CPQ Solutions Are Integral to Smart Manufacturing

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Smart Manufacturing CPQ Solutions

The “new” industrial revolution we’re experiencing now, commonly referred to as Industry 4.0 or “smart manufacturing” is powered by advancements that include robotics, artificial intelligence and the Internet of Things (IoT). According to the latest industry reports, manufacturers are expected to invest more than $267 billion U.S. dollars in the IoT by year 2020.

With these technological advancements, new tools are allowing companies to simulate the product-creation process in which highly complex products can be configured and 3D models can be shown before an actual product is created. As a result, manufacturers can increase their efficiency and automate their workflow more seamlessly.

The Current State of the U.S. Manufacturing Industry

There is a widespread belief that manufacturing in the U.S. is disappearing because the country no longer makes things. This is merely speculation, and data from the U.S Bureau of Labor Statistics proves it wrong; in fact, the real manufacturing output has risen by 75% in the past 25 years. Not only that, according to Manufacturing Institute, the manufacturing industry in North America is valued at more than $2.18 trillion USD.

What is actually happening is that manufacturing’s role is changing in the United States. Manufacturing is starting to promote innovation, productivity, and trade more than growth and employment. In the United States, more than half of all employees work in service roles, such as R&D engineers and office-support staff. In fact, the International Federation of Robotics forecasts that by 2019, we will see close to 2.5 million units of industrial robots, which is more than double the number from 2010. While these robots can handle some of the routine tasks, customers are asking for more variations and require after-sales services. Due to the rising innovations in materials and processes including 3D printing, advanced robotics and IOT, there is fresh demand and customers also expect higher productivity from their manufacturers.

What future trends can we expect to see?

Moving From Transactional to More Collaborative Relationships

Customers are increasingly becoming more actively involved in the process and see their manufacturers as partners rather than vendors. It is no longer a one-way transactional relationship but rather a partnership.

“You need to put your customers at the center of your business. When it comes to manufacturing, typically before it was geared towards mass production, cost control, mainly focused on internal efficiencies, but now and moving forward, it’s about customer profitability. Remove the barriers and put the customers front and center,” according to CPQ solution Technicon’s Chief Product Officer, Nils Olsson,

Total integration with IoT + Artificial Intelligence

We are starting to see a shift towards more automated facilities, allowing for more customization and flexibility for each account as the changes and updates come up in real time. This type of “configurable” facility represents decentralized components that can and will network with one another rather than having one centralized control system. Even as the equipments in these manufacturing facilities incorporate smart devices and AI, they will still need people to design, program and service them. In fact, IoT drives the demand for complex products and manufacturers need to ensure all the complex requirements are handled accurately from start to finish, which is exactly what CPQ solutions are suited to do. CPQ solutions allow manufacturers to handle complex configurations and leverage artificial intelligence to offer optimal solutions that satisfy their customers.

Rapid growth of 3D printing

According to Computerworld, the size of the 3D printing industry could possibly triple in the next few years, growing to $21 billion USD in revenue, and some experts, from a recent report  from Wohlers Associates, claim that it could one day become more than a $600+ billion market.

3D printing has allowed for manufacturers to easily create a prototype or rendering of highly complex and customized products they are building for their customers that they can show early in the process of production to avoid errors. Again, this drives more demand for complex, customized products, and manufacturers can manage these complexities with CPQ system. Design automation capabilities allow for 3D models and renderings to be produced and manufacturers can show exactly what the end products will look like to avoid potential errors in the process.

Mass Production and Customization 

Mass customization emerged in the 1990s as a solution and a bridge between mass production and customization. The efficiency associated with mass production is merged with the personalization that goes into customized products. With the many technological advancements today, mass production is well on its way to change the future of manufacturing. It is now possible to create small products tailored to meet specific needs without incurring massive costs as would have been the case before. There is growing interaction with customers and super configurability of the products that suit their requirements perfectly. With the rise of “Smart Industry” in the U.S., what you are producing is produced once and highly customized, but it goes through your factory as if you were doing mass production. CPQ solutions allow for manufacturers to produce highly complex, customized products, but the process of producing and selling such products becomes easier with CPQ solutions.

Preparing for the Future of Manufacturing

CPQ solutions are a key component of a long-term strategy for manufacturers to address the trend towards real-time, AI-based access to complex products. CPQ solutions address many of these changes taking place in the industry and can guide manufacturers towards exponential growth. The Configure Price Quote industry is estimated to be more than $157M USD and is likely to see a 20% increase by 2020, bringing that estimate closer to $190M USD, according to Forbes.

How Do CPQ Solutions Guide Manufacturers to Success?

Reduce work errors and shortens sales cycles, leading to greater efficiency: CPQ solutions reduce time-to-quote from weeks to same day all the while providing 100% accuracy between customer requirements and the final delivery. For instance, Tacton CPQ states that it has helped manufacturers shorten the sales cycle and cut sales support costs by more than half while reducing order errors up to 80%. CPQ solutions also speed up the quotation process dramatically and eliminate the manual tasks of gathering information and tailoring the proposal.

Guided Selling: Guided selling helps your sales team lead customers to the right decision, based on their specific needs and the factors that matter to them. A sales rep can directly address each customer’s requirements and present the most appropriate solution and that’s also where CPQ solutions help immensely. There is no need to walk through and configure the product feature by feature – just plug in the customer’s specific needs, in any sequence. Anything that isn’t of importance can be skipped entirely. The best configurator will fill in the blanks and propose the best overall solution for the objectives that the customer wants to achieve. As a result, you provide a compelling customer experience.

Design automation + Document Generation: Once the product is specified, the CPQ  solutions automatically generate the quote and any supporting documents needed – including technical summaries, 3D visualizations, price lists, user manuals and even bills of materials. You can control the layout, design and branding of quotes and work with tools that are familiar to your team,  such as Microsoft Word and Excel. With multiple language and currency support, you can also produce documents in any preloaded language and currency you require.

Optimization and Total System Configuration using AI: Manufacturers can specify products, assemblies and systems with assemblies of assemblies and the automatic optimization finds the right optimal solution using AI capabilities, not just what’s valid. 

In summary, CPQ solutions help manufacturers of complex products navigate the business challenges as they face growing technological disruptions in the industry.

Angela S. Hwang

Angela S. Hwang

Director of Marketing at Technicon
Angela is the Director of Marketing at Technicon, which provides CPQ solutions to manufacturers of complex products. Angela is a strategic thinker and a senior marketing professional with extensive experience in marketing technology products.
Angela S. Hwang

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