Engineer-to-order Companies Research Articles

An innovative model to enhance engineer-to-order companies operational efficiency conceived using axiomatic design theory

ABSTRACT The paper introduces the E.OpEx (ETO Operation Excellence) Model, a new framework to improve operational efficiency in Engineer-to-Order (ETO) manufacturing companies. The study used a Systematic Literature Review (SLR) and surveys to identify critical challenges in the ETO sector, which were prioritized through criticality analysis. The research applied Axiomatic Design (AD) theory to address these challenges and create structured solutions. The E.OpEx Model offers practical guidelines for resource management, workflow optimization, and customer satisfaction, aligning with the operational goals of ETO companies. Input from a Focus Group (FG) of industry experts was crucial in refining the model and identifying areas for improvement and practical integration with existing methodologies. This research also contributes to the application of AD to tackle operational challenges and proposes a model that enhances practices and lays the foundation for future innovations. Future research will focus on validating the E.OpEx Model in diverse ETO settings.

Commercial and Technical Productization for Design Reuse in Engineer-to-Order Business

In the engineer-to-order (ETO) business, companies provide customer value by customizing the products according to the customers’ needs in a project-like manner. As a result, the number of individual product designs tends to proliferate, causing challenges in company operations, and product portfolio and product lifecycle management. In addition, if the company's product offering is not well productized, using the ETO model may further lead to poor understanding of the offering, deficient reuse of previous designs, and challenges in sales and making offers. A qualitative multiple case study was conducted to analyze the productization challenges of four ETO companies. On the basis of the challenges and the previous literature, a generic model for commercial and technical productization in ETO business was constructed and further tested in the companies. The model utilizes the logic of commercial and technical product structures. The product structure logic is linked to four different scales of product development processes to address different types of customer requests based on the complexity of the modification that the request necessitates. The model may support clarifying the product offerings of ETO companies to improve their design reuse, sales, and making offers. Further, the ETO order-related decision-making can be linked to product portfolio management targets and company strategy.

Engineering-to-order manufacturing: A criticality analysis of key challenges and solutions based on literature review

Engineer-to-Order (ETO) manufacturing companies involve customised production products based on specific customer requirements, and face a significant challenge. Some of those challenges are related with this type of company’s activities in production scheduling, planning and control, efficiency improvement and lead time reduction. The present study was conducted with a systematic literature review and a survey from ETO firms to identify the most frequent and critical problems. Among the most critical issues identified is the difficulty in optimising production performance (P3), with a GCI value of 16, implying that both time and cost share the same critical level. An analysis using a proposed Criticality Matrix was then performed enabling companies to prioritise decision-making and resource allocation. The results highlight the importance of adopting mass customisation strategies, innovative approaches and workflow optimisation. Continuous monitoring and analysis of criticality levels can also help ETO companies identify emerging issues and improve informed decisions. Effective communication and collaboration among stakeholders were also identified as vital. Future research could be done expanding further the study sample and developing decision-support tools for ETO manufacturing companies. This study contributes to the field by providing a new criticality matrix for ETO companies to understand better and address their production challenges, aiding in decision-making and resource allocation.

Supply chain antecedents of servitization: A study in ETO machinery companies

Nowadays, manufacturers are increasingly shifting towards Product Service Systems (PSS) by accommodating servitization. Whereas a fair body of research investigates the effect of servitization on the product supply chain, studies on the impact of the supply chain on the company's service offerings are scarce and reveal controversial results. In this paper, we aim to clarify the latter relationship by studying the impact of three supply chain features on servitization within three Engineer-To-Order (ETO) machinery Small- and Medium-sized Enterprises (SMEs). First, our results reveal that companies located downstream in the product supply chain exhibit higher servitization levels. Second, the level of customization, represented by the position of the Customer Order Decoupling Point (CODP) in the supply chain, and the company's servitization level seem to be unrelated. Whereas it is true that higher product customization, per se, enables companies to offer more services around the product, the operational challenges encountered because of higher customization levels can lead companies to deliberately reduce their menus of services to the customer. Third, higher levels of vertical integration support the provision of basic services because companies have more control on supplies required for services such as maintenance and repair. Companies with low levels of vertical integration cannot provide the speed and responsiveness required for basic services, but can still offer advances services, provided that they engage in strong collaboration with their suppliers. Thus, with this work, we highlight the extent to which product supply chains can support or inhibit the servitization endeavours of ETO companies.

