configurators. 3.
Methodology
3.1. Sources of data Product configurators are widely advertised on the internet. This source of data gives insight into how configurator products are conveyed to businesses. 3.2. Developing the research instruments. The sources used and tools for analysis are shown in Figure 4. A software survey was undertaken by analysing publicity material of IT vendors. This was supplemented, where possible by interviews with IT vendors and software demonstrations. Attributes of the configurators were compiled in a functionality matrix. Information on the benefits of configurators was also collected in a matrix. This involved compiling and coding the quantifiable and claimed benefits of each configurator.
Data collection
Analysis
Outputs
Software demonstrations SOFTWARE SURVEY
Configurator marketing information
Interviews with IT vendor
Functionality matrix
Benefits matrix Case study illustrations
Target business types
1) Idenfication of configurator types 2) Categorisation of configurator benefits 3) Review of sectoral trends for configurator adoption
APPLICATIONS SURVEY
Sectoral analysis
Figure 4 – Methodology of data collection and analysis
Emphasis was placed on understanding the context in which the configurators had been implemented. Information on the characteristics of the business using the configurator characteristics was expected to give insight into the link between the type of configurator and strategic context. Therefore evidence of configurator applications
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was collected from the same sources. A number of methods were used for collecting data on configurator context – information on the target market for the configurator (where available), evidence of sectors where the configurator had been implemented. The impact matrix supplemented this information by classifying the types of configurator impact on the business. The intended outcome of the analysis work was to be able to identify configurator types based on their attributes and benefits. This analysis was supplemented by analysis of sector trends in order to understand the links between configurator type and market. 3.3. Identification of the sample A search of the web revealed over a thousand software tools relating to configuration. Fifty of these configurators were analysed according to target market and applications. A group of ten configurators have been selected for detailed review in this paper. These were chosen to illustrate the diversity of the configurator market. 4.
Findings
The database of the 50 configurators analysed by this research can be found on the research website [www.mcrcnottingham.org]. This directory of configurators provides a comprehensive listing of the configurators currently available. The table also contains information on the target markets of each configurator where available. Ten selected configurators will be reviewed in detail in this paper (a full list of these can be found in table 3). This set of configurators was chosen because they were viewed as providing illustration of the diversity in the configurator market place. A glossary has been developed as part of this research which defines some of the key configurator terms. The aim is to simplify some of the jargon that has evolved to refer to these IT solutions. This can be found in section 9. Configurators are given many different names; these include ‘sales’, ‘product’ or ‘process’ configurator and ‘sales process’ configurator. The name of the configurator does not appear to reflect its functionality. One exception is the term ‘engineering configurator’, which is of a different type in that it is intended typically for internal use only for providing technical specification and not for customer viewing. These have been eliminated from the analysis. Any of the other configurator types may be used with the customer in any location and with varying levels assistance. The configurator is sometimes broken down into a number of modules. The figure below shows a typical infrastructure for the configurator.
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Base module
BOM generator
Proposal / quote generator
Product catalogue
Maint. module Order handling module
Report generator
Stand- alone functionality module
Figure 5 – Model of Configurator infrastructure
4.1. Configurator attributes The attributes of the ten configurators are reviewed in three sections according to the three configurator core elements - rules engine, integration and customer interface. 4.2. Configurator rules engine The underlying rules engine is not always described in configurator marketing literature. When rules engines are referred to it is often implied that many rules engines are used concurrently within an application.
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Two examples of rules engines used by configurators are: • I2 (ABSE) - hierarchical, codes, relations, macros and interpretations. • Access (Cameleon) uses constraints, rules, simulations, ‘resource/consumption’, ‘includes/requires’, calculations fuzzy, conditional and Boolean logic. The IT vendor SoftTech provide a valuable model (see figure 6) which links the type of rules engine to the complexity of the product and the decoupling point.
Source: Taken from SoftTechnz [http://www.softtechnz.com/productsSaturn.php] Figure 6 – Relationship between the rules engine and application The most sophisticated are object orientated rules engines, which tend to? demand a high level of skill in maintenance. Features and options require less skill in maintenance but their power is limited to products with lower, less complex dependencies between modules. The process of maintaining configurator rules engines is claimed to be improving. Many systems no longer rely on programming but provide a graphical user interface. Often the graphical user interface (GUI) is provided through a web browser. Often it is the usability of the user interface that is the key feature of the configurator for the business. For many business strategies, responding to change is key and uploading new products whether they are initiated through new product development projects or driven by a customer. The speed of upload to the catalogue in the configurator for customer availability is key to product launch and return on investment. Some configurators offer ‘over ride’ features where special options may be manually added or production operations edited. The maintenance software for configurators, particularly for constraint based rules engines, are fairly complex e.g. the ‘integrated development environment’ of Ilog’s JConfigurator uses five different modules.
