September 13, 2024 Managing the Shift in Configuration Power to Customers

As product configuration management evolves, manufacturers are recognizing the need for CLM solutions.

By Daniel Joseph Barry, vice president of product marketing, Configit

Digital transformation has been a key trend driving manufacturing operations investment for the last decade. However, the underlying assumption has been that the manufacturing processes themselves would be enhanced rather than disrupted. For manufacturers offering standard products with few variants, this has proven to be true.

But for manufacturers offering highly customizable and configurable products, the whole value chain has been disrupted, requiring an entirely new mindset. Offering customizable products fundamentally changes manufacturing operations, requiring new approaches like Configuration Lifecycle Management (CLM).

The changing manufacturing landscape

Customer expectations and technological capabilities are changing the manufacturing landscape. The availability of customizable products shifts the power in the relationship from manufacturers to customers.

With standard products, manufacturers dictate how the product is designed, manufactured and offered to the customer. In the words of Henry Ford, “You can have any color you want as long as it’s black.” With customizable products, customers configure the product they want from choices offered by design, but what gets manufactured, and when, is now dictated by what the customer chooses.

This fundamentally shifts the power in favor of the customer. It also introduces complexity in the entire value chain. The manufacturer needs to figure out which options to offer, under which circumstances from a technical, logistical, commercial and service perspective. It is a cross-functional challenge that is being managed today on a siloed basis within engineering, manufacturing, sales and service organizations using a wide array of software systems and solutions.

Benefits of CLM

All of this calls for an entirely new mindset and approach for manufacturers offering customizable and configurable products. This is why many manufacturers are adopting cross-functional approaches like configuration lifecycle management. According to Gartner, “by 2026, CLM will transform 40% of manufacturers, reducing the amount of customer-specific engineering required to deliver products.”

With CLM, it is possible to consolidate the configuration information resident in existing systems in engineering, manufacturing, sales and service on a SaaS “shared-source-of-truth” for cross-functional configuration information. This doesn’t replace or interfere with the processes within each department but enables an end-to-end view of what is being offered.

This approach can be used to ensure that customers can only order product configurations that can be delivered, as well as analysis and optimization of the portfolio of products and choices being offered. This enables manufacturers to manage the complexity of configurable products, along with the commitments made to customers to ensure zero errors, low risk and fast response.

Finding a better solution

Now that customers expect the option to customize their products in one seamless experience, CLM has become essential. However, as organizations manage various aspects of their operations, most employ three or more different product configuration management tools. Variations can result in issues with quality, product development and delivery delays, and the possibility that the wrong product gets delivered to the customer.

It would initially seem to make sense that a product lifecycle management (PLM) system should be where products are configured, as that’s where they are designed and engineered. Yet though PLM systems do provide product variant management and, yes, configuration management modules, they’re usually geared toward the needs of engineers and their technical choices as a product is designed and engineered.

These choices sometimes make their way to the end user, but they are usually only of interest to the engineers. There are no rules and choices about localization, market availability and so on, since these are not things engineers need to think about.

ERP, CRM and CPQ systems all play their part, but product configuration management is the true performance bottleneck. That’s the reason organizations need a separate system solution so they can define and manage product configurations. By using a solution like this, a manufacturer can define product configurations one time and deliver them to many sales channels and systems.

This approach guarantees consistency of product configurations via up-to-date, reliable information that spans all sales channels and systems. Essentially, it’s the empowering force for manufacturers to make the shift from multi-channel sales to omni-channel sales – an arena in which consistent user experiences must be failsafe.

For asset-intensive manufacturers and others who sell complex products and services, a unified and shared-pane-of-glass CLM approach ensures the removal of inconsistencies, the scaling of performance with demand, and the error-free delivery of configurations to customers.

Profiting from the power shift

Customers have tasted the power of configuring customizable products, and they’re not going to give that power back. Consequently, offering a seamless configuration experience, regardless of sales channel, has become a necessity. Achieving this level of customer experience disrupts manufacturing operations and is far easier said than done in this sector.

As product configuration management evolves, manufacturers are recognizing the need for CLM solutions so that customers have a satisfying experience and get the products they want. A single, unified CLM solution eliminates data silos and creates a shared source of truth for all product configurations. It meets the need for high-performance, scalable and omni-channel sales solutions. This shift in approach results in happier customers, fewer errors and an expanded revenue opportunity.

About the author
Daniel Joseph Barry is vp of product marketing at Configit the global leader in Configuration Lifecycle Management (CLM) solutions and a supplier of business-critical software for the configuration of complex products. He has over 30 years of experience in the Telecom and IT industry, working in various technical and commercial roles.

Educated as an electronic engineer, he progressed from research and system development roles to leadership roles in business development, sales, product management, marketing and strategy in global multinationals like Ericsson, as well as startup and growth companies. After several years as an independent consultant, he joined Configit in 2023 in a role that leverages all his experience in articulating the value that CLM and Configit can provide, as well as providing insight into market needs.

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