Preventing Deviation in Engineer to Order (ETO) Manufacturing

What's the one thing that companies in the Engineer to Order (ETO) manufacturing space complain about most? Deviation. The difference between what they quote their client at the beginning of the process, and what it actually ends up costing them to produce whatever was ordered. Deviation costs companies untold sums and can be completely crippling in terms of margins. The problem is, it seems to be baked into the whole ETO process.

Key Takeaways

• Communication coordination between sales and engineering teams prevents costly misalignments and reduces deviation in engineer-to-order custom products

• Change request management through systematic data handling keeps projects on track and budgets accurate

• Resource alignment matching labor and materials prevents delays and cost overruns in complex manufacturing projects

• Technology integration with configurable ETO software provides visibility and control across all project phases

• Proactive planning using historical project data helps manufacturers better estimate costs for similar custom products

ETO costs are a moving target

Unlike Make-to-Order (MTO), where a standard product is produced according to how many are ordered, or Configure-to-Order (CTO), where a standardized product has minor changes made to it, ETO manufacturing produces unique, one-off products that have never been produced before. And when you're doing something brand new, and for the one and only time, how can you possibly hope to accurately predict what it's going to cost you to do it? Which is and isn't true. The fact of the matter is, everything that's ever manufactured, be it an individual component or the entire finished product, is only ever a slight variation on something that's already been done in the past.

The ETO conundrum

Nevertheless, ETO manufacturing does present a particular challenge, by reversing the conventional direction of exchange. Instead of making something people want and then asking them to pay a fixed price for it, you're asking them what they want, before trying to guess how much that's going to cost. Knowing that what they've said they want will change in the course of you making it for them. But this doesn't mean that every ETO manufacturing project is unique and impossible to predict. On the contrary. What it means instead is that ETO projects are very much like every other project, only more so. You go through the same process as you would on any project, but with added emphasis on the three pillars that allow you to maximise your margins.

Understanding the Engineer-to-Order Custom Products Landscape

The complexity of engineer-to-order (eto) manufacturing extends beyond simple project management challenges. Each customer presents unique requirements that demand specialized attention throughout the entire development cycle. Order manufacturers must balance innovation with profitability while meeting increasingly sophisticated customer expectations.

Modern production facilities face mounting pressure to deliver custom machine solutions that meet exact specifications without compromising delivery schedules. This requires sophisticated product configuration systems that can adapt to changing requirements while maintaining cost control. The challenge becomes even more pronounced when dealing with long-lead-time components and specialized materials.

Successful manufacturers recognize that eto solution implementation requires more than just good project management. It demands a comprehensive understanding of how custom products flow through eto workflows, from initial customer consultation through final delivery. This holistic approach helps identify potential deviation points before they impact project outcomes.

1. Co-ordinate communication

The first thing that leads to deviation in ETO projects is the difference between what the Sales team promises and agrees to provide the customer with, and what the engineering team can actually produce for the agreed price. Simply put, every element that the Sales team agrees to puts the cost up. But factoring that increased cost into the sale price makes a sale less likely. So, understandably, the sales team takes a permanently optimistic view of how much everything they promise will cost. Which is all well and good and even amusing, until suddenly there's this gap between what you're charging for something, and what it's actually costing you to produce it. The answer to which is to systematically impose improved communication. By making sure that the communication channels between Sales and Engineering, and between Sales and the customer are fully coordinated and permanently up to date, you can much more accurately track costs, which will then be factored into your forecasting.

Building Robust Communication Frameworks for Product Development

Effective communication in ETO environments requires more than occasional meetings between departments. It demands structured protocols that govern how information flows from initial customer contact through final product delivery. Design teams must have real-time access to customer requirements, while sales teams need immediate feedback on technical feasibility and cost implications.

The implementation of eto software platforms can significantly improve communication efficiency by creating centralized repositories for project data. These systems enable all stakeholders to access current project status, change orders, and cost estimates simultaneously. When properly configured, such platforms eliminate information silos that often contribute to project deviation.

Advanced communication systems also support better integration with MRP systems, helping manufacturers maintain accurate inventory forecasts and production schedules. This integration becomes particularly valuable when managing multiple concurrent projects with overlapping resource requirements.

2. Manage change requests

Managing data is a subset of your communication system. And keeping on top of your change requests depends on your ability to efficiently manage your data. Because every time data gets inputted into your system, there's the chance that it'll be incorrectly stored, stored in the wrong place, unnecessarily duplicated or not made available to the people who need it. And the large number of change requests in ETO means that data is constantly arriving into your system. So by rigorously improving your communication network, you'll necessarily be improving your ability to better manage your change requests.

Systematic Approach to Configuration Management

Change requests in customized product development present unique challenges that require sophisticated tracking mechanisms. Each modification must be evaluated not only for technical feasibility but also for its impact on overall project timelines and costs. This evaluation process becomes more complex when dealing with interdependent system components or when changes affect multiple production stages.

