Product Configuration: Where Customer Needs Meet Technical and Economical Necessities

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1 Product Configuration: Where Customer Needs Meet Technical and Economical Necessities PROMATIS software GmbH Ettlingen/Baden Summary In many market segments, companies face the challenge of offering increasingly standardized product components in more complex solutions. This applies equally to the manufacturing industry, service providers and traders. This paper describes how leading companies encounter this challenge in competitive markets through the use of an intelligent product configurator. It is the pivotal point of their CRM and SCM systems, ensuring an accurate and rapid configuration of even complex customer solutions. Various solution paths are taken, outlined and discussed in this paper. The continued unabated globalization results in more and more new providers appearing in the market offering ever-cheaper products. Companies from developed economies have no chance in pure price competition. In the manufacturing industry, services and trade, the competitive factors are creativity, innovation and the ability to respond quickly and specifically to individual customer needs. At the same time ambitious quality and cost objectives are targeted with standardized product components. This includes the strategy of many companies to increase customer satisfaction and loyalty and to generate additional income potential through an extension of their value chain. Driven by these developments in many industries, the configuration of customized products and solutions becomes a core competence and an intelligent product configurator becomes the pivotal point of their CRM and SCM systems. In this paper, first, the basic concept of an intelligent product configurator is described. On this basis, three different approaches are outlined and evaluated on the basis of practical experience: The implementation of the Oracle Product Configurator with extensive use of the standard functionalities offered, a custom-modified and extended solution and the integration of a thirdparty product predominantly used by SMEs. Key decision criteria for the selection of a product configuration solution are derived from the experiences made and are summarized in the recommendations for action PROMATIS software GmbH, Ettlingen 1

2 Concept of an Intelligent Product Configurator Conventional systems for Customer Relationship Management (CRM) and Supply Chain Management (SCM) are based on products whose structure is shown in more or less complex bills of materials or formulations. Flexibility is achieved via BOM or in the process industry through formulation variants. Whenever this kind of flexibility is not sufficient, the use of a product configurator is advisable. This is the case when due to the variety of the products themselves or the diversity of customer requests a vast number of product combinations would arise. The remedy here is an interactive generation of a product configuration in which, based on a predefined set of rules, the desired composition of the product components is achieved. Figure 1 shows the basic principle of the Product Configurator and its integration into the corporate context. Strategy Product components, configuration rules, pricing rules, recommendations Innovation Product Lifecycle Management (PLM) Customer Distribution partner Trader Customer needs, quality feedback, change requests, demand forecasts Figure 1: Basic principle of the Product Configurator Driven by the business strategy and a continuous innovation stream as well as in the context of the Product Lifecycle Management (PLM), the product master data is created, which provides the data basis for the configuration rules. We speak of an intelligent product configuration when the data from Customer Relationship Management, Risk and Compliance Management as well as external data from the market and competitive environment is incorporated in the regulations. The Product Configurator is then operated either by the customer (e.g. embedded in a self-service website) or by a sales consultant depending on the complexity of the configuration process and nature of the interaction interface (User Interface). In each case, however, intensive customer communication is vital during the configuration procedure. Intelligent product configuration also means that the customer information return is reflected in both the product development and configuration rules, i.e. customer needs, quality feedback, change requests and demand forecasts are considered PROMATIS software GmbH, Ettlingen 2

3 Standard Functionality: Configuration of Complex Testing and Measuring Systems Oracle Corp. offers a comfortable product configurator that comes with the Oracle E-Business Suite. It can be set up as an intelligent product configurator and it can be integrated into other CRM and SCM applications via open interfaces. Alternatively it can be used for configuration based on data from multiple source systems. The Oracle Configurator spans the entire Quote-to-CashFlow- right down to Process across different saless channels, from quoting to planning and production delivery and billing. The Oracle Configurator supports different User Interfaces for one and the same configuration model and therefore the Look, Feel & Flow can be tailored to the requirements of different sales channels. Figure 2 shows an example of how the Configurator is embedded in a web shop. Figure 2: Web shop with embedded Oracle Configurator The Oracle Configurator is being introduced as a central component of an Oracle E-Business Suite, Rel. 12 ERP system for a global leader in semiconductor technologies and innovative testing and measurement environments. It replaces a product configurator individually developed in Java, which was integrated with the Oracle E-Business Suite, Release 11i to particularly support offline configurations efficiently. Now in Release 12, the benefits of a product configurator that is fully integrated in the standard shall be tapped. It works seamlessly with the supply module (Oracle Quoting) and procurement (Order Management). The integration on the basis of Excel files is a hardship of the past. In addition, the requirement for offline usage has become obsolete. Figure 3 shows how the product configurator has been integrated into the client s CRM and SCM processes PROMATIS software GmbH, Ettlingen 3

4 Figure 3: Integration of the product configurator Due to the high complexity of the configurations, the product configurator is used exclusively by the sales staff who, when needed, call in the customer on site. In this implementation, the Oraclesupplied default user-interface can be used. It is interesting that precisely because of the high configuration complexity the slumbering intelligence in the established regulations actually makes for the company s competitive advantage. Customer-Specific Configuration in Packaging Disposal In a company in the waste and recycling industry, the Oracle Configurator is used for complex packaging solutions. The complexity is not enclosed in the composition of the product components, but in the correct pricing. It is based on a complex set of rules, in which packaging to be disposed is divided according to various sectors of origin and then priced accordingly by sector based on a set price list. The office staff uses the product configurator during the tender phase and in order management. A "lightweight" version of the configurator for the field staff is currently in preparation. In practice especially the possibilities in the design of user interfaces have proven to be valuable. However, some additional functions have been developed, which serve primarily for the extension of the configurations by order-specific information. The reason is that only one mask is to be provided for the office staff in order to improve the user acceptance regarding the system PROMATIS software GmbH, Ettlingen 4

