A Comprehensive Guide To Product Configuration
For a business to be operational, it majorly relies on two parties—the suppliers and the customers. Without customers, a business won’t make sales and will close down. On the other hand, the business gets its products from suppliers. Customers rely on the business to get what they want. When running a business, you need to offer your clients what they’re looking for in order for your company to thrive.
Apart from the price, when choosing products, customers also consider whether or not such items will satisfy them. Therefore, apart from coming up with enticing price offers, you should try to create products that customers will be pleased with. One of the ways of satisfying your customers is by asking them what they want and use such inputs during product configuration.
This article defines product configuration and explains how to do Continue reading to learn more.
What Is Product Configuration?
Product configuration is the process of customizing goods and services according to your customers’ needs and wants. It helps with keeping up with the ever-changing tastes and preferences of customers. Also, product configuration helps customers easily get the products they want.
There are various types of product configurators you can offer to your customers. Some of them include:
- Pick-to-order (PTO): This type lets customers figure out which dependent product materials go together. Most eCommerce businesses use this configurator.
- Select-to-order (STO): This configurator allows customers to pick independent materials. This means the materials chosen don’t affect each other.
- Make-to-order (MTO): This involves making products after clients have placed their orders. The materials are prepared in advance.
PTO and STO are categorized as less complex configurations, while MTO is more complicated.
One of the ways you can do product configuration is by preparing a list of all the materials needed. This list helps in attaining the components of a product. A product mainly has three components:
- Core benefit: This component deals with the advantages of using or purchasing a product. For instance, the core benefit of buying a car is that you’ll have a better transportation experience.
- Augmented benefit: It’s the added value you get from purchasing a product. Augmented benefits include warranties, excellent customer service, and complementary products.
- Actual product: As the name suggests, this is what you purchase or consume.
A list containing these materials is called a bill of materials (BOM). A BOM is also known as a product recipe, assembly component list, or product structure. It entails the information you need to produce what your customers want. In other words, it acts as a guide for product configuration.
If you decide to do product configuration using BOMs, you need to create one. Below are steps that you can use to create a BOM.
How To Do Product Configuration Using BOMs
As explained above, the main aim of product configuration is to satisfy customers. Due to customers’ dissimilar tastes and preferences, you may have to produce different product versions. To avoid making mistakes during production, you can create a list of everything you’ll need (BOM), together with the quantity and costs, and use it as a reference. To do product configuration, you first need to create a BOM.
Here are steps that can guide you in creating a BOM:
- Determine What You Need To Include In Your BOM
This step involves noting down all the materials that you’ll need. This will help in ensuring that you have everything available during assembly.
- Have Information In A Single Record
Many businesses have various departments dealing with different things. These departments have systems that contain relevant information. For product configuration to be effective, you need to ensure the BOM is accurate and up-to-date. For this to happen, you need to gather information from the systems of your business’s departments and compress them into a single record. This information is what will be used during product configuration.
- Determine Who’ll Be The BOM Editor
As mentioned earlier, customers’ preferences change over time. This means you’ll also have to make changes in your BOM to keep up with such changes. When it comes to carrying out these modifications, you’ll only need a limited number of people to minimize the risks of human error.
- Have A Way Of Tracking Changes Made To The BOM
BOM revisions are made often. To ensure that these changes don’t affect the accuracy of BOM, you need to trace these things back to the author. This will help clarify things if there’s a misunderstanding regarding the changes.
- Select The BOM Presentation To Use
There are two types of BOM structures to use. These include:
- Single-level BOM: This structure is similar to a shopping list in that it shows the parts that’ll be used together with the needed quantity. For this reason, it’s easy to make such a BOM. Moreover, it doesn’t show the relationship between the parts used to make the product. However, this character contributes to the disadvantage of single-level BOM in that if there’s an issue with the final product, it can be challenging to identify which part could be the cause.
- Multi-level BOM: Unlike single-level BOM, this structure shows the relationship between the assemblies.
The structure you’ll use depends on your products. Single-level structures are used for simple assemblies, while multi-level structures are used on complex products such as cars.
- Review Your List
Since you need to make changes depending on what your customers want, it’s essential to go over your list to ensure that you add the parts or materials you didn’t have before. Also, you can remove the materials that you won’t be using.
The above steps can give you an idea of what to include in your BOM. However, other key elements haven’t been mentioned in the steps. They include:
- Levels Of BOM
A BOM contains the finished product, components, and materials used. A BOM hierarchy lists these items by placing the final product at the top and going down to the individual components. At times, it may be challenging to break down a BOM. Therefore, the levels will make it easy to understand the hierarchy.