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The data collected on the rules engine takes a practical perspective by reviewing what functions the configurator performs. The results of these functionality assessments are shown in table 3. It is worth noting that this is a summary of functionality highlighted by product configurator marketing information. This is valuable because it emphasises the functionality that the IT developers perceive to be key. Additional functionality may exist but has not explicitly been mentioned in documentation. The key outputs of configurators are not just quotations but often, in addition, provide proposal and contractual information and drawings where appropriate (see table 3 Functionality matrix for the ten selected configurators). Complex pricing is stressed as key functionality by many vendors. Complex pricing may require prices to be generated based on geographic location of the customer or the volume the customer is ordering. Some configurators provide base plus options costings and end product costings. It will depend on the cost model that the manufacturer prefers to use but clearly linking to finance and operations is a key developing area in configurator technology. Some configurators highlight their capability to handle parametric CAD facilities. This suggests that some configurator rules are integrated with CAD rules. There is a difference between this and other configurators that have CAD linkages to drawing files to allow the on-line customer to download drawings of their product from a standard product database. An example of such a configurator is Saturn. Those with fully integrated with CAD functionality provide parametric specification in addition to module specification. Two categories of configurator were identified, referred to here as product configurators and process configurators. Product configurators are conventional configurators which take customer requirements and generate product specifications. Process configurators are a new generation of configurator which use their rules engines to configurator the appropriate processes for product definition and fulfilment. Process configurators tend to be found in customer needs analysis applications. Process configurators can often be recognised because they are used for other applications for example, process configurators are used for sourcing decisions. They use procurement knowledge in order to bolt together a supply chain for products. 4.3. Configurator integration with other information systems Configurators are often marketed as part of the order management information systems package. In the case of SAP 41, both quotation and order management modules are available alongside the configurator. It is therefore difficult to isolate the benefits of the configurator from related order management software. For example, it is often used in association with CRM packages for providing sales forecasts. Much of the power of the configurators highlighted by IT developers stems from their use as portals for the customers because information is funnelled through it from other systems to the customer. Close integration with other information systems is required in order to enable much of the functionality emphasised by IT providers. The interface with ERP systems is highlighted by many software vendors. However, this is not the only interface that is stressed - interfaces with other enterprises within the extended supply chain such as retailer integration are also noted. The high level of configurator integration means that isolation of the configurator as an entity for analysis is difficult. Therefore, the concepts of primary and secondary information were developed and are used here. Primary information is located within data stores within the configurator e.g. product rules. Secondary information comes
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from internal systems usually via real time links e.g. from an MRP system. Secondary information such as those facilitating dynamic pricing and leadtime information were frequently highlighted (see table 3). It is not clear from the configurator data available whether the product data store within the configurator is the prime product data repository or whether this exists in the ERP and the product configurator is a duplicated product model. 4.4. Customer interface Customer interface design was found to be strongly dependent on the rules engine(s) within the configurator. A review of customer interface attributes revealed three key differences between configurator systems. 1) Some configurators stress that they provide customer needs assessment rather than product specification (see table 5). These are often the configurators with multiple rules engines. 2) Some configurators offer several product models which are created by the rules engine, for example, for different retailers. 3) A configurator using a constraint based rules engine can simplify product choice because it gives proposals based on remaining choices. It is therefore likely to be applicable to products where the customer needs to make choices. 4.5. Configurator benefits Table 5 categorises the benefits claimed by the configurators. The five categories used were: sales, quotation accuracy, customer satisfaction, time and cost for the business. Data on benefits was not quantified by the IT vendors per sector but presented as universal benefits across all markets. 4.6. Analysis of configurator applications This section reports the findings on the analysis of the contextual information given for configurator applications including sectoral analysis and target markets. Many configurator suppliers infer that their products are universally applicable. The results from the sectoral analysis would suggest that different products do not appear to be available for different sectors. See table 4 for classification of each of the configurator applications by sector. IT developers may specialise in specific sectors but this is not made explicit except for those involved in automotive markets e.g. Chrome and Trilogy. SAP target small businesses with their proprietary bolt on configurators which have been developed for specific sectors e.g. electronics. In general, configurator products are implied to be suitable for all markets. What is not explicit is that some configurators are likely to be out of the price range of some companies with low customer consultations and low number of quotation preparations. Pricing does vary according to application and not surprisingly vendors are reluctant to reveal the precise pricing information. The data available reveals price ranges from $10k to $1m. Some vendors do not quote the price of configurator software in isolation because it is sold in a bundle with other CRM software.