Engineer-to-Order Challenges and Issues: A Systematic Literature Review of the manufacturing industry

Companies in engineer–to–order (ETO) manufacturing environments that seek efficiency gains through adopting a mass customisation strategy meet significant challenges. The implementation of the mass customisation (MC) strongly focuses on transitioning from mass production. The purpose of this study is to identify current areas of concern and operational challenges when adopting mass customisation principles in ETO companies. A Systematic Literature Review (SLR) was carried to evaluate the challenges the Portuguese Industry faces in the moulding companies’ sectors and how they are improving their ability to meet deadlines. The study will look at ways of boosting customer satisfaction by providing unique products at a relatively low cost. The study exposed issues of MC in ETO companies in general, it is critical to achieving more efficient use of resources, workflow, and innovative management methods and approaches to deal with the variability and complexity of this manufacturing system. The competitive pressure to achieve better efficiency and effectiveness in this type of organisation requires constantly searching for new concepts and tools that can be developed and applied. Furthermore, this paper explores the ETO companies' significant difficulties and the technical and scientific solutions used and proposed as its significant contribution, as well as a proposal for future research and development to increase ETO companies' resilience and performance level in managing their value chain and executing operations in response to customer requirements.

Managing industry transitions in ETO: the case of yard intralogistics

Engineer-to-order (ETO) supply chains are configured to deliver unique and complex products to serve specific market demands. If market requirements change, ETO supply chains must adapt to survive and thrive. This paper examines the measures ETO companies should consider to ensure that their supply chains meet the demands of changing business environments. In particular, the paper focuses on how the yard-intralogistics processes of a large supplier are affected by the current transition toward sustainable energy solutions within the oil and gas industry. A comparison between current intralogistics processes and the requirements of emerging product portfolios and project setups reveals the need for process redesign and supply-chain realignment. Current yard-intralogistics processes, which are designed for large-scale projects, lack the efficiency required by the smaller-scale, renewable projects that will be necessary in the future. Our investigation shows that intralogistics processes must be significantly changed and that such a shift will not be possible without addressing operational and organizational structures concurrently. We argue that there are critical interdependencies between operational and organizational measures. The ability of companies to manage this interdependency is crucial for ETO-based industry transitions. A framework for the transformation of ETO companies in the context of industry transitions is presented, highlighting the operational and organizational challenges involved. This framework serves as a guideline for practice and as a reference model for further research.

Sales and operations planning for delivery date setting in engineer-to-order manufacturing: a research synthesis and framework

Sales and operations planning (S&OP) has emerged as a planning approach that integrates tactical level decisions across functions and supply chains while aligning day-to-day operations with long-term strategy through these decisions. The extant knowledge on S&OP has evolved primarily based on the needs of mass production contexts, and applications of S&OP in engineer-to-order (ETO) contexts have not been explored by previous research. Arguing that the cross-functionally coordinated planning enabled by S&OP can improve the effectiveness of the challenging and competitively critical tendering process, this paper develops an S&OP framework for the tactical planning process design to support delivery date setting in ETO contexts. The paper adopts a systematic literature review approach for identifying the main tactical planning activities managers in ETO companies should consider while designing the S&OP process and the information inputs required for performing and coordinating these planning activities. The identified planning activities and planning inputs are synthesised to develop the proposed S&OP framework for delivery date setting in ETO contexts. The proposed framework can support managers in assessing which tactical planning activities are strategically essential in their respective companies and redesigning or reconfiguring existing planning processes to address the planning needs of their environment.

