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Customer Self Service for Configured ProductsHank Canitz Sr. Dir Industry MarketingMidwest User Group Meeting1Mass Production to Mass CustomizationQAD ConfiguratorQAD Customer Success StoryRecommended ActionsAgendaMidwest User Group Meeting23Lower prices Higher qualityFaster delivery Customized products

Customers DemandingMidwest User Group MeetingMass Customization Is (Finally) The Future Of Products

Forrester, April 15 2011

Customers tend to put manufacturers under a lot of pressures. And if you are not in the unique position to hold a market niche where you are the sole provider, you will have to work hard to keep your customer happy and ahead of the competition. And with deregulation and globalization of the market this becomes more true than ever...

A key strategy to maintain competitive advantage and differentiate from peers is to provide superior customer service and to provide products that exactly match customer requirements and needs. But custom-made products can come at a high cost and with long lead times.

The concept of Mass Customization the production and distribution of customized goods and services on a mass basis has the goal to address these issues by combining the low unit costs of mass production processes with the flexibility of individual customization.3

Mass Production Midwest User Group Meeting4Ford revolutionized mass production, and back then you could have any color - as long as it was black.

This worked until other automobile manufacturers also became proficient at mass production and then started offering color and other options. With these first options the path started towards....

Mass CustomizationMidwest User Group Meeting5Mass customization restores customer individuality to production.

Consumers with great purchasing power like to express their personality through customized product choices.As a result, manufacturers are forced to build production systems that support an increasing number of variants, right down to the production of units of one.

At its best, mass customization allows product strategists to: Differentiate products sufficiently to become the sole supplier Cultivate unparalleled customer loyaltyGenerate additional margin6The challengeIn a recent study more than 35% of consumers were interested in purchasing build-to-order productsA polarized economy will develop

The ImpactTo meet CTO requirements manufacturers must adopt:SC technologies that enable more efficient productionCustomer-facing technologies, like order configuratorMore effective management of engineering changesMore accurate new product demand projectionsThe Emergence of Mass CustomizationMidwest User Group MeetingCommoditized Products High Value Offerings Often you hear analysts talking about Mega Trends.

Mega Trends are long-term, far-reaching transformational processes that can be predicted with fairly high probability at least 10 years into the future. Mega trends have a broad impact and extend to most regions of the world and many companies. Mega trends generally bring about radical, multidimensional political, social, and economic revolution.

One such mega trend is the emergence of mass customization as a prominent manufacturing business model.67Manufacturing StrategiesMidwest User Group MeetingVarietyVolumeDesignPurchaseManufactureAssembleShipInventoryManufactureAssembleShipManufactureInventoryAssembleShipManufactureAssembleInventoryShipDelivery Lead TimeDelivery Lead TimeDelivery Lead TimeDelivery Lead TimeEngineer-to-Order (ETO)Make-to-Order (MTO)Assemble-to-Order (ATO)Make-to-Stock (MTS)Configure-to- Order (CTO)So if your customers demand many different flavours of a product, you basically have the following choices:

You can try to forecast what your customers may want, and produce those variations you anticipate are the most wanted, to inventory. This strategy may work well if your market can be satisfied with a rather small number of different products and if those can be sold in high volume. For this model delivery lead times are short but inventory levels are rather high and you may actually fail to produce what your customers really want.

On the other end of the spectrum would be the direct involvement of the customer in the design process and to engineer every product to the specific needs of a particular order and run the manufacturing in job shop mode. This process obviously doesnt lent itself easily to automation, it is time and cost intensive, and results in a considerable delivery lead time.

The Configure-to-Order concept, combines the best of both worlds of customization and mass production:

The end product is assembled or made to order out of a limited number of standard components that can be combined in hundreds or thousands of ways to match all actual customer specifications. The lower level components are either configurable themselves, or they are forecasted, produced in volume, and made to stock.

So rather than reinventing the wheel every new order, CTO processes embrace the concepts of reusability, effectiveness, and optimized resource consumption. With this approach, inventory levels for end items can be kept low, the delivery lead time is rather short ,and customers get what they actually want.78QAD ConfiguratorMidwest User Group MeetingBut the CTO approach does add a significant amount of complexity to your manufacturing process.

A lot of effort is required to create all those records, and a lot of tribal knowledge is needed to quote a product variation that actually can be built. That is where Configurator Software Tools can help.Configurators are a good fit when:A Company produces a relatively large number of end-products out of a relatively small number of componentsProduction is based on the assembly of variant products rather than fabrication of unique itemsOrder lead times, sales costs, & quote errors are considered highStandardization of components is desired89A powerful application designed to simplify processing of configure-to-order productsCaptures engineering knowledgeGuides through the selling processAutomatically generates work orders and routingsQAD ConfiguratorMidwest User Group Meeting

And this is where QAD Configurator comes into the picture. It is the primary enabler to successfully implement a configure-to-order process using QAD Enterprise Applications.

But how does the tool help?