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SoftTech is one of the few IT vendors who offer different types of configurator. Three main configurators are offered: 'V6 Manufacturer' which is intended for use by larger manufacturers, 'V6 Dealer' is a standalone configurator and 'V6 Network Estimator' is an interface and does not provide rule engine maintenance. Dealer and Network estimator are aimed at smaller manufacturers. All of the software products are aimed at markets including fabricators, retailers and company sales. Analysis of production trigger reveals three groups of configurators – those targeting build or assemble to order, those aimed at engineer to order and those claiming to be applicable to all of the previous environments. An example of a build to order configurator is that developed by Access. There are configurators that are targeted at engineer to order businesses but many configurators claim to serve assemble to order and ETO (e.g. Saturn). 5.
Discussion
A hasty review of product configurators might give a misguided impression that ‘one size fits all’ because of the claims of wide applicability of software. However, the findings from this research have revealed an array of different attributes. There are many dimensions and subtleties to finding a configurator that fits the business strategy. Some of these will be discussed in the following section. The discussion will be structured around exploring the relationship of configurator attributes to each of the four strategic themes shown in the Figure 3 – Business strategy formulation and implementation i.e. Sales strategy, Product strategy, Order fulfilment strategy and Information Systems strategy. 5.1. Sales strategy The mechanisms for offering the product to the customer are governed by the choice of rules engine of the configurator. Literature in the knowledge management domain would suggest that the choice of rules engine should be based on the level of user knowledge and the time available to find a solution (e.g. Davenport & Pruzak, 1997). This would suggest that if the customer has a relatively low level of product knowledge a constraint based rules engine should be used. If more knowledge is available e.g. if a sales engineer assists the customer then the knowledge is supplemented and case base reasoning may be used. The fastest response speeds will be achieved with knowledge component rules engines but these require a high level of knowledge. Clearly a tradeoff needs to be made between solution time and user knowledge (or supplemented knowledge). 5.2. Product strategy Although few IT vendors specifically mention modularity as a requirement it is clear that their applications are based on modularization of the product. There is a strong link between modularity and configurators because the more discrete product elements are the easier the rules are to describe. Complex modular architectures may require more than Boolean logic to describe them. At least two configurators were found that allowed configuration of non-modular products - Eden Origin and Saturn configurators have been used to ‘configure’ product dimensions and properties such as glass. It is worth remembering that the product configurator may allow the customer to specify the product in an order that is convenient for them, however the customer’s choices are
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still constrained by the architecture of the product. The nature of interfaces between modules will determine what is feasible and what is not feasible. There are many ways of describing a product (Erens et al, 1992) - minimum and maximum values, language dependent text, decimal places for accuracy of a dimension, date and values and pictures - but these will be governed by the degrees of freedom given by the configurator. The degree of freedom may be thought of as ‘granularity’ of product attributes. Defining this ‘granularity’ of specification using product attributes helps to give insight into the configuration processes required (see table 1). This work is based on the customizable product attribute taxonomy developed by MacCarthy et al (2003). For each customizable product attribute the degrees of freedom for product specification are listed in order of increasing flexibility for the customer e.g. is the product described using a continuous or a discrete descriptor? The above table provides a framework for businesses to decide which feature they want to allow the customer to play with and which product description processes need to be fixed within the configurator. Customizable attribute Fit
product Product specification by the configurator Predefined sizes Customer defined measurement
Hardware function
Selection from pre-specified options Customer defined functions
Software function
Selection from pre-specified options Customer defined functions
Property product
of
the
Grade
whole Selection from pre-specified options Technical configurator – calculation involved Predefined categories Customer defined measurement
Quality level
Selection from pre-specified option Technical configurator – calculation involved
Aesthetics & style
Pre-defined choices (e.g. colours)
Personalisation
Profile or colour number provided by the t Colour Digital input (logo)
Literature
Assemble standard booklets Customize the information content
Table 1 – Specification of customizable attributes using a configurator