- Numbers Of The Parts That’ll Be Used
Many products are made by assembling various parts. When making such products, you begin with specific parts and add others as you progress. To make the assembly easier, you can number the parts you’ll use.
There are two numbering systems you can use. The first one includes an intelligent number, whereby you add a description of the part. For instance, if you’re using glass, you can number it as glass 0001. Glass 0001 means that it’s the first glass you should use. However, this numbering system requires you to be informed about the parts so that you’ll be able to number them correctly.
The other type of numbering is non-intelligent, which doesn’t require extra description. This type of numbering is mostly used in assembling procedures that remain the same for a long time.
Regardless of the numbering type you choose, always ensure you don’t have multiple numbers for the same part.
- Name Of The Parts
Instead of using the numbering system, you may prefer to name the parts for easier identification. However, unlike numbering, naming may not include when to use each part.
- Phases In Which The Parts Will Be Used
Production involves various processes, such as production and packaging. Also, different parts are used in different phases. This sector involves indicating which phase the products belong to. For instance, you can add labels like ‘in production’ to show that a specific part is used in production. Also, sometimes, you may have parts that haven’t been approved yet. In such a case, you may label these parts ‘unreleased’ or ‘in design’ to indicate they haven’t been incorporated into the assembly process yet.
- More Descriptions
Besides naming and numbering, you may have to further describe the parts. This is done when there are similar parts that differ in some aspects, such as size. For instance, you may be using screws of different sizes. Naming and numbering them may not offer enough information to differentiate them. In such a situation, you can add the size to ensure you use the right screw in the correct phase.
- Quantity Needed For Each Part
Having the right measurements is essential, as too much or too little of a part may affect the outcome of the final product. Since product configuration aims at getting everything right, it’s critical to indicate the proper quantity. For instance, you can indicate the number of parts needed in each assembly.
Besides getting the right quantity for assembly, this sector also guides you on how much you need to purchase. Getting a smaller quantity may slow down the assembly process as you may have to spend some time buying more parts. On the other hand, having an excessive supply may result in overspending money that could’ve been used in other areas.
- Specific Unit Of Measure
It’s crucial to indicate the unit of measure to be used after figuring out the right quantity. This will help avoid any confusion during purchasing, as well as assembly. Moreover, using the same unit of measure in all stages of assembly is more preferable.
- The Procurement Type
The parts used are either purchased or manufactured. In terms of the latter, you can produce them internally or get them from subcontractors.
- Reference Designator Used
When dealing with electronic components, you may have to connect them in a controlled manner through a medium, which is called a printed circuit board. A reference designator is used to identify where each component is within the board.
- BOM Extra Notes
This part includes any other relevant information not mentioned in the above sectors. For instance, you may add other suppliers you can work with.
Besides understanding how to do product configuration, it’d be helpful if you understood the benefits of product configuration.
Advantages Of Product Configuration
- It Increases Your Sales
Through product configuration, you can provide what your customers are looking for, therefore, making them satisfied. Customers who are satisfied with your products tend to come back and may become loyal customers. Also, they can refer you to their friends through word of mouth. Referrals mean you may get more customers, leading to increased sales.
- It Helps The Sales Department
One of the sales team’s roles is to push a business’s sales. By doing product configuration, you get an idea of what customers want. This saves time in figuring out how to increase sales. Instead, you can use this time to focus on the customers who already know what they want. Also, product configuration can help save the time spent on creating quotes. This is because a product configurator automates the quote-to-production process.
- It Increases Efficiency
Since many production procedures are automated, the risk of human error is minimized. This increases accuracy, which, in turn, increases efficiency.
- It Allows For Immediate Pricing
Before getting a product, some customers would want to know how much they’ll spend. Product configuration generates prices by using the requirements issued by the customers. The pricing changes depending on the preferences.
- It Provides Tracking That You Can Use
Unfortunately, it’s not every time that production ends as a success. At times, the final product may not be what your customer wanted. In such a situation, you need to trace your production process to identify the cause of the problem. With tracking, it’s easy to know where things went wrong, helping you find areas to improve. Also, this helps in preventing more avoidable mistakes.
Summing It Up
The success of a business relies on customers. If you offer what customers are looking for and need, you’ll be able to attract more of them, increase your sales, and, eventually, make more profits. One of the ways you can satisfy customers is through product configuration. The process allows customers to state their preferences, and you can use this information in production. One way of doing product configuration is through Bills of Materials (BOM).
If you aren’t familiar with product configuration or have never heard of it before, hopefully, this article has deepened your understanding about the said process.