It captures the engineering and marketing rules of your CTO productsThen it simplifies the quote or order process by walking the user through a simple series of questions to arrive at a valid product configurationAnd finally it automates the creation of all of the required backend data - like item records, product structures and routings - that match the configuration entered.910Guided salesFlexible questionnaire designPowerful price calculationsInstant conversion of customer requirements into manufacturing requirementsProduct configuration rulesSeamless integrationIntuitive, Informative, IntelligentMidwest User Group Meeting

One of the most powerful characteristics of QAD Configurator is its intelligent and flexible rules engine, capturing the engineering and marketing knowledge of your products in a formalized and centralized repository. Rather then having to consult numerous spreadsheets and specifications, users maintain and retrieve all relevant product information in one place through an intuitive user interface.

The Configurator Questionnaire exposes this knowledge in a simple and personalized way that guides a customer service rep during quote and order entry, and removes the need for the customer service rep to also be an engineer. Therefore it also dramatically reduces the time to get new customer service reps up to speed.

The knowledge repository is also accessed once an order has been completed and the engineering data are automatically created by the Configurator: the product specification is converted into components which are picked and operations which are selected to get the customized product finished.1011Uses the QAD .NET UIMidwest User Group Meeting

The QAD Configurator is fully integrated with the QAD .Net User Interface and can take advantage of such built-in tools like the QAD Process Maps, Operational Metrics, and Browses.1112Integration withSales QuotationsSales OrdersItems and Item-Site recordsProduct StructuresRoutingsCostingPricing

Available for QAD SE and EEMidwest User Group Meeting

The QAD Configurator is available for both the Standard and Enterprise Edition of QAD Enterprise Solutions. It is fully integrated with .1213Configurator uses QAD Enterprise Applications language infrastructureAvailable in all QAD core languagesExternalization of labels & full translationMidwest User Group Meeting13

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14Meet customers specific requirementsStreamlined order and quotation processReduced error ratesReduces lead time to fulfill ordersBridge knowledge gap

Your Competitive AdvantageMidwest User Group MeetingThe QAD Configurator can be your companys competitive advantage when providing CTO products.

First, and above all, it allows you to easily offer your customers the product variations they wantBut it also ensures that this does not come at the price of high costs and long lead times by automating the massive amount of work that otherwise would be requiredAnd finally, it helps close the knowledge gap between sales and engineering. Any CSR can now simply enter quotations and orders for configured products without going back and forth to the engineering department, or extensive initial training.1415Forecast consumption for planning itemsUser defined warning messagesEnhanced for kits and links to sales quotes/ ordersNew attribute creation rulesIntegration with enhanced best pricingKey Recent Product EnhancementsMidwest User Group Meeting

The QAD Configurator is a product with very active development.

So if I look at the last couple of years, we significantly invested in the Configurator product and were continuously evolving it to make it even better and more valuable.

A few of the key enhancements include...

Forecast consumption for planning items to provide better visibility of sales to forecasts.User defined warning messagesThe ability to combine the sale of highly configured sets, kits or bundles of products, and services as a package. This brings the Configurator much closer to the QAD SSM module. We also have leveraged the new enhanced Attribute functionality that was added to QAD EA to attach additional information - like size, color, and shape to products and order lines. The Configurator is able to intelligently populate these attributes so they can be used further downstream in the process.The QAD Best Pricing engine has been enhanced so it can select price list candidates in real time, using attributes and sales order fields, like order type, channel, source, and the like. The Configurator leverages these enhanced capabilities in the price calculation for configurable products.

15March 2013 ReleaseQAD Configurator 5.4 EnhancementsMidwest User Group Meeting1617Enhancement Release, March 2013Variant Item Master Comment creationEMT support: Supplier Item creationCost Roll-up control flag in Configuration RebuildUsability and layout improvements in QuestionnaireConfigurator 5.4 ReleaseMidwest User Group MeetingNow the upcoming Configurator 5.4 is a actually only a minor product release, but it contains 4 customer driven smaller enhancements that are of great value to many customers including...1718Creates master comments for configured itemPerfect to add configuration description and notesVisible with item, sales order print, invoice print, et ceteraCan also be used to create comments in multiple languagesVariant Item Master Comment CreationMidwest User Group Meeting

The Master Comment creation allows for automated creation of configuration description on business documents like sales order print, even in multiple languages.

18EMT ProcessSupplier Item is the cross-reference to convert PBU SO/PO line items into SBU SO line itemsMaster Comments can be used for Configuration DescriptionConfiguration ModelOne central modelOne Configurable ItemItemSet up Configurator Variant Item-Site Records for both sitesBOM/RoutingLinked to item numberDomain APBU EntitySO SiteSBU EntityShip-From SiteSOSOPOVItemVBOMVRout.VItemSiteVItemSiteCItemCOPPC RulesSC RulesSupp.ItemEMT Support: Supplier Item CreationMidwest User Group Meeting The new automated Supplier Item Creation now allows for EMT orders to be processed in a multi-site sourcing scenario of configurable products within the same domain.

