Dimensional Product Manufacturing: Handling Mass Customization in a Discrete ERP Environment
By Mike Lynch, CIO
Dimensional Product Manufacturing
Introduction Most large manufacturing companies have rationalized their product lines so there are not a lot of options associated with the configuration of a finished good. For example a new automobile may offer choices of a V6 or V8 engine, interior type and color, stereo system and paint color. A computer configuration may offer the choice of core processors, a few options around memory and hard disk space, options around graphics cards and other discrete accessories. In other industries in which consumers expect total customization, or that the products have been around for a century or so, an extremely large or even infinite number of options are available. In the construction industry for example, consumers may want a new custom home requiring mass customization of products such as windows, doors, cabinets and garage doors that have unique measurements in order to be uniquely engineered to fit into a predefined space. Another consumer may wish to remodel a home that was built in 1920 having a unique space with which the product must fit. Custom window and door companies must have the capability to configure their products at least on two scales, width and height, and they often need to scale each dimension to 1/32 of an inch. Cabinets and countertops require configuration on three dimensions; length, width and height often scaled to 1/32 of an inch. This dimensional product manufacturing is often overlooked as a key component of mass customization in a Tier-1 ERP Environment The objective of this article is to provide best practices with respect to product configuration, data management and product lifecycle management for the manufacturing of dimensional products. The focus is for those manufacturing enterprises which manufacture high product volumes, distribute products across large geographic areas and have multiple products and manufacturing facilities. Hence, Enterprise Resource Planning (ERP) is used to optimize the manufacturing, distribution and order management processes as well as other supporting functional areas. To compete in today’s economy they may need to enable remote, web Types of orders that need to be configured: based product configuration and order entry, they may need to provide their product data (including pricing) to multiple sources either electronically or through pricing catalogues, and may need to manufacture products that can have other value added components (such as installation) downstream in their wholesale distribution channel. Even though most of these companies do not sell to end consumers, they must understand consumer needs and requirements and need to market to them to create brand awareness and pull-through demand. They may also be required to take orders that need to be engineered for a particular order (Engineer-to-Order) or configured uniquely to a specific order (Configure-to-Order). Custom orders may be taken from a dealer, transferred to a distributor and then transferred to the manufacturer to be fulfilled.
Assemble to Order (ATO): Typically this is an order in which stocked material needs to be picked from plant locations and assembled to create the finished product Configure to Order (CTO): These orders may contain sub components that may need to be assembled prior to final assembly or may require items that are not normally stocked. In addition, there may be raw materials that are stocked in large quantities that need to be cutto-fit the finished good. Engineer to Order (ETO): Orders that contain products that may require an engineering blueprint to ensure it can be manufactured and used safely. Once the blueprint is verified a list of subcomponents is released and the needed items are either ordered or pulled from stock and cut or manipulated to fit the finished good.
Dimensional Product Manufacturing A dimensional product is a product that can be manufactured to customer specified dimensions (length, height and sometimes width) in specified increments (usually 1/16 to 1/32 of an inch). In a Configure-to-Order (CTO) environment there are maximums and minimums as to how large or small the product can be. In an engineer-toorder environment there either are no maximumâ€™s or minimums or they are so large or small that an engineer needs to be involved to ensure they can be manufactured and used safely. What brings the complexity into this type of manufacturing is that when the dimensions of the finished good are changed, some individual items in the Bill-of-Material (BOM) dimensions must change as well, while some items will not change. Figure 1: Window For example, if the length of a finished window is changed, the length of the extrusion in the frame and the glass size must change as well. If the window has grids, as in Figure 1, the pattern, dimensionality and number of grids must change as well. In addition some non-mathematical rules may be applied. For example, the finish on the handle of the window may be derived from the type of frame finish being used. Each sub-component in this BOM, shown graphically in Figure 2, will determine its configuration characteristics from inherited values and values from its own configuration. For example, the customer may want the glass with a single glaze finish (its own configuration) and the glass will derive its dimensions from the overall size of the finished product.
Figure 2: Window Bill of Material
Other options that need to be configured for windows are glazing type, product type, framing material, glass type, energy efficiency package, grid type, type of insulation, color,
mull type, finishing options to name a few. To add further complexity with respect to windows, finished windows can be mulled together with an eyebrow shaped window that sits on top, as shown in Figure 3. All three finished goods must be designed and dimensioned together to fit into a predetermined opening and must be geometrically accurate and the grid patterns must match across the finished goods. The problem with the Tier-1 ERP solutions such as SAP, Oracle, or JD Edwards, is that they require a unique stock keeping unit (SKU) for each item that needs to be scheduled for production and run through the manufacturing process. That means that an SKU, BOM and Routing is needed for every item and every possible dimension needs to be stored in the ERP or created instantaneously as they are ordered. Some companies have chosen to customize their ERP system to generate 3
Figure 3: Mulled Window Unit
Dimensional Product Manufacturing these SKU’s instantaneously when they receive an order for an odd dimension however this eventually leads to what is termed as SKU proliferation which means they are storing redundant information and generating a very large number of SKU’s over time. Other functions within the ERP that use SKU information such as cost rollups, advanced planning and general ledger account information perform poorly because of a large number of SKU’s that need to be processed.
