The Engineer To Order (ETO) in production planning

How many production methods are there? Traditionally four are identified and the Engineer To Order is one of them. The ETO is one of the most complete and complex processes, which allows the design and creation of customized products according to the specific requests of the customer. Find out whatit is and how it develops.


Whatis Engineer To Order (ETO)

The Engineer To Order, abbreviated ETO, is a production type in which a product is designed and manufactured after the order has arrived. By using the ETO method, a manufacturer can fully meet the needs of the customer. The ETO is ideally designed for companies that make highly configurable products and often requires a great deal of customer involvement in the design and implementation phases.


Differences with Make to Order (MTO)

Another well-known production method is Make To Order, or MTO, in which products are made to order. If we compare the MTO with the ETO there are considerable differences, especially with regard to complexity.

Generally, companies using the MTO manufacturing process have a standardized product that customers can customize in specific ways. These options include product size options, add-ons, or different materials. When a customer places an order, the company can therefore start producing it immediately using existing and available projects.

Companies use the ETO method, however, they go further, in terms of customisation, and customers can order truly personalised and unique options, made specifically for their needs. These types of products often require significant delivery times as the order must be made by the company.

Taking as an example a company that manufactures chairs, this can choose to produce them in MTO mode giving the customer the opportunity to choose different shapes, colors, details such as padding or seams. Choosing instead to produce them with the ETO mode could allow the customer to choose anything, from shapes beyond the standard ones, with unique designs made specifically for the customer, or to choose any detail, from padding made with innovative materials, to coatings made of particular fabrics.

This example simplifies the reality of the facts but allows us to understand the differences between the two systems, especially in terms of the amount of work needed to reorganize the production process to move from an MTO to an ETO method. For example, the latter being a process that involves a much more relevant creative part, compared to the former, it requires a much closer collaboration with the customer.


The advantages of the Engineer to Order

Engineering to Order brings benefits for both the customer and the manufacturer. On the one hand, it makes it possible to find products that are not easily available on the market, thus satisfying specific needs. On the other hand, the manufacturing company only starts production when it knows the exact demand and specifications required. This creates a winning combination between customer satisfaction, which can reach even very high levels, and the value obtained by the manufacturer.  


The Engineer to Order workflow

It is interesting to analyze the workflow of an ETO, which is logically very different from that of an MTS (Make To Stock). In fact, it presents additional steps that require a study and evaluation from both sides, both sales and design/design. It also requires a system of accurate change through the production process and requires continuous cost control and verification to ensure that real-world production conditions remain within the expected cost structure. These are the basic steps of the ETO workflow:

  • Sales Engineering: A production order usually begins with the request for a quote (also known as Request For a Quote, or RFQ). At this stage, the customer highlights only his requests also in terms of requirements and functionality of the finished product. Once an RFQ arrives, the sales staff works closely with the product engineering to create an estimate that meets the customer’s requirements, allowing the company to achieve its margin targets. Often this phase sees several exchanges before the product configuration is approved.
  • Process Planning: unlike MTS, ETO production often varies according to the product, this is because different cases can occur. The company may produce variants of a standard product that differ in some customized elements, or it may need a different method or production line for each specific product. For these reasons, process planning must be well defined, accurate and flexible, so that costs and production capacity are respected.
  • Inventory management: it must be as accurate as possible to always have the availability of specialized components dedicated to ETO products under control, so as to avoid production slowdowns.
  • Production: ETO products, unlike MTS products, are not produced in large volumes, so it is not possible to collect data at multiple points in the production cycles. As a result, you are more exposed to unknown variables and have less accurate information about costs, labor, waste, intervention times and other variables. To cope with this limit, it is important that in the production process the bill of materials is accurate and the production planning automated. This is also to be able to deal with any change orders that may require adjustments to the production line processes at one or more points in the factory.


An example of Engineer to Order

ETO is usually used in industrial production processes characterized by the presence of very complex and expensive products. For example, it is used by companies in aerospace manufacturing when they receive special orders from governments or large companies. In addition to aerospace, the Engineer To Order model is also very common in defence and energy.


The software for the Engineer to Order

Today, companies can simplify the entire process by investing in software that allows them to better manage the production process. These software allow companies to be fully in control of calculations, data management, parts acquisition and implementation. These software also allow you to focus on the creative side of things, devoting more time and energy to the creation of innovative and cutting-edge products, instead of planning them. With these solutions, companies have a concrete competitive advantage thanks to the fact that companies can provide customers with significantly faster and more reliable delivery times. Discover the APS CyberPlan, the ideal software for companies that produce with the ETO mode, request information from an expert consultant at your disposal.


Subscribe to the newsletter to learn more about this article!