1920Allows to rebuild configuration with or without a cost roll-upA rebuild without cost roll-up is often done when cost are frozen for a certain period (typically a financial year), but the actual configuration changes within this periodCost Roll-up Control Flag in Configuration RebuildMidwest User Group MeetingWe also added an option to decide whether you want to perform a Cost Roll-up at Configuration Rebuild, allowing to recalculate or freeze costs when changes occur to existing variant items.

2021Less white spaceLogical features display in one lineBrowse shortcut Alt-BAuto-complete feature/option search textVisual separation header data, configuration description in browseHide tabs without featureUsability and Layout Improvements in Questionnaire Midwest User Group Meeting

And finally there were a number of layout and usability improvements to the Questionnaire, streamlining its appearance.

21Configured Products Through the WebMidwest User Group Meeting2223Configured Products through the WebMidwest User Group Meeting

Last year QAD enabled the Configurator Questionnaire within the QAD Customer Self Service catalogue and shopping cart.

This allows your customers to configure products and place orders on the web.23CSS /Configurator

24Five Simple StepsQAD CSS and Configurator Integration1. Select configurable product from catalogueSo your customer coming into CSS will have 5 simple steps to order a configured product.2425Select Configurable ProductQAD CSS and Configurator Integration

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26Step 2QAD CSS and Configurator Integration2. Review standard configurations 1. Select configurable product from catalogue2627Review Promoted ConfigurationsQAD CSS and Configurator Integration

27CSS /Configurator

28Step 3QAD CSS and Configurator Integration2. Review standard configurations 3. Use as-is or change configuration1. Select configurable product from catalogue2829Select or Change ConfigurationQAD CSS and Configurator Integration

29CSS /Configurator

30Step 4QAD CSS and Configurator Integration2. Review standard configurations 4. Add to shopping cart3. Use as-is or change configuration1. Select configurable product from catalogue3031Add to CartQAD CSS and Configurator Integration

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32Step 5QAD CSS and Configurator Integration2. Review standard configurations 5. Check out4. Add to shopping cart3. Use as-is or change configuration1. Select configurable product from catalogue3233Check OutQAD CSS and Configurator Integration

So as you can see we have been very busy improving the QAD Configurator.

The release date for the CSS to Configurator integration is March 2012 for EE and June 2012 for SE. The combined solution will work with QAD EA all the way back to eB2.1 SP4.

I could go on talking about planned enhancements but as they say the proof is in the pudding so I will not switch gears and talk about how one of our customers is benefitting from the QAD Configurator33ConclusionMidwest User Group Meeting

The importance of being able to offer configured products efficiently and effectively is essential to competing in todays customer centric, mass customization business environment.

To survive and thrive, manufacturers are embracing processes and enabling technologies to support the sales of configurable products.35Value of Using the QAD ConfiguratorMidwest User Group MeetingProcessBenefitValueConfigure complex products based on pre-approved engineering and sales business rules Product personalization / customization by semi-skilled sales staffReduce errors Reduce selling time Increase market shareImproved sales productivity$000s50%-90%5% to 10%10% to 50%Rules automatically translate possible configurations into actual items, product structures and routings Lower costsReduce errorsReduced product lead-time5% to 25%$000s10% to 50%Rules based generation of variant item numbers enable re-order of configured itemsIncrease customer satisfactionIncrease market share10% to 20%5% to 10%3536Determine the market for configured products in your industryDoes your company have the desire and capability to design, manufacture, and sell configured products?Build a business case to support getting into or improving your configured product capabilities through the use of the QAD Configurator.To Configure Or Not to ConfigureMidwest User Group MeetingSo to paraphrase William Shakespear in the opening line of Act III, of his playHamlet To Configure or not to Configure That is the Question.

Now is the time for product strategists at companies in all industries to consider whether seizing first-mover advantage in mass customization will create value for their products.

Forrester believes that product strategists who dont at least consider this strategy soon may see their competitors beat them to market.

You need to determine if offering configured products makes sense for your company and if so whether your company has the desire and capabilities required to do so.

If you do then start building a business case to support entering into the configured product market.

If you already offer configured products but you want to enable that process with the QAD Configurator, start building a business case to support that initiative.36Schedule an on-site discovery / vision engagement to let QAD help you determine how to efficiently & effectively offer configured products.Let QAD HelpMidwest User Group Meeting123Discovery / Vision EngagementRapid value assessmentMap QAD potential solutions to business goals / strategies / tactics & processesRecommendations & ROI analysis of high potential areasProcess QSCANs4The QAD Discovery Vision Engagement consists of QAD & U Collaboratively identifying key process, people, and technology initiatives.Building business cases & ROIs for these key initiatives, andDeveloping a prioritized multi-year improvement road-map

The QAD Discovery Vision Engagement can also lead to a QSCAN where QAD experts work with you to put together a detailed plan to implement process, people and technology improvements.

The discovery/vision process is offered free to you, a valued customer of QAD. There is a slight charge for a QSCAN but the value you receive is definitely worth the cost.37Hank CanitzSenior Director Industry MarketingHCC@QAD.comQuestions?

Midwest User Group Meeting38Time for Questions

Can also contact me at this email address