An approach for the development and implementation of commissioning service configurators in engineer-to-order companies

The commissioning of newly developed, complex engineer-to-order (ETO) products, such as plants, buildings, and ships, entails the testing and validation of installed systems prior to operation. Challenges related to the delivery of such commissioning services are manifold, including high levels of uncertainty and challenging information management. In this paper, the question of how configurator technology can be developed and utilised for the specification of commissioning services is investigated. Specifically, while several studies have demonstrated the significant benefits of applying configurators to support product specification processes in ETO companies, none have explored their usefulness in relation to commissioning services. Thus, based on the literature pertaining to commissioning services and product configuration, a five-step approach to the development of commissioning service configurators is developed. The approach was tested in a case company, resulting in the creation of a commissioning configurator. The approach was well received by company employees. Moreover, its use resulted in a commissioning service configurator that reduced the service specification time by more than 70% and the number of people required for the specification by 40%. Other identified benefits included a reduction in planning efforts, improved utilisation of expert knowledge, and improved resource allocation.

Identifying modular candidates in engineer-to-order companies

The purpose of this paper is to address a gap of missing modularization methods for engineer-to-order (ETO) companies. The research project was initiated by clarifying the challenges facing ETO companies, based on these challenges synthesis of existing methods was done to conceptualize a method. This article presents the modular candidate identification (MCI) method aimed at identifying modular candidates in ETO companies. The method analyzes five dimensions, namely, market segments, customer requirements, product architectures, cost and lead time to find modular candidates. The method was applied in a Danish ETO company and shown to be successful in identifying two modular candidates. Both were recognized by management and redesigned in modular product development projects.

Automated Scheduled Nesting for Flexible Manufacturing

In the sheet metal industry, companies rely on nesting procedures to organise the cut patterns of sheet metal. Most of the current nesting algorithms and methods focus solely on laying out the cutting patterns only to reduce material usage. However, in dynamic manufacturing environments, such as engineer to order (ETO) companies, efficient nesting has to be addressed together with effective production scheduling. Therefore, reducing the trade-off between high material utilisation (to lower production cost) and effective production planning (to honour tight delivery deadlines) is essential. This paper presents a novel scheduled nesting approach for ETO companies. The framework is built on the existing ”scheduled nesting” model, where material utilisation and variables implied from different operations around the nesting process are considered together. The proposed artifact, called Scheduled Nesting System (SNS), is based on a constrained optimisation objective function to be minimised and considers a wide range of variables, which are either directly or indirectly connected with nesting. These variables are material usage, operation of cutting machine cost, cost of changing metal sheets, cost of cutting orders to stock, and order due date, to name a few. The dynamic nature of the ETO operations is as such included by adapting pending nests based on incoming orders. Based on these variables, the framework finds a nest, which has a minimal cost. The study focuses on ETO companies’ sheet metal nesting process, and test results show the SNS’s potential for lead-time and production cost reduction.

Analyzing the factors affecting engineering change implementation performance in the engineer-to-order production environment: case studies from a Norwegian shipbuilding group

Engineering changes (ECs) are unavoidable in the engineer-to-order (ETO) environment. ECs improve products and bring additional profit to ETO companies if effectively negotiated and implemented. Despite the abundant relevant literature on EC management, ETO companies still report cost overruns owing to ECs. Here, a multiple case study conducted in a Norwegian shipbuilding group was used to investigate the factors affecting EC implementation performance in complex ETO environments. The factors were examined by a cross-case analysis of six ECs occurring in the shipbuilding projects. Eleven factors were identified and analyzed; their impact on EC cost was assessed by experts. The factors were ranked; the ranking shows three factors having the highest impact: time of EC occurrence, competence and experience of engineering and production staff, and degree of vertical integration in a supply chain. Finally, the study recommends EC management practices and tools to reduce the negative impacts of the identified factors.