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5.3. Order fulfilment strategy The impact of the configurator on order taking processes has been reviewed. An obvious difference is that product acceptance decision making has been moved closer to the customer. The most significant impact seems to be on related processes such as forecasting because more detailed information is provided by the configurator which can be analysed. Many IT developers offer this additional interrogation and reporting functionality. Two different stances are taken by IT vendors to the standardization of process models. SAP on their CRM system of which includes the product configurator: ‘Companies can easily combine their core processes with the generic and industryspecific capabilities of mySAP CRM to create a seamless flow of business transactions, information, and knowledge across the entire value chain -- and build truly customer-centric operations,’ from [www.sap.com/solutions/crm/industryspecific.asp]. EdenOrigin on their Sales Order Processing solutions: ‘Every business has unique requirements when it comes to processing orders’, from the configurator product brochure [www.datadialogs.com]. Eden Origin emphasises that customer interactions are business specific whereas SAP offers configurators that facilitate generic processes but may which may be tailored to the industry or sector. This allows them to offer best practice business processes but may compromise competitiveness of the manufacturer. A new insight which has been emphasised by this review of practice is the impact of the product configurator on the extended supply chain. Integration of the product configurator with distributors has been shown to enable the decoupling point to be moved for late configuration. The knowledge for product specification and production becomes portable through deployment of multiple configurators connected to the central product model. 5.4. Information systems strategy A key factor within this strategic theme is the infrastructure of the business’ information systems. The information architecture is governed by where the product data model or store is to be maintained from - within the configurator or within the ERP system. The options for the business are to update product data within the ERP system and copy across or to edit product data within the configurator and duplicate to other systems using product information. There are other considerations in information systems strategy because IT often requires commitment of high levels of investment. The choice of product configurator may depend on IT investment priorities. A sophisticated product configurator may offer the ideal solution but if cash flow is limited and there are other automation priorities such as inventory management then ERP upgrade may be chosen in preference to configurator spend. Another possible scenario is that a business has already committed high levels of investment in a standard ERP package and the obvious choice is to remain with the existing vendor for purchase of the configurator system rather than opting for best of breed and incurring additional investment in interface development.
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However, this is not to imply that all configurators are used with ERP systems. Instances of product configurator usage have been found in businesses which do not use ERP systems. 5.5. Measure of success of configurator match The applications survey has provided data that indicates the relationship between configurators and their applications. Efforts have been made to measure the success of configurator implementations in order to quantify the fit of the configurator to its context. The results shown in table 5 illustrated that configurator impacts are diverse and include customer satisfaction which is difficult to measure. A more comprehensive framework of performance metrics is required to test the success of configurator applications. It is worth briefly reviewing examples of lack of fit of configurator to business needs. Two case studies have been conducted as part of previous research work. The businesses – a commercial vehicle manufacturer and an instrumentation manufacturer - both suffer from problematic configurators. The symptoms include: the cost of resource required to maintain the configurators, additional product configuration verification work is required for complex products and there are interfacing problems with existing information systems. In addition, these businesses have had difficulty recording the functional view (Jiao & Tseng, 2000) within their configurators. The instrumentation manufacturer provides product to three different markets – aerospace, automotive and capital equipment manufacturers and therefore the functionality of the product is diverse. There is a high amount of complex knowledge to capture and therefore it has remained in the domain of the sales engineer. The key problems for both businesses stems from the versatility demanded by their markets. High versatility of product and processes are required. Some configurators such as ILOG claim to be able to provide this. It is possible that configurators with more appropriate attributes may be found for these applications. 5.6. Applicability of configurators to mass customization strategies Configurators would appear to offer a universal tool for automating order taking processes whilst allowing customer determined choice and preferences to be respected. SAP offer different solutions according to the industry in which the system is to be applied. Most other IT developers offer a single configurator. This may be tailored to suit the application but how this is achieved is not clear from the evidence reviewed. The information given by configurator vendors highlights the importance of their product in enabling mass customization (MC) but does not classify the types of MC to which the software is applicable. Table 2 outlines some proposed matches between configurator types and mass customization strategies using the classification of the principal feasible operational modes for MC developed by the authors (MacCarthy et al, 2003). 5.7. Constraints imposed by configurators on strategy There are a number of constraints or risks which may be imposed on strategy by a configurator. Recording the product within a database may make it static which could erode price and affect product/sales strategies. The difficulty is that the product template needs to be pre-designed. If the basic product architecture changes then the product configurator rules engine will need significant redevelopment work. The
