Sample Model Description—Configure to Order

The goal of Configure to Order (CTO) is to support multi-level product customization within the predefined engineering limits of a product family. Enforcing engineering rules as part of the sales process makes it possible to release a valid product configuration to Manufacturing as soon as a sale is completed. This eliminates the need to reengineer the product each time an order is taken and thus reduces product delivery lead time and cost.

Introduction

The ability to make and deliver products customized to customer needs offers a powerful competitive edge. At the same time, however, it takes comprehensive functionality to handle the complex material flow of parts that can be combined into perhaps millions of combinations. The IFS functionality for Configure to Order  (CTO) gives you powerful functionality to handle these situations by providing support for configured products. Instead of using a part number for each unique combination, you maintain a configurable base item number, making it much easier to maintain and control products and their possible variations. You define the characteristics and possible values of each characteristic for each base item. Orders are entered in configured form with feature and option selection. Multi-level structure functionality makes it possible to have configured products that consist of other configured products at many levels.

The CTO functionality has advanced IFS Applications in numerous areas, including the following:

• Configuration Characteristics and Configuration Back Office
• Inventory
• Part Catalog
• Manufacturing Standards
• Dynamic Order Processing (DOP)
• Customer Orders
• Shop Order
• Purchasing
• Costing
• Planning
• Constraint-Based Scheduling (CBS)

With CTO a terminology and concept of its own has been introduced, among them the following:

• Configuration family—A set of products sharing common engineering and configuration data
• Configuration characteristic—An attribute or classification of a product describing its functional capabilities
• Option value—A value associated with discrete characteristics and offering a specific alternative
• Configurable part—A part that can be configured, belonging to a configuration family. The part is configured based on family characteristics selected for it.
• Configured part—A part whose specific characteristics and options are chosen for it
• Configuration—A set of characteristics and values that are associated with a configurable part, typically attached to an order line
• Sales Configurator—A tool used to define rules governing valid values for a specific configuration
• Back Office Configurator—A tool used to define rules governing the manufacture of a configured product, including support for multi-level product configuration within predefined engineering limits

Requirements and Solutions

The CTO solution is driven by market demand for product customization combined with cost pressures and shorter delivery time expectations. Pre-engineered product elements can be captured in the form of back-office manufacturing rules that allow reuse of design commonality. This helps automate the manufacturing order flow, reducing human intervention and avoiding the need for re-engineering each time a new order arrives.

Requirements of companies that fit the CTO profile can be described as follows:

• Companies will typically configure a specific product structure and routing based on the options selected, so support for both sales rules and back-office, multi-level manufacturing rules is important.
• Products typically belong to a family of already engineered items, where the product configuration reflects sales and product engineering rules. There may also be a need to re-engineer minor parts of the product due to special customer requirements.
• Feature and option selection, along with the ability to do formula-driven configuration, is important. These should be considered throughout the entire structure.
• The ability to handle configuration-dependent pricing is crucial.
• Products are generally material intensive, so material requirements planning (MRP) and inventory control are important, as is support for multi-site order sourcing.
• Visibility into available manufacturing capability (material and capacity) is important.
• The customer may choose to cost at actual or standard.
• The ability to create configuration-dependent quotations is required.

Defining Configurable Parts

Configurable products are defined as parts with selected characteristics and options necessary to specify a complete configuration. The Back Office Configurator is used to define rules for manufacturing a multi-level configured product based on specific characteristic values.

Some of the key aspects of the Defining Configurable Parts process are as follows:

• Definition of configuration characteristics and valid options that are necessary to describe the product. Characteristics can be either discrete or variable, mandatory or optional, alpha or numeric.
• Support for defining more complex sales rules to guarantee valid sales configurations
• Back-office rules outlining the manufacturing resources that are required according to specific configuration values. Manufacturing rules allow conditional selection, derivation, and calculations to determine the proper product structure and routing elements.

Configured Sales Quotation Entry

As an optional step in the sales process, the entry of sales quotations for configured products is supported. This step includes entry of the desired configuration with configured pricing and available/capability check date calculation.

Some of the key aspects of the Configured Sales Quotation Entry process are as follows:

• Entry of offered configuration, with specified features/options that conform to sales rules
• Configuration-specific pricing
• Configuration-specific order-based costing/contribution calculation using interim orders
• Configuration-specific capability check functionality using interim orders as a resource reservation vehicle
• Copy of any attached interim order for a won quotation
• Printed quotation stating the configuration specification and associated pricing

Configured Customer Order Entry

The CTO solution provides for the entry and management of configured orders—from initial pricing, through invoicing, to follow-up. Configured products can be sourced from either Manufacturing or Purchasing.