Implementing configurators to enable mass customization in the Engineer-to-Order industry: a multiple case study research

Engineer-to-Order (ETO) companies are embracing the mass customisation strategy to face the challenges posed by global competition. Product configurators are key enablers of such strategy. Despite the benefits, the actions to perform to manage the challenges of implementing product configurators are still understudied. This paper aims to fill this gap by empirically exploring seven case studies of ETO companies that are embracing a mass customisation strategy and have implemented a product configurator. The results provide a classification of the challenges that ETO companies have to manage in each phase of the implementation of product configurators, and a framework that supports managers in defining the actions necessary for the development and implementation of product configurators. This study, thereby, contributes to the debate on how ETO companies can move towards a mass customisation paradigm.

Status of engineering change management in the engineer-to-order production environment: insights from a multiple case study

Engineering Changes (ECs) are a fact of life for companies in the Engineer-To-Order (ETO) production environment. Various Engineering Change Management (ECM) strategies, practices and tools exist, but no explicit distinction has been made regarding ECM in different production environments. Using a multiple case study method, this article investigates how ETO companies manage ECs and how ETO characteristics influence ECM. A generic ECM framework was developed and used to map ECM in the cases. The study showed that ETO companies use similar practices for handling ECs, while ECM tools are either not used by the companies or used to a very limited extent. It was found that the use of some ECM practices and tools is complicated by specific ETO company characteristics. However, no reasons were found for the lack of computer-based tools, change propagation and impact assessment tools, change reduction and front-loading tools, and design tools. This suggests, firstly, that there is vast room for improvement in ETO companies when it comes to ECM; and secondly, that the applicability of such tools should be further tested in the ETO environment. Based on the findings, some suggestions as to how ECM can be improved in ETO companies are given to practitioners.

Determinants for order-fulfilment strategies in engineer-to-order companies: Insights from the machinery industry

Recent empirical studies have refined our understanding of engineer-to-order (ETO) situations, supporting the existence of different order-fulfilment strategies based on the degree of customer involvement in the engineering and production activities, which differs depending on the strategic fit with the environment in which the company operates. Despite the importance of this finding, limited attempts have been made to comprehensively understand the determinants for this strategic choice in ETO companies. To overcome this gap, this study aimed to investigate the sources of differentiation between the environments that ETO companies can face and the ways of reacting to strategically fit the order-fulfilment strategy. Therefore, this research analysed the existing literature through a contingency theory lens and performed a multiple case-study research in a specific ETO sector, i.e. the machinery industry. The study identified five different order-fulfilment strategies implemented in the machinery industry to provide different product families to the market. For each strategy, the different environment characteristics were defined, and the performance outcome was measured, explaining the rationale for the positioning of the product families in different strategies. The findings of this study have two main contributions. First, the study contributes to theory by deepening and refining the analysis of contingencies for choosing different order-fulfilment strategies in the ETO context. Second, the study provides practical guidelines to ETO companies that want to adapt their order-fulfilment strategies to the unexpected or planned changes in their environment.

Tabu-search-based order seat planning for engineer-to-order manufacturing

This paper focuses on engineer-to-order (ETO) products, where the combination of components varies according to the customer requirements. However, components are not specialised for each product; rather, multiple components can be used for different products ('shared component' hereinafter). An issue faced by target ETO companies is that although they always have a huge component inventory, the order-receiving rate is low. One reason for this is that the components are allocated to orders sequentially; therefore, orders arriving later may have a higher chance of refusal, particularly under conditions of component shortages. To solve this problem, an order seat booking system is proposed with consideration of short-term demand information, component inventory, and component combinations for different product specifications. A seat planning algorithm based on tabu search is developed to increase the seat count by distributing the shared components among the order seats. The effect of increased order intake by using the planned order-receiving system is confirmed by numerical experiments.

Tabu-search-based order seat planning for engineer-to-order manufacturing

This paper focuses on engineer-to-order (ETO) products, where the combination of components varies according to the customer requirements. However, components are not specialised for each product; rather, multiple components can be used for different products ('shared component' hereinafter). An issue faced by target ETO companies is that although they always have a huge component inventory, the order-receiving rate is low. One reason for this is that the components are allocated to orders sequentially; therefore, orders arriving later may have a higher chance of refusal, particularly under conditions of component shortages. To solve this problem, an order seat booking system is proposed with consideration of short-term demand information, component inventory, and component combinations for different product specifications. A seat planning algorithm based on tabu search is developed to increase the seat count by distributing the shared components among the order seats. The effect of increased order intake by using the planned order-receiving system is confirmed by numerical experiments.

