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Thomas R. Cutler

Quality Insider

Engineer-to-Order Manufacturing

A rundown of its different set of quality standards and tools

Published: Monday, September 12, 2005 - 22:00

In repetitive manufacturing, it’s possible to apply statistical process control (SPC) techniques to purchased components and manufacturing quality as well as scrap and yield. Statistical analysis is acceptable if a company mass-purchases or mass-manufactures the same product to the same standards every time. The essence of engineer-to-order (ETO) is building a unique complex product every time. There may be components that are common from one machine to another, but not in the same quantity as a repetitive manufacturer.In the ETO world, the cost of poor quality can be very high. The cost of rework to replace an item in a complex assembly and the warranty costs resulting from equipment failure can have a serious negative effect on profit margins. In an ETO environment, quality must be part of the entire process, and not just part of purchasing and manufacturing—the typical focus of a repetitive manufacturer.

Engineer-to-order manufacturers
Few ETO manufacturers call themselves ETO. This is nomenclature devised by software manufacturers to express the nuances and specifications of a process. ETO manufacturers include those that make: dies, tools and molds; machine tools; industrial cranes and hoists; farm machinery and equipment; metal-working machinery; construction machinery; foundry equipment; mining machinery; industrial automation equipment; oil and gas equipment; medical equipment; industrial tractors and trailers; custom boas; power generation equipment; conveyors and material-handling equipment; food industries machinery; paper industries machinery; transportation equipment; communications equipment; fabricated metals and custom sign makers.

Visibility = quality in ETO
According to Dave Warford, president of Cincinnati-based ETO enterprise resource planning provider Encompix, “One of the biggest areas that ETO manufacturers can improve quality is visibility. Because ETO manufacturers aren’t making the same thing each time, it’s easy for quality problems to be hidden. The appropriate technology solutions provide visibility throughout the whole process to monitor the actual cost against the original estimate and highlight areas where the costs were higher than expected.”

Metal Systems’ controller, Fred Richardson, notes some of the quality improvements post-ETO ERP: "One of the biggest changes was tracking our paint shop. The paint cost was double or triple the estimate. We never had this visibility before our ETO ERP implementation. As a result we changed over to an electrostatic paint process. We cut our painting costs by 50 percent by virtually eliminating rework and using less material."

Paul Frascoia, senior vice president at Fab-Tech, implemented the company’s ETO ERP system to improve quality. “We now track quality and performance data on every single part we manufacture. Each part now has its own specific bar code identification, enabling us to track quality and chart trends. This is a huge improvement over what we were able to do before the new ERP implementation."

Quality improvements require ETO technology solutions
There are no perfect technology solutions for ETO manufacturers, but some solutions come much closer to ensuring quality than others. The ETO Institute, an organization developed to enable competitive advantages for North American ETO manufacturers, revealed: “The key things that go wrong with ERP software selection in the ETO environment are related to the business processes. The software often turns out to be a poor fit and the company typically employs either ‘workarounds’ or manual sub-systems. The system is not as intended. Another approach to compensate for deficiencies in these technology systems is to build a separate system to cover problem; in many cases the raw data is dumped into a spreadsheet.” Ultimately, if the system wasn’t designed for the ETO manufacturer then there will be gaps between engineering and operations. This leads to the manual re-keying of data from one system to another, which leads to potential errors and the wrong material being purchased. The wrong technology solutions guarantee higher failure rates, lower quality and higher costs.

Finding quality-driven ETO technology solutions
Whether a moldmaker or a machine tool ETO manufacturer, there are similar processes that allow for quality assurance in a manner quite distinct from the repetitive manufacturing:

  • Estimating Costs: An ETO ERP solution must allow the user to construct estimates using previous estimates and actual costs from similar projects, which enables the user to develop a more accurate estimate and allows for high quality timely production.
  • Engineering: The link between the engineering design and manufacturing removes the need for re-keying data from the CAD system to ERP. This eliminates the possibility of ordering the wrong parts as a result of a transcription error.
  • Manufacture: Monitoring the traditional amount of rework and scrap will provide quality control mechanism.
  • Service: Nonconforming material itemization is lacking in most ERP systems. This feature tracks the material from purchase all through the manufacturing process. It allows many options for recording repair, scrap and return to vendor. There must be “reason codes” for analysis.
  • Lot Tracking. A critical feature that tracks the material from the project back to the source, enabling quality control mechanisms to detect a defect part and how other material from the same batch may be affected.

Technology solutions intended to improve quality can produce the opposite result. ERP disaster stories aren’t difficult to find. If the process of ETO companies is clearly understood by an ERP vendor, their knowledge, understanding and commitment to lean initiatives will provide a long list of measurable quality improvements.


About The Author

Thomas R. Cutler’s picture

Thomas R. Cutler

Thomas R. Cutler is the President and CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc., celebrating its 20th year. Cutler is the founder of the Manufacturing Media Consortium including more than 7000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. Cutler authors more than 1000 feature articles annually regarding the manufacturing sector. Cutler can be contacted at trcutler@trcutlerinc.com and followed on Twitter @ThomasRCutler.