According to the newest GEXSO study, companies more and more understand Product Configuration as a critical success factor but are still missing the most important point.
You do not have to be an expert to realize that you cannot avoid the individualization of products and customer orders in today’s world. Many aspects are important if you want to satisfy the demands of a customer or create an individualized offer. Successful companies offer a wide range of product variants and individualization options throughout their global sales operations and supply chain, which is a core prerequisite for their competitiveness and success on a global scale. For a successful market strategy, the technical view of a product is becoming more and more important, especially the management of variants and customization options.
These are some of the main conclusions drawn by the Global Excellence in Supply Chain Operations initiative (GEXSO) (http://gexso.com). GEXSO is a cooperation between the Technical University of Darmstadt (https://www.tu-darmstadt.de/index.en.jsp), the magazine “LOGISTIK HEUTE” (https://www.logistik-heute.de/) and the management and technology consulting firm BearingPoint (https://www.bearingpoint.com). The study’s main goal is to focus on the global strategy, as well as to outline the existing globalization competencies for discrete manufacturers. It also identifies challenges and potentials of improvement and offers support in finding the right solutions and approaches.
According to the study, most of the medium-sized industrial companies are already global players – they are focused on expansion and have a strong global footprint. 80 percent of industrial manufacturers see product configuration as a key enabler for their success. When it comes to the maturity of their product variance management, the percentage share is even higher: Almost 90 percent believe that the skillful management of product configuration is decisive for their success. These companies have already laid the foundation for successful variant configuration, as most of them already have common products and material numbers. They share and re-use product models and modular system components through the management of standard assemblies.
Product Configuration as success factor for competitiveness
Source: BearingPoint
According to results of the study, those companies that customize more than 80 percent of their products via configuration have optimized the processes and perfected the configuration compared to the participants with less product variety, but otherwise, do not differ in their overall strategic goals. Operational priorities such as reduction of errors in the ordering processing or overall cost reduction remain the focus. Other strategic goals, such as the standardization of the product portfolio or an increased win rate are less important.
Achievement of objectives through product configuration
Source: BearingPoint
While most apply already some form of product variant management, further extending this approach in sales e.g. through guided selling or active product recommendations is not yet common. In addition, digitalization still holds a lot of potentials which are not yet being leveraged. Graphical 3D previews of the product are mostly not used. The possibility of using a "digital twin" to provide data of the individual configuration up to the customer service (equipment information) is also currently not used. While these opportunities largely are untapped, the surveyed group of manufacturers have started to understand them and are now more and more evolving their offerings into these directions.
Digitalization strategies in sales for product configuration
Source: BearingPoint
To manage the complete Digital Configuration Lifecycle, SAP offers for your customer’s experience C/4HANA Sales Cloud Configure, Price, Quote (CPQ) and for your Digital Core S/4HANA for advanced variant configuration.
For S/4HANA for advanced variant configuration, please check out the following articles:
ON AIR with Sven Denecken: https://blogs.sap.com/2017/05/03/sap-s4hana-for-advanced-variant-configuration-on-air-with-sven-dene...
Business view: https://blogs.sap.com/2017/09/19/s4hana-1709-use-case-series-3a-advanced-variant-configuration-biz-v...
Technology view: https://blogs.sap.com/2017/09/27/s4hana-1709-use-case-series-3b-advanced-variant-configuration-tech-...
For C/4HANA Sales Cloud Configure Price Quote (CPQ), please check out the following information:
C/4HANA: https://www.sap.com/products/crm-commerce/c4-hana-cx-suite.html
Sales Cloud: https://www.sap.com/products/crm-commerce/sales.html
Configure, Price, Quote (CPQ): (https://www.calliduscloud.com/configure-price-quote-cpq
For further information, please contact us at sapvc@sap.com
References:
Global Excellence in Supply Chain Operations (GEXSO): http://gexso.com/en/
GEXSO study “Product configuration as a success factor for industrial product manufacturers” in English: https://www.bearingpoint.com/files/Study_Product_Configuration_GEXSO_EN.pdf
GEXSO study “Product configuration as a success factor for industrial product manufacturers” in German: http://gexso.com/de/gexso-studie-produktkonfiguration-als-erfolgsfaktor-im-maschinen-und-anlagenbau/
GEXSO study 4.0 on Product Configuration in “Logistik heute” magazine in German: http://gexso.com/de/gexso-studie-4-0-in-der-logistik-heute/
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