Understanding the impact of non-standard customisations in an engineer-to-order context: A case study

Companies operating with an engineer-to-order (ETO) manufacturing strategy produce customised solutions for their customers. While they may be able to build on a base of existing sub-solutions, e.g. standard product structures, modules or parts when engineering a customer-specific solution, they often have to create something completely new to satisfy customers’ requirements. However, it is not always clear to ETO companies what the costs associated with making customer specific solutions are, or which product or project characteristics drive costs and in what business processes. Therefore, it is not clear to companies if it is actually profitable for them to fulfil all of their customers’ requirements. Hence, making it relevant to understand how creating non-standard customisations impact project profitability. This paper presents a framework for how ETO companies can quantify the impact of the complexity associated with non-standard customisations when cost data is only available at the project level. The framework is theoretically founded; it is based on statistical regression and a definition of a complexity index for non-standard customisations. The framework is validated in the context of an ETO case company and empirical data is presented.

An empirical application of lean management techniques to support ETO design and production planning

Engineer To Order (ETO) companies have to face the difficulty to manage high uncertainty in customer requirements, and, consequently, to organize all the activities for efficiently and effectively answering customer orders. In these contexts, planning the activities of design, production and assembly departments is a complex task, also given the variability of lead times and the difficulties in forecasting resources workload. Literature has mainly devoted attention to planning tools for standardized make to stock environments, often neglecting ETO companies’ needs. This paper aims to present a methodology for supporting design, production and assembly planning in an ETO context. The methodology combines project requirements planning with lean management tools, i.e. Asaichi and visual control and management tools. It has been successfully applied in a company showing its potential for increasing planning performance, company flexibility and, in the end, delivery performance.

Establishing a maturity model for design automation in sales-delivery processes of ETO products

Short delivery times are considered a competitive advantage in the engineer-to-order (ETO) sector. Design-related tasks contribute to a substantial amount of delivery times and costs since ETO products have to be either fully developed or adapted to customer specifications within tendering or order fulfillment. Approaches aiming at a computerised automation of tasks related to the design process, often termed design automation or knowledge-based engineering, are generally regarded as an effective means to achieve lead time and cost reductions while maintaining, or even improving product quality. In this study we propose a maturity model as a framework for analyzing and improving such activities in ETO companies. We contribute to the literature in being the first to investigate design automation in the ETO sector from a maturity perspective. Beyond that, we extend the extant literature on design automation, which is of a highly technical nature, by providing a framework considering organizational and managerial aspects. The findings indicate that five different levels of maturity can be achieved across the dimensions strategies, processes, systems, and people. Empirical cases give insight into these different levels. Our investigation draws from extant literature and a comparative case study involving four companies over two years.

Designing a performance measurement system to support materials management in engineer-to-order: a case study

There are many different production situations that can be employed to meet demand. In the engineer-to-order (ETO) production situation, products are manufactured to meet specific customer needs by unique engineering or significant customization. In such an environment, failing to supply the required materials in the right quantities and at the right time increases the risk of breaching due date agreements and thereby losing customer satisfaction. As such, materials management is one of the most important and critical processes within production planning and control in ETO. To bring attention and improvement to this area, ETO companies may benefit from a performance measurement system (PMS) that systematically monitors how well materials management is carried out. The design of a company’s PMS varies with its production situation. Within the large body of literature on performance management and measurement, limited literature specifically addressing performance measurement in ETO has been identified. After being approached by a Norwegian ETO company requesting a PMS for materials management, the authors therefore set out to design the PMS from scratch, using literature on ETO, materials management and performance management and measurement as a starting point. The paper presents the proposed PMS. It provides a basis for further studies on the topic, and could be used by managers in ETO companies to assess and improve their materials management practice.