The rise of mass customization in manufacturing: PwC

In the ever-evolving landscape of manufacturing, a noticeable shift is underway: the industry is moving from a mass production model to one where customization is the new norm. This trend is fueled by growing consumer preferences for tailored products — such as electronics, industrial machinery, and furniture.

To meet this trend, an increasing number of manufacturers are adopting engineer-to-order (ETO) or configure-to-order (CTO) models to help provide customers with the flexibility they need to customize their product. Many manufacturers are seeking to make customization accessible to a broader audience, to also allow individuals with limited technical knowledge to tailor their purchases. In this sense, we at PwC have seen a growing demand for simplicity in the manufacturing process through user-friendly interfaces and intuitive customization platforms.

Challenges in business management: Integrating diverse manufacturing processes

Manufacturers employ a range of revenue-generating methods, including make-to-stock, assemble-to-order, engineer-to-order, configure-to-order, service-heavy manufacturing, and project-heavy manufacturing. Across industry, manufacturing companies tend to grow through acquisitions, which often results in challenges when it comes time to integrate processes associated with each acquired business. Successful integration requires a high degree of flexibility from ERP systems to help seamlessly adapt to the diverse methodologies acquired through business expansions. Navigating these challenges can be essential for manufacturers aiming to thrive in an environment increasingly shaped by the demands of mass customization.

Specifically, the mass customization trend can result in significant operational challenges for CTO and ETO businesses. In addition, embracing this trend means constantly innovating to introduce new products, which incurs additional costs. Finally, managing collaborations among various parties, including sales, engineering, production, and customers can become critical.

Addressing the customization trend with a framework for manufacturers

Overcoming these challenges typically requires a balance of integration and innovation. Businesses are exploring solutions that not only help address immediate concerns but also lay the groundwork for sustained adaptability to future challenges in the realm of customization. In this context, Oracle offers a platform that spans various business process areas. For the CTO and ETO processes, Oracle Fusion Cloud Applications Suite provides a reliable starting point to help address customization challenges. Leveraging Oracle’s integrated platform, PwC has developed an integrated approach that can help meet these challenges to create holistic solutions for both CTO and ETO models.

While sales teams often see tremendous revenue opportunities and naturally assume it’s a simple tweak to the product, it can take multiple business functions to make the customization occur. The costs are typically buried in the traditional cost structure under selling general & administrative (SG&A) expenses and not thoroughly understood. PwC's integrated approach can help to provide visibility into the actual cost of mass customization, draw attention to the profitability of providing the services, and help companies to remove administrative tasks. Companies can better understand the income and the market share impacts of the offerings, allowing them to determine where, when and how much financial impact mass customization represents for their business.

Helping Improve ETO processes

Weaving together Oracle Fusion Applications capabilities, PwC can bridge gaps with an integrated ETO capability. This tool helps orchestrate multiple integrations across customer interactions, sales processes, and engineering workflows. The integrated capability operates as follows:

Using Oracle Configure Price and Quote module (CPQ) in Oracle Fusion Cloud Customer Experience (CX), a user-friendly interface customized by PwC, the customer can specify whether certain aspects or the overall product requires engineering. The product details are then transmitted to Oracle Product Lifecycle Management (PLM) in Oracle Fusion Cloud Supply Chain & Manufacturing (SCM) triggering engineering team’s involvement using a PwC tool. Upon proposing a price and timeline provided by the engineering team, an automated integration is triggered from PLM to send details to CPQ enabling sales representatives to help create a proposal document.

Using DocuSign, the customer can accept or reject the proposal, setting in motion a series of integrations that involve Product Data Hub (PDH) for engineering change orders and bill of material updates. This chain of actions leads to the ETO item creation in CPQ and submission of the new item to Order Management, initiating a sequence of standard processes. The sales order progresses through the manufacturing queue for construction utilizing PwC’s advanced manufacturing capabilities built on top of Oracle Cloud Infrastructure, supporting discrete and flow models.

This solution serves as a central hub to help enhance shop floor workflows. It can help streamline tasks, decrease the need for extensive system interactions and enhance productivity. In addition, it can automatically track released work orders, empowering schedulers to arrange schedules and shifts, and it helps provide operators with the flexibility to initiate and complete operations while issuing the required components. Once finalized, the product is shipped to the customer, completing the ETO process.

PwC deploys solutions that can complement and extend the capabilities of Oracle Fusion Cloud Enterprise Resource Planning (ERP) in ways that help capitalize on unique business challenges. Through a nuanced understanding of the manufacturing landscape, PwC has developed strategies and assets that help address aspects beyond the standard functionalities of Oracle Cloud ERP. Our capability offers clients plug-and-play experience and can help slash the implementation costs significantly. The benefit is not only to mitigate expenses but also to help open avenues for additional revenue stream, foster growth and enhance market share.

PwC successfully implemented this tool at a major industrial manufacturer specializing in heavy equipment. Through our tool and service, they are on track to achieve up to 15% reduction in engineering SG&A costs. This tangible outcome underscores the transformative impact of our capability on ETO operations, enabling organizations to operate more efficiently and competitively in their respective markets.

A Configure-to-Order tool that can help manufacturers shorten lead time and reduce production costs

While the configure-to-order (CTO) process offers customers the flexibility to customize products, there are inherent inconveniences that business leaders should navigate. When embracing customization capabilities, manufacturers often face extended lead times, higher production costs, and the need to manage multiple inventories. Additionally, communication issues and the potential for higher returns and exchanges further contribute to the complexities of the ordinary CTO process.

To help mitigate these issues, PwC is developing a CTO capability that can create a quote featuring tentative data. With this capability, customers can indicate that the quote details are not finalized, prompting a temporary hold of the order in the Oracle Order Management module. Here, an integration is triggered from Oracle Order Management to the Oracle Projects module creating a project automatically (see illustration below).

A designated technician is assigned to the project to help evaluate and finalize the quote details by working with the customer. Once quote details are finalized, the sales order is submitted for the build process. The final product is then ready for shipment to the customer.

PwC’s tool helps tackle extended lead times and production costs by enhancing workflows and automating tasks. This not only enhances operational efficiency but also allows for better communication, reducing the likelihood of misunderstandings during the customization process and decreasing returns and exchanges.

Helping industry leaders meet market demands with innovation

PwC brings Oracle model systems that can help address unique industry requirements representing "what good looks like" for your industry based on our extensive experience, allowing an accelerated "design by exception" approach. We closely collaborate with Oracle’s Development team to share and strategize on approaches to meet industry requirements. When capability gaps are identified, we extend their platform to help create client specific digital assets while working to get industry standard requirements built into Oracle's roadmap.

Our industry-leading knowledge and proven approach are built into digital assets that deliver valuable insights and rapid outcomes. We then showcase rapid prototypes to help inform early decision-making. This collaborative approach helps manufacturers harness the spectrum of tools and technologies required to navigate the complexities of diverse revenue-generation methods, offering a holistic and tailored capabilities that can go beyond the conventional ERP deployment.

Let PwC help you unlock the value of innovative supply chain applications and solutions and help you gain a competitive advantage in this fast-moving market. Get in touch and explore services and solutions from PwC and Oracle Alliance.