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authors have previously discussed how Key Value Attributes (KVAs) - those product attributes that benefit most from allowing customization - are dynamic (MacCarthy et al, 2002b). A configurator may not be appropriate to all strategies for example customizers aiming to mass customize may adopt a configurator but risk allowing competitors to imitate their core competences. For some environments, applications knowledge is the order winner and a configurator may compromise the uniqueness and competitiveness. Process configurators may be more appropriate when the business wants to avoid standardization of order taking processes and allow more flexibility of interaction to suit the customer. MC mode
operational Configurator requirements
Configure to order
Configurator software
Most configurators will provide sufficient e.g. SAP functionality. empower
and
Fixed resource call- Rapid update of rules engine required. The e.g. I2 (ABSE) off configurator must store special product and price information for a customer which can be retrieved for placing repeat orders. Fixed resource Configurators may provide efficient access design-per-order to product data stores if product elements are to be used. However product data management software may be more appropriate.
ETO configurators e.g. Soft Tech (Saturn)
ILOG Call-off or design- Additional agility of the rules engine will be e.g. (JConfigurator) per-order engineer required to modify processes. with flexibility resource Table 2 – Possible matches between configurator types and MC strategies
6.
Conclusions
This review of ten configurators from empirical evidence has revealed a diverse set of software which has been implemented across many sectors. Configurator software may be classified according to the type of production trigger of the manufacturer although many configurator vendors claim them to be suitable for both build to order / configure to order and engineer to order environments. All of the configurators studied provide e-commerce functionality through an on-line configurator although not all give evidence of customer needs analysis and may require some sales support. A key distinguishing feature between configurators is the rules engines which enables a range of functionality. Although configurators have been seen to claim to offer dynamic rules to support businesses offering an evolving product range to a turbulent market, this is not to say that configurators offer a universal solution. Adoption of a configurator with standard order taking templates may constrain the strategy of a manufacturer by imposing an identity on the business. A careful match must be sought between the attributes of the configurator and the strategy of the business.
18
The next stage of the research should investigate more instances of configurator application. This is required to test and further identify relationships between configurator attributes and their application. On-line configurators will be analysed to increase the sample size and extend theory. The aim of this analysis will be to develop a configurator classification system to aid business to fit match between their business strategy and the configurator attributes. 7.
References
Bottema, A / van der Tang, L (1992): A product configurator as key decision support system. In: Pels HJ & Wortmann JC (eds): Integration in production management systems, Elsevier Science, North Holland, pp. 71-92. Davenport, T H / Pruzak, L (1997): Working Knowledge: How Organizations Manage What They Know. Harvard Business School Press, p130. Desisto, R (2003): Sales configuration vendors [http://www.gartner.com/reprints/siebel/112965.html].
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1H03
magic
quadrant
Erens, F/ Hegge, H / van Veen, E A / Wortmann, J C (1992): Generative bills-ofmaterial: an overview, In: Pels, HJ / Wortmann, JC (eds): Integration in production management systems, Elsevier Science, North Holland, pp. 93–113. Farrell, D / Terwilliger, T / Webb, A P (2003): Getting IT spending right this time, McKinsey Quarterly, [http://www.mckinseyquarterly.com]. Forza, C / Salvador, F (2001): Configuring product to address the customizationresponsiveness squeeze: a survey of managerial and opportunities, Proceedings of Euroma 2001, Bath, June 2001, pp. 519-530. Forza, C / Salvador, F (2002): Managing for variety in the order acquisition and fulfilment process: the contribution of product configuration systems. International journal of production economics, Vol. 76, pp. 87-98. Franke, N / Piller, F (2002): Configuration toolkits for mass customization - setting a research agenda [www.mass-customization.de] ISSN 0942-5098. Freuder, E (1998): The role of configuration knowledge in the business process, IEEE intelligent systems, June / July 1998, pp. 29-31. Guptill, B (2003): Customer [http://www.optimizing.com/printer/018/pr_roi.html].
metrics
that
matter,
Hvam, L / Malis, M (2001): A knowledge based documentation tool for configuration projects, Proceedings of 2001 World Congress on Mass Customization and Personalization, Hong Kong, October 2001. Huffman, C / Kahn, B E (1998): Variety for sale: mass customization or mass confusion? Journal of Retailing Vol. 74, pp. 491-513. Jiao, J / Tseng, M (2000): Fundamentals of product family architecture. Integrated manufacturing systems, Vol. 11, pp. 469-481.
