Research Rap: Are Product Configurators PLM?

A quick peek into some research on
… using configuration solutions to
customize products comes from Aberdeen’s Michelle
Boucher as a follow up to her
Tailoring Products to Customer Preference benchmark. The follow
up research shows that the use of configuration
solutions helps to improve profit margins. I’ll provide a
bit of the research here, but then pose a question. Should
configurators be a part of PLM? ERP? Or in some cases, CRM? You
will see, I have an opinion.

Different Types of Configurators
The Aberdeen report
segments configurators into three categories:

• Sales Configurator - to enable pricing and the
  creation of quotes and orders
• Product Configurator - to define compatibility
  rules and configure the product (typically a bill of material, CAD
  model, and drawings)
• Manufacturing Configurator - to define
  manufacturing processes, scheduling, and resource
  allocation

Clearly, there is overlap in the needs for these
solutions, and a typical customized order will go through each of
the processes identified above. The research first shows that the
use of configurators helps drive improved profits. What is more
interesting is that those companies that have integrated
their configurators are showing even higher levels of
profit. Speed and reduction of errors are
specifically mentioned in the report. In addition to that, I
have to imagine that the ability to more accurately predict product
costs allows companies to safely quote more aggressively (yet
confidently) and win more profitable orders. But that is my
speculation.

Who Should Provide Your
Configurator?
Speaking of speculation, what does this mean for the market for
configurators? Where should companies look to buy one? The process
is clearly tied to sales, so ERP and/or CRM make sense from that
perspective. And most ERP companies do offer (at least one, if not
more) configuration solutions. Some CRM companies do as well. But
what about PLM? Isn’t PLM the natural home for
this? As more commercially-oriented product data is
defined and managed in PLM, shouldn’t the processes for defining
the configuration be managed there as well? And for that matter,
shouldn’t they be a part of the same review/approval/versioning
process as the rest of the product data? This may be one person’s
opinion, but to me PLM is the most natural home for these
solutions. Yes, they must be integrated to orders, but as PLM
continues to become the system of record for product data (some
really interesting preliminary result are coming out of our
“Integrating the PLM Ecosystem” benchmark on this, by the way) then
configuration definition, at a minimum, should be kept in PLM.
Perhaps PLM execution is a web service called by
ERP? Before you call me an idiot (too late?) I recognize
probably can’t be the full answer. Executing on
configured product has deep tentacles into the rest of the product
execution process (which for the most part, is in ERP). So what’s
the answer? The research says integrated configurators. I
suggest integrated PLM-ERP solutions that treat configuration like
the rest of the product data. Define and manage it in PLM, execute
it in ERP. But don’t forget that you still need to
integrate it to CAD… but that’s for a different
time…

So that was a quick peek into some recent
research on customizing products, I hope you found it interesting.
Does the research reflect reality? Do you see it differently? Let
us know what it looks like from your perspective.