Successful change management relies on establishing clear approval workflows that involve all affected departments. Engineering teams must assess technical implications, while production planners evaluate manufacturing feasibility and resource requirements. Financial controllers need to validate cost impacts and adjust pricing accordingly.

The configuration management process also benefits from historical data analysis. By examining patterns in previous change requests, manufacturers can identify common modification types and develop standardized response procedures. This proactive approach helps reduce the time required to process changes while maintaining quality standards.

3. Align resources

One of the major factors in producing unforeseen costs in Engineer to Order manufacturing is the misalignment of labor and non-labor costs. With locations being staffed by people who've been booked for the day but who have nothing to do because the materials haven't arrived. Ordering and procuring the materials and parts that you need is a perennial challenge in the ETO process, where many of the products are long-lead items. It is then particularly important that all your departments are up to speed about where everything is in the supply chain. So the "what" can be correctly matched up with the "who".

Strategic Resource Allocation for Manufacturers

Resource alignment in ETO manufacturing requires sophisticated planning tools that can accommodate the dynamic nature of custom projects. Traditional resource planning methods often fall short when dealing with unique product specifications and variable project timelines. Modern manufacturers need systems that can adapt resource allocation based on real-time project status updates and changing requirements.

Effective resource management also involves cross-training personnel to handle multiple project types and manufacturing processes. This flexibility allows organizations to redistribute workforce capacity as project demands fluctuate. Such adaptability proves particularly valuable when dealing with unexpected technical challenges or accelerated delivery schedules.

Supply chain coordination represents another aspect of resource alignment. Manufacturers must maintain visibility into supplier capabilities and lead times while managing inventory levels for both standard and specialized components. This balancing act requires sophisticated forecasting tools that can predict material requirements based on current project pipeline and historical usage patterns.

Eliminating deviation in ETO

In other words, those three pillars are causally linked. Because your internal communication network has been rigorously streamlined and is perfectly functioning, everyone is up to speed on all the various change requests for the different projects. Because of which, all your labor and non-labor resources are much better aligned. So any discrepancies between the price you quoted your customer, and what it cost you to produce it, have been factored into your estimates. In other words, there is no deviation.

Engineer to order tech

In short, what it all comes down to is the software system you employ to govern your internal communication network. The right software will give you full visibility. And that means control. So long as you can configure it so that it's precisely crafted to suit your specific needs, you'll be able to minimize and eventually eliminate deviation completely. What you really need then is a manufacturing engineering software package that functions in much the same way that Engineer to Order manufacturing does. One that's as configurable and responsive to change requests as you are with your customers.

Implementing Advanced ETO Software Solutions

Modern ETO software platforms offer sophisticated capabilities that extend beyond basic project management functions. These systems integrate design tools, production planning modules, and customer relationship management features into cohesive platforms that support the entire product lifecycle. When properly implemented, such systems provide real-time visibility into project status, resource utilization, and cost performance.

The selection of appropriate technology solutions requires careful evaluation of organizational needs and existing system capabilities. Integration with current MRP systems, CAD platforms, and financial management tools represents a priority consideration. Seamless data flow between systems eliminates manual data entry requirements while reducing the potential for errors that can contribute to project deviation.

Training and change management represent equally important aspects of technology implementation. Personnel must understand how to leverage new system capabilities effectively while maintaining productivity during transition periods. Organizations often benefit from phased implementation approaches that allow teams to adapt gradually to new processes and tools.

Advanced Strategies for Requirements Management

Effective requirements management in ETO manufacturing begins with comprehensive customer consultation processes that capture both explicit and implicit needs. Experienced sales and engineering teams develop skills in translating customer objectives into detailed technical specifications that guide design and production activities. This translation process requires deep understanding of both customer industries and internal manufacturing capabilities.

Documentation standards play a role in requirements management success. Consistent formatting, version control, and approval procedures help maintain specification accuracy throughout project lifecycles. When requirements change, documented processes support systematic evaluation and implementation of modifications while maintaining project control.

The development of requirements templates and checklists can accelerate customer consultation processes while reducing the likelihood of missing important specification elements. These tools prove particularly valuable when dealing with complex products that involve multiple subsystems or when serving customers in unfamiliar industries.

Conclusion

Preventing deviation in Engineer to Order manufacturing requires systematic attention to communication, change management, and resource coordination. By implementing robust processes supported by appropriate technology solutions, manufacturers can achieve predictable project outcomes while maintaining profitability. Success depends on treating each ETO project as part of a broader organizational learning system that continuously improves estimation accuracy and operational efficiency.

The integration of advanced planning tools, comprehensive requirements management processes, and proactive risk mitigation strategies enables manufacturers to deliver customized solutions that meet customer expectations while preserving healthy margins. Organizations that master these capabilities position themselves for sustained success in competitive ETO markets.