Identifying profitable reference architectures in an engineer-to-order context

Abstract

Companies operating with an engineer-to-order (ETO) strategy are often challenged with generating the desired profit as a consequence of product volumes and high levels of product customisation. Profit margins are seen to vary greatly from project to project, which may partly be explained by a lack of references to guide design decisions. Specifically, new product offerings are often based on reuse of design knowledge, which is often not efficiently utilised, as the knowledge transfer and reuse across projects are unstructured, incomplete, or not providing a suitable reference for design specification. To address this issue, this paper presents a method for identifying reference architectures under the consideration of profitability. The method was developed by combining and extending known methods within the fields of product architecture and complexity cost estimation to cover part of the ETO domain. The method was tested in two companies, one producing industrial spray drying plants and the other providing solutions for the production of confectionary products. The findings suggest that a limited understanding of "preferred solutions" existed in the two case companies, and applying the suggested method to identifying reference architectures could potentially support a more profitable project execution.

Empirical Validation of Lean Implementation Barriers in Engineer-to-Order Companies: An Exploratory Study

“…Engineer-to-Order (ETO) companies design and manufacture highly customized products such as machines, plants, buildings, and ships according to customer requirements. These goods are often characterized by low volumes, a low rate of order recurrence and project-by-project procedure (Løkkegaard et al, 2022). ETO projects are characterized by high cost and delivery time pressure, a high degree of individualization, and high complexity in relation to planning and coordination activities, which lead to a large proportion of non-value-added activities resulting in productivity losses and lower competitiveness (Aslam et al, 2020;Schulze & Dallasega, 2021).…”