SKU Proliferation To illustrate the problem, consider the number of SKU’s that may be generated from a window product line. Height and width can vary in size from 1 foot to 7 feet wide and from 1 to 7 feet tall (range of 72 inches) and can be made in 1/16th inch intervals. This leaves 1152 possible options for height and 1152 possible options for width resulting in 1,327,104 different possible combinations. Each combination results in a unique SKU and associated BOM and Routing in an ERP system. Further combinations will result from the typical discrete options such as:
Glazing options- 2 (Single Pane, Double Pane) Framing material options-3 (Aluminum, Vinyl, Wood) Glass type options- 4 (Low-E4, Low-E, Dual Pane, Clear) Energy efficiency packages-3 (Specified U-Values 24, 25, 30) Grid type options-5 (Square, Diamond, Etched, Equal Light Patters, Custom) Gas options-4 (Argon, Krypton, Mixture of Argon and Krypton, None) Color options-5 (White, Tan, Brown, Blue, Yellow) Finishing options-7 (Stain – Clear, Honey, Cinnamon, Mocha or Paint – White, Brown, Birch)
Extremely Large Numbers: Million Billion Trillion Quadrillion Quintillion Sextillion Septillion Octillion Nonillion Decillion Undecillion
106 109 1012 1015 1018 1021 1024 1027 1030 1033 1036
This conservative number of options would result in 334,430,208,000 SKU’s that would need to be created. Of course, of the possible 334 billion possibilities for one product, some would never be ordered. The author has experience with a regional window company that had a total of 3.2E+35 or 320 decillion different possible options. There are a few lower tier ERP packages that can handle dimensionality (MacPac, Frontier…), but they do not have the breadth of functionality nor the support as that of a Tier-1 ERP package. In these packages configuration codes are created with rules that calculate SKU’s, BOM’s and Routings as they are ordered and store only summarized historical information about what products were sold. The configuration rules are typically maintained by employees with both a product engineering background as well as an IT programming background, because the rules engine require a programming like feature to establish the rules.
Dimensional Product Manufacturing
Product Data Management 3-D Computer Aided Design (CAD) packages (such as AutoCAD, Pro/Engineer and Solid Works) handle dimensional functionality very well (See Figure 4 for the 3D view). This is the primary tool for product engineers when designing dimensional product lines because rules can be setup for the sub-components based on dimensionality and do not have to deal with the large number of SKU’s mentioned above. In other words, when product dimensions change the software instantaneously adjusts the dimensionality of all subcomponents. CAD is also used by engineers to ensure the structure of the end product (or any of the subcomponents) is not compromised if configured too large or small. Most building product companies that deal in dimensional products sell through wholesale distribution channels, to large retailers and to large construction or remodeling companies. Further, with the current economic conditions, most of these companies want to reach the end consumer (typically via the internet) to create increased demand within the wholesale distribution channel. Internet tools are now available to let a Figure 4: 3D CAD View of a Finished consumer see how a certain window or door would look in their Window house by uploading pictures (either from the inside or outside), and configuring a window to see how it would look in their home. In addition, large retailers like Home Depot and Lowe’s have software that they use in their stores to configure custom windows and doors. Large construction companies typically buy products for a whole subdivision based on the engineering drawings used for each model of home that will be built in that subdivision. The point is that it is becoming increasingly important to share product information with several business partners that may be using different software to configure custom products. Sharing billions if not trillions of SKU’s across several sources is not manageable.
Product Lifecycle Management Manufacturers of any kind must make product improvements and upgrade options in order to stay competitive in a very tight economy. Therefore, it is in the best interest of the company to add or upgrade products quickly and without having an army of product engineers and information technology (IT) software people every time. This is the reason most companies are looking at having tight integration between product design data and manufacturing information systems. When product changes are made, the manufacturing information is updated and the new options and manufacturing changes can be made quickly and effectively.
Dimensional Product Manufacturing
Best Practices for Lean Manufacturing Systems. What is the solution to this conundrum? There are some very robust third party dimensional configurators that are capable of taking data from 3D CAD packages and managing the rules associated with each item in the Bill-of-Material, as illustrated in Figure 5. They are also capable of generating pricing and routings instantaneously when an odd dimension is configured. In addition, through web services or application program interfaces (API’s) they are capable of generating the information needed in the underlying ERP system without creating the SKU proliferation scenario discussed above. So when product configuration (customized dimensional product) is needed, the ERP simply calls the dimensional configurator, which guides the user through the configuration and populates the ERP system with the data needed to manufacture the product. The SKU’s are temporary and only used while the product is being manufactured. After the Figure 5: Enterprise Product Configurator manufacturing process is complete only summary dimensional data is stored while the detailed product information (that information needed for costing, demand planning and accounting) is stored. No unnecessary SKU’s (because the BOM, routing and pricing is calculated and summarized), no unnecessary administration and no order entry errors. Standard orders (those that can only come in a few Decreased quotation time dimensions and have inventory stocked at the plant) can run through between 40 – 80% (typically the ERP order entry process and the ERP can use the standard can receive a quote at the functionality to pick sub-assemblies and route the product through the plant. The ERP system then optimizes the rest of the enterprise time of configuration) functionality including advanced planning, production planning, Reduced order lead times 10finance, warehouse management, customer relationship 50% management, inventory management, business intelligence and other Reduce cost 10-40% functions performed by the Tier-1 ERP packages.