5 SME Solution: Configuration of Electronic Control Systems Especially for medium-sized enterprises and SMEs the cost of implementing a high-end configuration solution such as the Oracle Configurator is sometimes too high. They prefer fast-todeploy solutions that are already tailored to applications in the sector. However, the effort to integrate with the CRM and SCM application landscape cannot be ignored in such applications. As part of a joint project with the software manufacturer ACBIS based in Ettlingen, a configuration solution for a medium-sized supplier of electronic control systems is currently being implemented. It bases on the epos Configurator, which is used in sales and order processing, i.e. for machinery and equipment manufacturing, in automotive and electrical engineering. The aim of the project is a web-based shop system in which customers can configure the control systems themselves interactively and as a result be presented with a comprehensive preview of the offer. So far, the configurator is still used exclusively by the sales department of the control system provider. They create the appropriate orders via integration with the existing ERP system. It is interesting that not only prices and bills result automatically from the configuration, but that accompanying diagrams and CNC data are generated as well. In the web shop, the customer is provided with ready-made templates that he can use especially for repetitive orders. Also important are vivid representations of the configured product. To achieve this, the Configurator is additionally equipped with a flanged 3D product visualization based on the Lumo Graphics visualization software, as shown from another application in Figure 4. Figure 4: 3D visualization of the configured product (source: PROMATIS software GmbH, Ettlingen 5

6 Critical Review and Recommendations These three examples show how different the requirement priorities can be for a product configurator. Where a high-end product like the Oracle Configurator impresses with its full integration into a comprehensive application landscape and its technologically homogeneous extensibility, a SME product can convince with its strengths in meeting industry-specific requirements and its lightweight architecture. From our experience, we have derived four recommendations that we want to pass on to readers dealing with a product configurator project: Recommendation 1: Thorough requirements analyses Prior to operating a configurator, the functional and technical requirements need to be clarified: Who are the intended system users (customer service, sales representative or distributor, customer, consultant), and what is their level of training? What are the requirements for the user interface? Is a model-driven user interface generation required? How will the products be visualized? Will it only be used offline or also online? Are mobile solutions required? Which master data will be used (products, customers ) and of which quality are they? What types of configuration rules need to be represented? What systems need to be integrated with which performance profile? Which integration technologies and development resources are available? Recommendation 2: Consider the technical, organizational and technical integration In all applications, the product configurator becomes the pivotal point of the CRM and SCM system, and the configuration process has implications for all CRM and SCM business processes. For this reason, it is essential that the technical, organizational and technical requirements of the configurator are also taken into account in all phases of the project, beginning from the outset. Recommendation 3: Holistic view of the configurator solution When deciding on a configurator solution, various aspects need to be considered, ranging from product strategy through the power and flexibility of the set of rules, integration interfaces and the capabilities of the user interface. It is important to follow a holistic approach when comparing different solutions, which also includes the future use and maintenance phase. Recommendation 4: Standard functionality first Because of the high usability requirements that are imposed on a product configurator, customers are often quick and vehement about demanding custom modifications (customizations). However, these regularly result in considerable additional costs in the integration and also in the subsequent maintenance and care of the customization. In any case we therefore recommend considering the feasibility of the requirements in and with the standard product beforehand. Furthermore, it is necessary to consider whether or not a functionality of a standard integrated module is available. For example, for the Oracle Configurator it may be sensible to use the appropriate functions of Oracle Advanced Pricing instead of individually programmed pricing functions. Sometimes costly customizations can also be replaced by a much simpler accumulation of unused master data PROMATIS software GmbH, Ettlingen 6

7 Conclusion In many companies, the product configurator is an indispensable component as pivotal point of the CRM and SCM application landscape. Due to the high requirements in terms of usability and integration, the implementation of the configurator gains a mission-critical significance in any implementation project. The Oracle Configurator convinced as a high-end product with its modeldriven user interface generation, its power in the formulation of rules and configuration, and its strengths in the integration. In medium-sized projects, it may certainly be useful to follow a bestof-breed approach and to consider industry-specific third-party products. References [1] Schönthaler, F.; Vossen, G.; Oberweis, A.; Karle, T.: Geschäftsprozesse für Business Communities: Modellierungssprachen. Methoden, Werkzeuge. Oldenbourg Wissenschaftsverlag, München, 2011 (in German). [2] Schönthaler, F.; Vossen, G.; Oberweis, A.; Karle, T.: Business Processes for Business Communities: Modeling Languages, Methods, Tools. Springer Heidelberg Dordrecht London New York, Note The listed products are trademarked and belong to the respective owners. Date of documentation: November 2013 Contact PROMATIS software GmbH Pforzheimer Str Ettlingen, Germany Phone: Fax: mailto:info@promatis.com PROMATIS software GmbH, Ettlingen 7