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Some Enterprise Resource Planning (ERP) packages tout that they offer a “product configurator.”  This article is intended to help layman, consultants, executives, and search committees understand what configurators do, how they work, what are the different kinds, and most of all…who needs one and why?

Q) Exactly what is a “product configurator? “

A)  A “configurator” is a tool that can help an ERP system deal effectively with certain variable aspects of manufacturing and distribution environments.  A properly designed configurator can offer tremendous benefits in many different environments.  Configurators are very specialized and sophisticated quotation and/or order-entry modules activated only for certain types of orders or products.   A “Product Configurator” can instantaneously solve many different kinds of problems relating to special manufacturing instructions, special pricing considerations, specifications of materials, manufacturing limitations, and product limitations, as well as substitutions, additions, deletions, and modifications to products or components.

Q)  Why are more companies seeking ERP packages with configurators today than five years ago?

A)  Today more companies produce products that are customer driven ...”To-Order” manufacturing.  Many companies have increased revenue by producing products that are often “customized” or “configured” to the customer’s specifications.  Configurators can help to produce these products and shorten delivery time.

Q)  What is the difference between a “Features/Options“ configurator and a “Rules-Based” configurator?

A)  Some well-known software vendors offer expensive, under-performing  configurators that are very simple and do little more than present a list of options or accessories that can be added to a product …like adding a trailer hitch to an order to build an automobile.  One type of simple configurator works at the bill-of-material level and does little more than add components to the bill-of-material and descriptive notes to work orders.

Powerful “Rules-Based” configurators operate at a much higher level of intellect.  They allow the establishment of rules that will apply to a single product or an entire family of products.  Top “Rules –Based” configurators allow for the establishment of a hierarchy of rules.  This concept allows for more powerful rules that can enforce or ignore other sub-ordinate rules.  

Q)  What exactly can a powerful “rules-Based” configurator do?

A)  Each time a quotation or an order in entered into the ERP system the configurator can automatically be “called into play.”  The Sales or Service person selects a product or a family of products.  The  “Rules” take over the process by asking key questions that require a decision or a choice allowed by the “Rules.”  That “choice” or decision determines what “other choices” or “other decisions” will become available or be required …both at that level and all subsequent levels.  Choices “Rule” all the decisions and can accurately reflex the outcome of any or all of the following facts about the product or the order:

a)     The product’s description.

b)     The product’s weight and/or size.

c)      The manufactured and purchased components used in the order.

d)     The manufacturing processes or routing steps appearing on work orders.

e)     Where and when the order will be scheduled.

f)        What the product will cost to produce “as-built” (material, labor, & overhead.)

g)     What the exact selling price should be.  (considering actual labor, materials, qty pricing, sales/promo dates, & customer class considerations.)

Q) Is a “configurator” a module that can be added to an existing ERP system?

A) It is very difficult add a “stand-alone” configuration module to an existing ERP package.  A sophisticated rules-based product configurator needs to be accessible in the middle of ordinary order entry; thereby, allowing entry of both configured and non-configured items in the same order. 

The configurator interacts with the customer files, master pricing database files, item-master files, work-center routing files, bill-of-material files, sales history files, shop floor scheduling files, purchasing files, and subsidiary files to the General Ledger, in addition to its own configuration “rules” files. 

Economics suggests that adding a configurator to a system would be akin to adding a hot tub to your motor home.  It would take a lot of plumbing and cost a lot of money…and you might want to consider purchasing a new motor home that was designed  and built with a hot tub already incorporated …before you start shopping for the best price on pipe.  

Q)  Are configurators useful to companies that do not manufacture products?  

A)  Yes.  Configurators can solve complex problems such as creating custom kits for distribution companies.  They can provide mathematical computations and qualify or disqualify a product’s suitability to a particular situation.  They can handle special pricing considerations or interact with external resources such as cross-reference checking or executing and retrieving 3rd^-party software resources. 

Q)  What are some signs that a company could benefit for a “Rules-Based” configurator? 

A)  Here is list of indicators demonstrating an obvious need for a new ERP system with an integrated  “Rules-Based” configurator.  The presence of more than two of the following indicators signals significant need:

a)     New customer orders are sent to the engineering department.

b)     New customer orders are acknowledged containing errors such as:

i.)            Accepting  “mutually-exclusive” features.

ii.)          Accepting upgrades that had pre-requisites ignored.

iii.)        Specifications left “blank.”

c)      Finished products are assigned serial numbers.

d)     Orders for customized products are handled separately.

e)     The company offers a product catalog containing asterisks, footnotes, or bubble numbers.

f)        New orders require pre-processing before order entry.

g)     Copies of new orders go to the purchasing dept.

h)      Bills-of-material need to be created prior to order entry.

i)        Order entry jobs require manuals, product notes, catalogs, or accessory sheets.

j)        Order entry jobs require vast knowledge of products and/or accessories.

k)      Production orders do not match drawings.

l)        Work Orders are found to be not congruent with customer orders during production.

m)   Accounting department costs customized orders separately from standard orders.

n)      Processing “Repeat orders” for customized products requires access to paperwork from previous orders.

Q) Are there specific things a configurator should include?

A) Things a “good” rules-based configurator should include:

1)       Allow additions, deletions, & modification of components.

2)       Allow additions, deletions, or modification of routing steps.

3)       Allow “processing” changes even without changes of components such as specifying and tracking attributes (e.g. – color, size, grade, texture, finish.)

4)       Allow for the presentation of additional options (or logic) based upon previous selections.

5)       Disallow mutually exclusive options, choices, features, (or logic.)

6)       Should provide for creation of “by-products”, drop-offs, and scrap.

7)       Automatically create all manufacturing orders for configured items.

8)       “Option” to auto-launch manufacturing orders if selected.

9)       “Option” to auto-launch concurrent departmentalized Work-Orders.

10)   Automatically compute price of “as-built” item.

11)   Create accurately costed, complete bills-of-material for “as-built” products.

12)   Auto-generate requisitions and/or Po’s for purchased component requirements or “outside” processing requirements.

13)   Automatically handle all inventory transactions.

14)   Automatically handle all accounting transactions.

15)   Capture to order-history all “as-built” product structures.

16)   Capture all costed “as-built” bills-of-material to history.

17)   Capture to labor-history all “as-built” W/C data & Reported Labor.

18)   Capture to order-history all “as-built” product routings.

19)   The ability to seamlessly “call” external procedures, 3^rd party software, or routines possibly unique to an industry or one company’s capabilities or philosophy.

About the author:

W. Reid Biberstine is a graduate of Indiana University, School of Business in Bloomington, Indiana.  He has held various executive positions during his 25 years in manufacturing management.  Contact Reid at sales@xdata.com.  Xdata solutions, inc. is a software development company specializing in ERP Solutions for Manufacturing and Distribution companies in addition to the development of Standard Accounting packages.