What is ETO?

What is Engineer-to-Order?

Engineer to order (ETO) is a type of manufacturing process. The process begins when the company receives a sales order with the specifications for a new product. Manufacturers design, engineer and produce unique products from start to finish for customers.

During ETO, customer’s work with the manufacturing team to produce the end result. ETO is usually used to produce complex or specialist products. These can include specialist vehicles, electronics, machinery and industrial cranes. It is common practice in the aerospace, defence, agriculture, software and energy industries.

Complexity of engineer to order

The ETO process is complex and challenging. Every product is uniquely tailored to meet a customer’s specifications. They are difficult to cost as there are only specifications. Almost everything is unknown including lead times, drawings and performance data. Yet the manufacturing company has to give the customer production deadlines and cost estimates to secure a sale.

ETO products require engineering involvement right from the start. Engineering starts by completing a rough design to meet the customer’s specifications to develop a proposed solution. This gives the sales team a solution to work into a proposal with accurate costs and lead times.

When there is not the time to develop a solution, companies make estimates based on experience and other work. This is not preferred as estimations can cost the manufacturer profit. To get around this they add a contingency to the cost and production lead time. This can be a paradox. If the contingency is too high it can cost you the job, and too low reduces the profit margin.

Challenges of the engineer to order process

Once a company receives a sales order for a unique product, the process starts. The manufacturer receives a deposit and sets up milestones as part of product development. Milestones keep projects on track as they move through each phase. They also give structure to the billing plan.

The engineering design team collaborates with the customer. They need in depth understanding of the concept and function of the end product. It is a customer-centric. The team needs to interpret the customer's vision so it meets specifications and is fit for purpose.

Designing new products is not always a smooth process. The design needs customer approval and sign off at each stage. It must go through testing, changes made and re-submission for approval. And this may go through several iterations before going into production.

Automate the process

Product configuration challenges increase when every customer requires every product engineered to order. These are complex products that have new designs and parts for every order. Using a good software like MORE-MX helps automate different phases of the process. It integrates into your billing software, manages data, tracks inventory and automates scheduling the manufacturing process for on time delivery.

You need the right software to help manage the ETO process. Talk to us about how MORE-MX can simplify the ETO process for your company.