Market Share growth by 20% Eliminate up to 80% of human errors Free up personnel 25-50%
Also, as shown in figure 5, since the Enterprise Product Configurator stores the engineering details of all product data, it can be used to generate temporary SKUs, BOMs and Routings to be sent to the ERP, 3D Virtual images and visualization details that can be used to help potential customers through the configuration process, the quote information used for the selected options in the configuration as well 6
Dimensional Product Manufacturing as sales and production drawings used in price books. Since, the enterprise product configurator can exchange information freely with 3D CAD software, new products and options can be more easily launched and deployed. This then becomes the product data bible ensuring that all product data, whether being sent to the ERP, configured on the Web or sent to partners (either as price books or XML data to load remote systems) it will always be consistent. Figure 6 shows at a high level, how the ERP, Configurator and CAD software fits together.
Figure 6: ERP, Enterprise Configurator, 3D CAD Functional Flow
Key Functional Requirements in an Enterprise Configurator. Integration with ERP and CRM applications: The enterprise configurator must have tight, bi-directional integration with the ERP or CRM application that are used (or planned) for the enterprise. This includes the ability to use web services or application program interfaces (API) to exchange functionality between the applications. In addition an XML or EDI transaction should be used to transfer large amounts of data between them. Bottom line, the configurator should work seamlessly within the ERP and CRM environment without the user being able to discern which application is being using. 7
Dimensional Product Manufacturing
Web-Based Architecture The internet architecture provides the most flexibility to support internal or external users as well as sales personnel that have travelled outside of the corporate firewall. In addition, the web based architecture requires no need to load software on local computers which is appreciated by web browsing consumers who have no desire to download software in order to configure a product. Most importantly, this eliminates the need to keep corporate applications synched up with a large number of desktops whenever a price change or product revision is rolled out.
Offline Capabilities Travelling sales personnel who may be on the road a lot, and must visit customers that do not have the capability to provide internet connections, may need to access the configurator remotely, complete a quote or an order and synchronize with the main system the next time they get an internet connection. With the increased use of mobile devices including tablet computers, this requirement will be increasingly important.
BuyDesign – TDCI ConfigureOne – Configure One CS Enterprise – Consona M1 – B&G Stealth – CSC
Dynamic Drawing Capabilities As discussed above, typically the configuration data and rules are derived from a 3D CAD software package. The reverse requirement is also needed. That is, to take the configuration data and rules and dynamically generate a drawing that can be produced and reviewed by potential customers. The drawings may be a sales drawing to be reviewed by marketing, or production drawings including anything necessary to produce the part (part assembly, weldment and/or flat pattern drawings) to be used by engineering or operations.
Advanced Order Entry, Bill of Material and Routing Generation As discussed earlier, for some custom products it may be necessary for the order entry and guided selling to be done outside of the ERP package and within the Enterprise Configurator. In this situation, the configurator will guide the user through the necessary questions to get to a final product, calculate the price and build a quotation. Then if the order is accepted, the configurator will need to build the any data needed by the processing system and to load it seamlessly. An important consideration here is that you may be asking the customer to enter information that previously they may have written on a piece of paper and emailed in. The point is that the order entry needs to be intuitive and truly guide the user through a simplified and quick process to get the necessary information into the system. Consumers lose interest quickly.
Quotation Management Once a quote is entered, the customer may or may not choose to purchase the product at that time. They may need time to consider the final purchase decision. So the quote information should be saved and enable the customer to bring it up later and make changes if necessary.
Advanced Document Creation The configurator should also be able to generate additional documentation as needed such as legal agreements, terms and conditions, warranty information as well as produce drawings of the quoted product and/or other marketing documents and product specifications needed. 8
Dimensional Product Manufacturing
Visualization: The enterprise configurator must have the ability to create 3D visualization of a configured product in several different ways in a web based environment. Most people have used web based visualization when buying a new automobile. You can see the automobile in different models, colors, inside and out and even in some cases behind the wheel while driving. In addition new technologies enable panoramic views in which you can move the camera to view details from almost any angle. In the home improvement industry, there are web based software products that enable users to upload interior or exterior images of their home and then place a configured product in that picture to see how it would look in their home. They can then change the color, style, tint, dimension and many other aspects of the product. The cool thing is that once the consumer finds the exact fit they like, they can then send the product specifications and quote to their closest dealer and have it delivered and even installed without having to leave their home.