ETO Standardization Strategies: Verifying Implementation and Effect

Contrary to other production business forms, Engineer-To-Order (ETO) companies work with customization as a central part of their business. Products are done on a project-by-project basis and are tailored specifically to the requirements of each individual customer (Hobday, 2000; Wortmann, 1992). This is often done by modifying existing designs or collecting sub-solutions from previous projects.

The solution space and solution complexity are ever expanding and increasing by the order (Fisk, 2013). To decrease the amount of repeated work, decrease waste-work in the organization and cope with increasing complexity, ETOs attempt to improve their product creation by various means of portfolio rationalization and management strategies.

This includes, but is not limited to: Standardization, modularization, platform based design, mass customization and configuration (Gepp et al., 2015; Hicks et al., 2000; Willner et al., 2016).  Common for these initiatives is, that they introduce control measures to the workflow, guiding designers towards standardized solutions, fixed module packages, technology platforms or configurable design solutions.

This is done to improve sales delivery times, decrease project risk and ultimately to increase the profitability of project execution (Haug et al., 2014; Robertson and Ulrich, 1998). There is more to portfolio management than simply labeling preferred solution  variants. It entails investigating and defining superior solutions, both functionally, financially and operationally.

Once defined, they need to be sufficiently embedded in the project execution workflow. Incentives can be offered to the organization to make it attractive to use them, e.g. lower price tags or reduced lead time. However, those benefits must be balanced out by benefits somewhere else in the project lifecycle e.g. by increased productivity or lowered  manufacturing costs.

These optimizations can be found internally (e.g. via improved manufacturing or bulk purchase) or externally (e.g. negotiated standard deals with suppliers). Ultimately there is a whole system of integrationable  considerations around the implementation of standardization strategies. It is this system that this article aims to elaborate upon.

A study was conducted in collaboration with an ETO company to evaluate the standardization implementation of design standards introduced into the organization long ago. That study involved a series of steps undertaken to assess the current state of the standardization strategy. Based on that study, this paper describes the generalized method and how other businesses can evaluate their own implementation of standardization strategies.

This paper proceeds as follows: The foundations in state-of-the-art research of ETO standardization are described in section two. Section three describes the proposed standardization implementation method and the considered evaluation aspects along with case-specific execution details. Section four follows up with a discussion of the challenges and benefits of this approach.

The  ethod and use is concluded in section five.