The digital transformation of manufacturing is manifested in the growth and adoption of numerous technologies and strategies collectively known as advanced manufacturing. Some of these include: additive manufacturing, robotics, artificial intelligence, virtual and augmented reality, CAD and build-versus-buy decisions driven by traditional lean manufacturing and demand-driven manufacturing economics.
These revolutionary changes present CPQ and other front-end processes with many challenges and many opportunities. But, manufacturing will change; it will adopt new technologies and take advantage of the great value these new options present. Hopefully, CPQ will be able to exceed the goal of compatibility and actually offer greater value to manufacturers that deliver these new technologies on their own.
CPQ has to be ready to change, adapt and embrace new technologies, new processes and new manufacturing strategies. This means speaking new languages to new audiences with goals and requirements that often differ from those of the current user.
Let’s take a look at what this means for CPQ as a technology.
CPQ and Configuration – The Prototype as a Finished Product
When Henry Ford built his vertically integrated manufacturing process, it was a monument to his genius and also to modern manufacturing of that era. Imagine, a single building; raw material goes in one end of the building, and finished automobiles emerge from the other end.
Integrating a CPQ tool to that process would be easy. The only real option available was, do you or do you not wish to buy a car?
But people got picky fast. They wanted any color BUT black, they wanted engine choices and they wanted different transmissions, entertainment systems, premium interior finishes and the rest. As my car selling friend says, “They want all the toys!”
All of the variety, all of those choices to be made bring complexity to the product. For most complex products, CPQ brings logic and order to the complicated questions regarding what options should be chosen, what choices should be optional and how long will it take to process the order.
But advanced manufacturing now brings the possibility of unlimited options, pure customization and the ability to fill orders for almost anything. Until now, the product to be sold already existed. Product management and engineering had designed it, tested it, priced it and put it on the market.
Now CPQ will need to know how to handle that which does not exist; products that aren’t even products yet.
Additive Manufacturing Pushes CPQ Beyond Parts and Assemblies into Product Design
Additive and other advanced fabrication technologies impact CPQ directly. CPQ contains part specifications for existing parts. These technologies are easily exploited in the advanced manufacturing vision as enabling mass customization almost to its ultimate degree—we make anything you can imagine.
So, how would CPQ specify a part or product that doesn’t exist?
Inputs for additive produced products include the physical geometry of the product (the shape), the fabrication material, acceptable tolerances for any specific dimensional or other physical metrics, the surface finish (including color, texture and other characteristics) and any other requirements necessary for the product to meet specifications.
These types of inputs are not impossible to imagine with a CPQ integrated with CAD and other design tools. But, by default, most CPQ logic systems are built with the idea of collecting data that allows the user to determine which existing product or part is best suited for the job at hand out of the many products and parts that are available.
Using CPQ to spec out parts and products for a one-off design system will require augmenting the capability of most CPQ systems. Additionally, organizational processes in terms of product management and engineering approvals will need to be incorporated into this design element as well.
CPQ and a Supply Chain that Offers Alternative Parts, Supply Sources and Fabrication Options
Henry Ford’s vertically integrated manufacturing process is wonderful until you try to scale it over millions of copies of complex products that offer hundreds of configurations.
The strength of CPQ is found very early in the selling transaction as being able to channel the selection process for multiple options and variable configurations to tailor a generalized product to match a highly specific need. Coupling this with a robust, highly visible supply chain allows great variety to be offered without adding increased cost.
Advanced manufacturing promises even higher variability and product diversity. Much of this is reflected within the very depths of the products offered in the form of one-off enhancements and modifications made possible by additive manufacturing and other technologies.
A part is needed that looks like this, performs like that and is fabricated from this. The next logical question is, do we build it or buy it? This decision will be driven by all manner of variable conditions, and the answer to the question will frequently change based upon those conditions. This month we buy it, next month we build it.
The supply chain will need to include options for building items, instead of merely supplying them.
The whole arena of contract manufacturing or manufacturing-as-a-service will need to step up in this role.
CPQ Serves Manufacturers and Makers
What is the difference between manufacturers and makers? Here is my personal short definition: Manufacturers build discrete products out of parts and assemblies. Makers build discrete products out of goo (fabrication material) that are assembled together to make fully configured products. Perhaps I’m oversimplifying things.
Makers as a “movement” see the manufacturing capacity as a community resource, a sort of centralized facility that offers all manner of advanced fabrication tools including 3D printers, laser and high-pressure water cutters and more. Anyone can use it or employ it to make anything they want to make. Individuals can make parts for busted appliances; companies can make parts or finished products.
Another vision would have a company like Amazon building maker centers in or around its distribution centers. Certain types of products could be built on-demand.
I could make a case for CPQ and the maker vision of the world, but this is not our subject.
The Maker Movement is an entirely different issue and discussion; our subject is manufacturing facilities that exploit advanced manufacturing processes and hardware. However, awareness of the maker movement and how it evolves is important as its vision solidifies and its impact on traditional manufacturing is felt.
CPQ Extends Beyond Building Mechanics into How, Why, When and Where to Build
Many maker mavens don’t have a full understanding of design requirements, fabrication materials and how they relate to the design and economics of manufacturing a specific product. This is not to demean those individuals, it’s just that their expertise tends to focus around the building process itself and less with the before and after.
The whole concept of CPQ is based on having total knowledge about the product to be sold and then a complete understanding of the customer’s needs. The scripted interview is a guided selling process that brings sellers and buyers together to explore and evaluate needs, requirements and possible options. As the conversation evolves, the conversation becomes more and more focused, and a solution, in the form of configured products, begins to emerge.
All of this is driven by language. The seller and buyer converse, and CPQ communicates with back-office systems, inventory, supply chain and production systems to get the product built and delivered.
CPQ must become polyglot in terms of communicating with all elements within the manufacturing process. With AI and robotics, humans, hardware and software share the same shop floor. What languages does CPQ need to speak to communicate effectively with all elements at work within this environment?
CPQ is at home communicating proposal, order entry, supply, inventory and production triggers. This capability will need to be augmented to include the inputs necessary to instruct robotic or other advanced manufacturing assets if not directly, then through the manufacturing execution systems that drive them.
The closer we get to on-demand, mass-customized manufacturing, the more we will require these technologies and their integration with our existing tools.