Plastics manufacturers do not refer to themselves as engineer-to-order (ETO) companies, but rather as custom plastics manufacturers. But technology for plastics manufacturers, especially in the enterprise resource planning (ERP) arena, does not refer to “custom” plastics manufacturing, instead using ETO. This varying nomenclature is often the cause of inappropriate manufacturing software selection.
ETO ERP manufacturers — from Encompix Inc. in Cincinnati to Glovia International Inc. in El Segundo, Calif., to dozens of other companies offering plastics manufacturers “custom” ERP software solutions — all reference ETO and leave plastics manufacturers confused about what to request or seek out in a manufacturing software solution.
The ETO plastics manufacturer has to confront many unique issues recently highlighted by the ETO Institute. According to Jim Lamb, quality assurance manager of JM Mold South, “The top challenges for us are capacity utilization and scheduling. From an ETO ERP solutions standpoint, we need a product that helps plastics manufacturers compete in a lean manufacturing environment.”
How does a plastics manufacturer determine its ETO status?
* ETO plastics manufacturers build unique products designed to customer specifications.
* Each product requires a unique set of item numbers, bills of material, and routings.
* Estimates and quotations are required to win business.
* As technology gains from efficient software systems ranging from ERP to knowledge-based engineering have improved for ETO plastics manufacturers, so has the profitability margin.
* Products are complex with long lead times, typically months or even years.
* Material is purchased not for inventory but for a specific project.
* All actual costs are allocated to a project and tracked against the original estimate.
* Once complete, the product is typically installed at the customer's site. In most cases, aftermarket services continue throughout the life of the product. These aftermarket services represent an additional revenue source unavailable to the repetitive plastics manufacturers whose revenue streams end upon delivery of the stock item.
Diane St. John, treasurer with Reko International Group, suggested, “ETO plastics manufacturers' top challenges are being able to produce a custom product at pricing similar to a mass-produced product and with shorter and shorter lead times.”
St. John also noted, “Customers in our industry are coming more dependent upon us for engineering services and are looking to give us more responsibility for final part specifications and cycle times.” St. John also urged that with targeted ETO ERP solutions designed for plastics manufacturers, “we have been able to standardize our manufacturing process and gain efficiency from monitoring the flow of work throughout our company.”
Examples of ETO plastics manufacturers include Delta Technologies Group of Auburn Hills, Mich.; Hallmark Technologies of Windsor, Ontario; and JM Mold South of Easley, S.C.
ETO plastics manufacturing experts were consulted about some of the key characteristics for this industry sector. Chuck Stewart, a technology consultant for the ETO plastics manufacturing sector said, “To win business, ETO plastics manufacturers must provide accurate estimates and quotations to a demanding customer base. Often, ETO plastics manufacturers will not receive payment for a project until it is installed and operating on a customer's site. And after the sale, you need to track warranty information and provide aftermarket services, including the sale of spare parts that may constitute a significant share of the company's business.”
Similarly, Dave Warfield, a Cincinnati-based ETO expert, shared this thought: “Most traditional manufacturing systems, designed to address the needs of the 60 percent of manufacturing that is repetitive in nature, do not adequately address the requirements of ETO plastics manufacturers. Even systems designed for “job-based” manufacturing do not really address ETO plastics manufacturers' critical need for project management, integration, progress tracking and billing, and field service/installation.”
If plastics custom plastics manufacturers want to secure the appropriate technology it is critical that they ask for the ETO system. ETO by any other name is not ETO.
Thomas R. Cutler is president and chief executive officer of Fort Lauderdale, Fla.-based TR Cutler Inc., a manufacturing marketing firm. He is lead spokesman for the ETO Institute.