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Kelly, S (1996): Data warehouse: the route to mass customisation. Chichester, UK: John Wiley & sons. Kruse, G / Bramham, J (2003): Trends in product configurators: key enablers in mass customisation, IEE Manufacturing Engineer, article in press. Lieberman, M (2002): Getting a grip on configurators [http://www.pdmic.com/articles]. MacCarthy, B L / Bramham, J / Brabazon, P G (2002a): Compression of quotation leadtime in a mass customization environment, Proceedings of EIS - Workshop on Information Systems for Mass Customization 2002, Malaga. MacCarthy, B L / Brabazon, P G / Bramham, J (2002b): Key Value Attributes in Mass Customization, in: Rautenstrauch, C / Seelmann-Eggbert, R / Turowski, K (ed.): Moving into Mass Customization: Information Systems and Management Principles, Springer, pp. 71-89. MacCarthy, B L / Brabazon, P / Bramham, J (2003): Fundamental modes of operation for mass customization, International journal of production economics, Vol. 85, pp. 289304. Pilkington, A / Chong, D (2001): Conflict at the Interface: Mass Customization Definitions for Operations, Marketing and Strategy, Proceedings of the European Operations Management Association 2001, Bath, June 2001, pp. 1249-1257. Reichwald, R / Zanner, S and Jaeger, S (2001): Creating individualized solutions in decentralized, customer-centric production units: investigations from an economic perspective. Proceedings of 2001 World Congress on Mass Customization and Personalization, Hong Kong, October 2001. Rogoll, T / Piller, F (2003): Marktsudie (2003): Konfigurationssysteme für Mass Customization und Variantenproduktion: Strategie, Erfolgsfaktoren und Technologie von Systemen zur KundenintegrationMarktsudie 2003. Sabin, D / Weigel, R (1998): Product configuration frameworks - a survey, IEEE intelligent systems, June / July 1998, pp. 42-49. Totz, C / Riemer, K (2001): The effect of interface quality of success - an integrative approach on mass customization design, Proceedings from MCPC 2001, Hong Kong, October 2001. Waller, B (2002): Integrated capacity planning and revenue management for build to order: market responsive manufacturing in the automotive supply chain, Proceedings of the second international conference of responsive manufacturing 2002, Turkey, July 2002. 8.
Tables
Tables 3 - 5 are shown on pages 23 – 25.
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Table 3Table – Functionality 2 – Functionality matrix for matrix selected for the configurators ten selected configurators
Siebel
X
Cincom (iC)
X
SoftTech (Saturn)
X
X
Additional features
Comments
X Product config. info not avail in isolatation Complex product config stressed
X
X
Applications knowledge
?
