CPQ (configure-price-quote) software simplifies the complexities of manufacturing and selling customized specialty vehicles, such as those used in law enforcement, fire and rescue, emergency medical services and municipal fleets.
The song tells us, “the wheels on the bus go ‘round and ‘round,” but it doesn’t tell us what type of wheels the bus uses. If you ride the bus every day, you may not really care about that. But, if you buy or sell buses, the design characteristics of the bus wheels may be very important to you.
Buses, like virtually all specialty vehicles, are designed with a specific mission in mind. The requirements of that mission are fulfilled by selecting from a variety of options and choices during the design-and-specification phase of the purchase.
School busses, urban transit busses and over-the-road or long-haul motor coaches all have unique and varied wheel requirements. Weight load, speed, road type and tire requirements are all considerations driving the applicability of one wheel over another when configuring the design of any given bus.
Specialty vehicles, by their very nature, are some of the most complex products manufactured. Most of this complexity is due to the high degree of product variability and customization associated with any given vehicle type. By example, one leading manufacturer of fire trucks lists as many as 14,000 individual customizable features available for each truck in its product catalog.
This is just one of several major challenges CPQ can address in the building, selling and acquisition of specialty vehicles. Let’s take a closer look at each of these challenges.
Vehicle Outfitting and Upfitting Vary by Market
Most specialty vehicle manufacturers address one particular market. These individual markets might include but are not limited to: fire trucks or emergency vehicles, utility trucks, refuse trucks, food trucks, freight haulers and construction vehicles. This allows them to use a limited number of basic truck designs that can be highly modified and customized to match the specific needs of each individual buyer. This is a product family approach.
Product family engineering is facilitated by designing adaptable single product platforms with planned variation applied later in the production process to serve multiple uses. The manufacturer realizes great economic benefit by sharing the cost for a high percentage of product content across many final configurations.
CPQ facilitates this decision-making process throughout the design and specification phase of the sale. An interactive, scripted interview collects the basic requirements from the buyer and specifics of the basic product family platforms. As more usage information is collected from the buyer, are recommended or required as needed until the finished vehicle is fully configured.
No one has to remember what all of those 14,000 parts do or when they are indicated. CPQ software uses artificial intelligence (AI) to maintain that information and make those choices based on the specifics of the buyer’s needs.
Multilevel bills of material (BOMs) are automatically created, and the design is ready for entry into the order management system and product scheduling system.
Tribal Knowledge Is Built into CPQ
People who drive fire trucks, emergency vehicles or utility trucks know when they are talking to someone who is really familiar or experienced with their world. Sensing that level of knowledge in the selling organization is critical to building confidence with the buyer. Product managers, engineers and sales reps all need to display a level of knowledge beyond familiarity with terminology and anecdotal recall. Authentic knowledge assures buyers that they are in good hands.
Lack of tribal knowledge is a huge challenge for specialty vehicle manufacturers and dealers because the nature of it is esoteric and highly specialized. It varies greatly between vehicle types and models.
You can’t instill this knowledge through a two-week sales success course. CPQ helps to preserve this critical knowledge by incorporating it into the AI and business rules used during the guided interview and configuration process.
The individual rep doesn’t have to remember that “option A” works best when used with “subassembly 100” in “arid climates.” The guided selling interface in the CPQ software will remind or prompt the buyer and seller during the configuration interview process.
When the customer asks if a specific pump option on a fire truck will handle fire suppressants designed for aircraft fuel fires, CPQ will have an accurate answer. Within the automated selling interface of the CPQ system, the customer will only be permitted to select options that are appropriate to specific configurations.
Complex Pricing, Currencies and Contracts Are Simplified
Earlier in this piece, we talked about building fire trucks with 14,000 selectable options. That level of product complexity is reflected in the pricing associated with the product. Each of those 14,000 options has a separate price and part number or assembly number, so pricing has to be accurate and documentable.
Additionally, these products are sold across international borders and driven by multiple regulatory requirements and localized pricing and currencies.
Within a given geographical market, government or large-volume buyers may require development of a purchasing contract or agreement that will contain special pricing and special terms and conditions.
CPQ provides the manufacturer with the capability to handle multiple price lists based on geography, currency and discount structure. Special contracts are also handled by CPQ to ensure that extended discounts meet the agreed-to contractual levels. Special terms and conditions are reflected in proposals and quotations generated by CPQ as well.
Competitive Procurement Processes May Require Extended Lead Times and Dynamic Demand
In addition to the pricing complexities, the specialty vehicle acquisition process is highly complicated. This may be reflected in specific discounts for buying contracts negotiated in advance of any particular purchase transaction. Many of these vehicles are acquired by government agencies, which places them in a competitive bidding and procurement process.
Specifications for these vehicles are developed over an extended period of time and may involve multiple changes. As the buying process evolves over time, budget limitations and needs assessments become more fluid. The scope of the acquisition may change in terms of units purchased or specific capabilities required.
Price quotes, estimates and ballpark quotes produced along the way must be documented and backed up by specific information about what is included in any given quotation. These may well be subject to financial audits and reviews in the future.
It is critical for the seller to be able to quickly respond to any changes and provide modifications to the proposed solution in terms of actual product specification and resulting price changes. These have to be handled quickly and with confidence.
CPQ gives the seller and the buyer the assurance that any changes made during the specification discussions have been correctly accounted for in terms of price and parts.
Most importantly, CPQ provides a solid itemization of what is included in every quotation or proposal generated. In the months or years following a quotation, there will be no confusion about what was or was not included in that transaction.
How CPQ Helps Overcome Inventory Challenges
Enhanced Supply Chain Visibility
Consider again the impact of 14,000 options and what that means in terms of inventory and supply chain responsiveness.
Especially important to this market is not only availability, but also confidence in quality. Supply chain visibility ensures that low-volume, infrequently ordered items are available on demand.
Predictive Analytics Helps Manage Inventory
CPQ helps to minimize the need to maintain low-volume items in inventory by providing early warning or purchase triggers earlier in the ordering process. Using predictive analytics, CPQ data can be reviewed in terms of activity in the early buying process. This data will help to refine and shrink inventory level estimates for required onsite part supplies.
Reduced inventory onsite and the ability to turn that inventory more frequently will pay dividends in terms of better management of cash assets―in other words, having parts on hand when you need them, with minimal cash outlay.
CPQ Smooths the Road for Specialty Vehicle Makers and Buyers
CPQ partners with the specialty vehicle marketplace to help ensure that the wheels keep turning. Getting the job done is the ultimate goal for any specialty vehicle. Whether it’s fighting fires, transporting the sick and injured to hospitals, delivering your Amazon order or wiring up your cable TV, there is a specialty vehicle working for you somewhere right now. CPQ helps ensure that the vehicles are properly configured for their jobs.