Some of the key aspects of the Configured Customer Order Entry process are as follows:

• Entry of offered configuration, with specified features/options that conform to sales rules
• Configuration-specific pricing
• Configuration-specific order-based costing/contribution calculation using interim orders
• Configuration-specific capability check functionality using interim orders as a pegged resource reservation vehicle
• Option to print configuration specification information on the order confirmation document. Characteristics and discrete values can be displayed in different languages.
• Release either to Manufacturing via DOP or shop orders (for single-level configured structures), or to Purchasing via external or internal (intersite) suppliers. The configuration information is transferred to the applicable orders.

Managing DOP Structure

Dynamic Order Processing (DOP) is the primary vehicle for managing the production of configured products, as it organizes the production requirements in a multi-level pegged order structure.

Some of the key aspects of the Managing DOP Structure process are as follows:

• The product structure/routing explosion can produce a multi-level pegged order structure (DOP) as well as a single shop order (single-level only).
• When the product structure/routing is exploded, back-office configuration rules are evaluated to obtain the configuration-specific structure/routings from the superset product structure/routings, as defined in Manufacturing Standards.
• Every configuration (derived or entered) of a product defines the product completely and exists in its own right. This means, for example, that a configured part may exist as a component (derived configuration) and as a (separately sold) spare part.
• Automatic netting is supported for identical configurations in inventory (and planned excess quantities).
• Manual netting is supported for “compatible” configurations in inventory.

Production of Configured Products

Shop orders are used to manage the production of configured parts. Though a shop order is typically pegged to the DOP structure for the end item or configured subassembly, configured shop orders can be created manually or directly to supply a customer order (for single-level structures only).

Some of the key aspects of the Production of Configured Product process are as follows:

• The normal shop order production flow is used for configured parts.
• The shop order structure and routing explosion are based on back-office configuration rules.
• Configured goods received into inventory are typically automatically reserved to source requirements (e.g., customer order or DOP order).
• The distinct configurations received into inventory are visible.

Purchasing Configured Products

All normal purchase flows are supported for configured products demanded by either DOP or as supply for a customer order.

Some of the key aspects of the Purchasing Configurable Products process are as follows:

• Configured products can be purchased. The sold product may be purchased entirely, or a component with (a derived) configuration may be purchased.
• Purchase requisitions are generated by Master Scheduling (MS)/MRP for (non-configured) components of configured parts. 
• Purchase requisitions are generated by the DOP structure explosion along with the needed configuration specification.
• A request for quotation (RFQ) can be generated for any configured part supplied directly for a customer order (using purchase order supply codes).
• Configured products may be purchased from an external supplier or an internal supplier. In case an internal supplier is another site within IFS Applications, intersite ordering (with EDI messaging) is supported.
• The configuration specification is printable on all purchasing documents. Characteristics and discrete values can be displayed in different languages.

Stocking and Costing Configured Products

Configured products are stocked by distinct configuration in inventory. You have a choice of costing methods for configured parts.

Some of the key aspects of the Stocking and Costing of Configurable Parts process are as follows:

• The inventory balance of a configured part is stored by part number, site, and configuration ID.
• The configuration associated with a configuration ID can be viewed in many windows in IFS Inventory by right-clicking in the windows.
• Costing can be based on orders (costing per unique configuration) or on a “statistical” part, using the probability factors for each component and operation in the superset product structure/routings.
• Configuration-dependent cost rollups are performed based on the execution structure (DOP, Shop Order).
• A simulation structure (interim order) is used for order/quotation cost calculation purposes.
• If the costing is per configuration, a standard cost per unique configuration is kept. This value is used for all postings of transactions concerning the specific configuration.
• Except that the cost may be evaluated per unique configuration, there is no change to the transaction postings due to configured products.

Shipping and Invoicing Configured Parts

Shipping and invoicing for configured products follow the normal application flows, except that configuration information can be added to order documents.

One of the key aspects of the Shipping and Invoicing Configurable Parts process is the option to print configuration specification information on the shipping documents and printed invoice. Invoice print settings can be specified with or without associated price contribution per configuration characteristic. Characteristics and discrete values can be displayed in different languages.

Planning for Configured Products

Long-term planning for configured products starts with market forecasts for configured items. Purchasing and other resource commitment planning for configured items is based on probability factors for each component and operation in the superset product structure and routings. This data is used to drive demand for (non-configured) components of configured goods.

Some of the key aspects of the Planning for Configured Products process are as follows:

• Demand planning allows for statistical forecasting of configured items, yielding models that respond to seasonality or other business cycle trends. Forecast outputs are used to drive long-term purchasing commitments.
• Master scheduling at Level 1 of configured parts enables then user to plan supply of non-configured components.
• MRP and CRP respond to the master schedule plan based on probability factors defined for components and operations in the superset product structure and routings.
• DOP is used to manage the production and/or procurement in response to customer demand for configured items with a pegged product structure specific to the customer's specified configuration.