Aberdeen Group Report Published: Configuring Profits to Order: Best Practices in Mass Customization in Industrial Markets

A few weeks ago I offered you the chance to participate in a study by Aberdeen Group, a technology research company. Now, the results of this research have been published. The study focused on the use of configurators and customization strategies in industrial markets (b-to-b). Many manufacturers here are seeking to win business by offering their customers products configured specifically for them.

However, capturing and validating exactly what customers want, accurately quoting orders, and still delivering products quickly is challenging. Companies that are successfully addressing these challenges are able to reap the benefits of higher product profitability. Some are even seeing product profit margins improve by up to 80%, just by using configurator solutions.

The research report found, that:

- Best-in-Class reduce write-offs by 26.2 times by minimizing order errors with sales configurators.
- Best-in-Class are 20% more likely to accurately predict costs used to develop quotes for custom products, allowing them to achieve higher profit margins.
- Best-in-Class are 14% more likely to meet the customer’s promised delivery date with design rules to automate the creation of sales and design deliverables
- Best-in-Class achieve higher customer satisfaction by offering 3.5-times as many customizable product features as Industry Average companies
- Best-in-Class are 18% more likely to hit revenue targets with integrated sales and product configurators.

The research found that the biggest performance differentiator of the companies surveyed is in their ability to predict cost. "The key to being profitable is in knowing what the costs will be and developing an accurate, yet competitive quote," the report states. "To accomplish this, companies must look at the unique challenges of their business and implement the capabilities and enablers that will provide more visibility and predictability to cost.”

Another finding also stresses the need of a stringend product configuration system and corresponding product structures. Best-in-Class companies report only US $31,400 in lost revenue due to quote or order errors. In comparison, the Industry Average report write-offs of US $823,900. Best-in-Class companies are better equipped to accurately capture what their customers want and process, engineer, and manufacture the order with far fewer errors. The research concludes:

"Companies who have not deployed a configuration solution will be at a competitive disadvantage and will forego the benefits of higher profit margins. A sales configurator alone can translate to profit margins that are 12% higher. An integrated sales, product and manufacturing configurator solution can mean profit margins that are 21% higher."

Context:
# Download a free copy of the report here.
# Posting about a similar report on the configuration practice of industrial companies.
# Configurator database: Get inspiration by browsing though hundreds of configuration solutions in all industries.