Working with various industries as a planning manager, I have found Engineer to Order (ETO) to be the most complex environment to plan for, and often times the most frustrating. Coming from a Production Planning (PP) background, it is easy to neglect many of the core principles and fundamentals that must be accounted for in a project world.
This is where I have seen most organizations falter, not taking into consideration that an integrated supply chain in an ETO world must consider all constraints and integration points within their business, including both engineering and manufacturing resources and deliverables. Those that fail to take this into account will soon find they are working in a siloed environment with little to no accountability, longer than anticipated lead times for internal and external customers, and a culture that thrives on blame and highly reactive behaviors.
Having worked with many of the large firms on Project System implementations, it is apparent that they leverage their Production Planning (PP) expertise to force a solution that does not account for the complexities of an ETO environment. Although the optimal solution is a strong integration between Project System and Production Planning modules within SAP, being forced into the typically proposed solutions I have encountered are by no means optimal and negates the ability to utilize SAP to its fullest potential. This is often exasperated by a client who either accepts the solution as status quo or allows themselves to customize a solution based on their previous legacy systems… both of which will undoubtedly cripple their business.
Every ETO company believes they are truly unique. In reality, what they manufacture might be, but the business processes required are not. This is where leveraging the SAP solution to work for you comes into play. By focusing on integration and allowing SAP to do the heavy lifting, you can focus on the inevitable – change. SAP accounts for the change in the form of exceptions. This is precisely where the lack of strong integration leads to failed implementations, as the client is left in a constant reactionary mode due to their lack of knowledge on the processes required to manage by exception. Once the client is able to manage by exception, they are then able to proactively manage change and mitigate risk on a project to project basis.
Reveal’s solution focuses on the strong integration between Project System and Production Planning, which gives our clients the ability to meld project and production planning, capacity planning and leveling, and material requirements planning within the appropriate modules. This integration allows SAP to do the heavy lifting, further enabling the client to truly focus on exceptions. Make no mistake, succeeding in an ETO-driven industry requires discipline, accountability, and often times a change in business behaviors. Reveal’s methodology provides our clients with not only the agility required to thrive in a highly competitive and uncertain ETO environment but also a roadmap to utilize SAP’s other solutions tailored to the ETO industry; Commercial Project Management (CPM) and Project Portfolio Planning (PPM).
Reveal has extensive experience working with ETO companies, and our methodology takes into account the dynamic environments our clients are faced with. To learn more about Reveal’s education offerings visit our Resources page, which consists of many tips, tools and supply SAP chain industry information.