Visualisation
X
Other features Production information generation
? X
Product documentation generation
X X
Process routing
Process related
Complex products
X
Product related
Product spec generation
SAP
Dynamic leadtime
Leadtime
Complex pricing
Leadtime related
Price
Configurator application WebSource Eden Origin
Cost
Cost related
X
X
1) Linking to parametric CAD tools 2) Configuration of product to spacial constraints 3) Personalised quotation documentation 4) Process workflow 5) Configuration of product to spacial constraints
X
6) Product upgrade specification Complex 'shipping and discount' engines 1) Check unallocated stock 2) Check costs of similar historical products 3) Expected costs of purchase products
X
4) Recosting during negotiation 5) Order tracking 6) Scheduling to reduce material wastage emPOWER
X
i2 (ABSE)
X
X
Generation of intelligent part codings
X
1) Manages customer preferences 2) Manages distribution 3) Rules can be linked across different product models 4) Special part codes assigned to special business orders 5) Notification of obsolete parts to repeat customers
ilog (Jconfigurator)
Access / QAD (Cameleon)
X
1) Customer express preferences not just requirements 2) Availability
X
X
X
X
X
X
X
Dynamic illustrations
X
Cincom (iC)
EdenOrigin emPOWER
X
X
X
X
X
X
SAP Siebel SoftTech (Saturn)
WebSource
X X
X
Kitchen
Other applications (8 related modules) Service & repair + process workflow Service engineer capacity planning + EAI
X
Adidas golf Cockpit & cabin design
Service
Valves
i2 (ABSE)
ilog (Jconfigurator)
Custom packaging
X
X
Other industrial product
Windows & doors
Other consumer product
Kitchen & bathroom
Leisure product
Construction
Food / Pharmaceutical
Clothing or shoes
Computers
Capital equipment
Medical equipment
High tech
Forklift trucks
Furniture
Access / QAD (Cameleon)
Aerospace
IT vendor
Automotive
Table 4 – Applications by sector for the ten selected configurators
Metso Minerals Telecommu Finance & nications Insurance Printing, Electronics banking Communicat ions Drives, motor controllers
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Table 5 – Benefits of the ten selected configurators
i2 (ABSE)
ilog (Jconfigurator) SAP
WebSource
Time
Cost
Accuracy
Reduces errors
Shorten sales cycle
Increase margins
X
X
X X X
X
X
X
Lower returns
Increase customer value Lower returns
X
Many customer channels Market share / new markets
Shorten sales cycle
Supports 'diverse decision making processes' / agile adjustment of 'key buying criteria'
X
No errors in customer quote / consistent Solutions match pricing needs
X
Reduced order errors
Loyalty Simplified process / no waiting for quotes
Centralise product intelligence Needs analysis
Reduce training and skill levels / gather market intelligence / simplification of specification process
Current and consistent info maintenance Provides agility
X
Siebel
SoftTech (Saturn)
Customer satisfaction
Access / QAD (Cameleon) Cincom (iC) Eden Origin emPOWER
Other
Increased sales
Configurator application
Cross selling & upselling
Sales
Analysis of historical orders to inform strategy
X Shorten sales cycle / improve time to market
Reduce customer transaction costs
Lower sales training costs
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9.
Glossary
Configurator fundamentals: Configurator
The tool that transforms customer needs into customer response.
Product configurator
A tool that uses rules to search and retrieve from a generic product model.
Process configurator
A tool that intelligently finds and configures business process elements.
Product variant
An instance of the product range.
Configured product
A product specified configuration process.
Configuration
The process of piecing an entity from subelements.
Configurator system
The configurator tool and the people and resources that support it.
Generic product model
A model of the product which describes the many rules by which allowable product variants can be defined.
through
the
In its simplest form this is the allowable characteristics of the underlying standard product. Other rules such as cost may also be assigned to these characteristics. Functionality: Sales configurator
A sales configurator is a configurator tool used by sales engineers.
Bill of material configurator
A configurator tool that generates the part listing for product variants.
Quote configurator
A configurator tool that generates price, leadtime and often service information such as warranty terms for a product variant.
Assisted configurator
A configurator tool that uses a sales representative to guide and support the customer during specification.
Manufacturing routings configurator
A configurator tool used to generate the listing of the manufacturing resources which will be used to produce a customer request.
Document configuration
A configurator tool used to generate documentation e.g. technical literature.
Engineering configurator
A configurator tool used to provide technical specifications for product variants.
CAD configurator
A configurator tool which is integrated with the enterprise CAD system for accessing drawings.
Cost configurator
A configurator tool which provides costing information – usually for internal use only.
Price configurator
A configurator tool which provides price information on a product variant.
Integration: On-line configurator
A configurator which is accessible through a network.
Nomad configurator
A configurator which is mobile i.e. does not require connection to a server.
Remote configurator
A configurator which can be used as standalone software.
Web based configurator
A configurator which is accessed via the internet.
Jargon: Sales force automation (SFA)
Use of information systems to provide automation of the complete sales cycle e.g. documentation generation processes
Interactive selling
Customer is stepped through the options with the results being communicated back to them (usually in real time)
Guided sales
Sales interactions where the customer is provided with support in making their product choices.
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Automated order processing
Use of information systems for handling order documentation including communication.
Related tools: CRM
Customer relationship management – usually used to refer to a set of software tools used by sales.
ERP
Enterprise resource planning is a range of software applications which support business activities including order fulfilment.
PLM / PDM
Product lifecycle management or product data management are tools that provide repositories for product data.
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