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Meet the People at Tacton: Marc Herling

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Today we will get to know Marc Herling, VP of Business Development at the Tacton office in Karlsruhe, Germany. Marc became a part of the Tacton family with last year’s acquisition of Lumo Graphics – experts in 3D visualization for CPQ.  

What have the first few months with Tacton been like?

I must say that it has been really intense and positive. The acquisition is a perfect match for both companies, so everyone is super excited for several reasons. Mainly because we can contribute with expertise within visualization. However, for our part, it also means adding global sales reach overnight. Our expertise is highly appreciated, and everyone in the main office shares the passion for mass customization. One thing I have appreciated is that because we have always been a rather small company, joining a 200+ employee company adds new levels of organizational professionalism and processes to our office, which is challenging but good. In addition, the work culture in Sweden and Germany, at least regarding the Tacton HQ and Tacton in Karlsruhe, is quite similar. For example, both have, strong work teams and a pragmatic approach to problems. So, the adaption has been rather easy for the team in Karlsruhe.  

You have been working with 3D and visualization for over 10 years. What has changed since you started?

I started working directly with CPQ visualization in 2004. But, at that time, the computer capabilities were nowhere near what we have today. Back then, the visualizations were based on crude 3D models with very limited realism for material appearance. Since then, mainly the gaming industry has pushed the development of 3D graphics immensely, making everything faster and better. Additionally, 3D engineering files and a much broader bandwidth of internet connections have helped make it happen. 3D configuration over the web is a good example of something that is now a reality, thanks to this development. The progress in technology turned CPQ visualization into an important sales tool, rather than a tool mainly for production and engineers. These 13 years have been an exciting time to be in the 3D visualization business, but I think the future will be even more exciting. Outside of everything becoming faster, cheaper and more powerful, I think the next big thing in 3D visualization and CPQ will be Augmented Reality. Imagine configuring equipment for a room and seeing it in the room – while it is being configured! It would not only be really cool, but also extremely useful.  

What do you think a Tacton office in Germany will mean for the customers?

During these first months, we have noticed that customers that have never been in contact with the main office in Stockholm have reached out to our German office. My feeling is that Tacton’s customers, both existing and future, will appreciate the local presence and the fact that they can easily visit us. And equally important, that we can quickly help and support them on-site. I also think the fact that we speak the same language is another factor our customers will appreciate. One should not underestimate these ”soft” values in business!  

Is there any area that is especially great for 3D visualization and CPQ?

Any physical product with a broad modular offering is a great match for 3D visualization in CPQ. As a consumer, some may have tested kitchen designer CPQs, which are simple but great. In the professional areas, we see MedTech as a field which benefits greatly from 3D configuration. The buyer is often a doctor with a practical approach, who needs to make sure the equipment fits in the room, and that all parts of the equipment will be suitable for the workflow in the room. One example is making sure a particular handle is in the correct position. Even in the consumer market, we see a trend towards more customized and modularized products with CPQ. In the consumer market, the aesthetics of the product is more important, so 3D visualization is very useful to visualize make-to-order products.  

In your personal life, do you have anything you visualize doing in the next couple of years?

My family (wife and two kids) takes up much of my spare time, but I am a dedicated paraglider and I try to go paragliding as much as I can. One thing that is on my bucket list and that I really want to do is cross the Alps on my paraglider. That would be incredible!   Marc Herling VP Business Development | Diploma in Product Engineering | 1 year with Tacton Passionate about: My family, decision processes and paragliding

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CPQ and the rationale behind irrational choices

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The (ir)rationale of having more options in your CPQ

When faced with choosing between different options, you might think that the choices you make and the answers you give are rational and not at all manipulated. But sometimes the question is half the answer. There’s a Swedish saying that goes like this: “As you ask, you’ll get your answers.” This is highly relevant when we design our CPQ interface. In workshops, I’m the first and the last to point out the importance of simplification in a product configuration. If we can remove a question, an alternative answer or maybe a complete group of questions, I always see it as a mission accomplished. That’s why I’m caught off guard when someone shows me that the opposite of simplification may also serve our purposes when designing our CPQ solution. What we all want is to create a system that boosts sales. We do this by simplifying, streamlining and presenting the product in the best possible way. That’s why adding a supposedly “stupid choice” that nobody will ever buy seems to make no sense at all. Let me show you what I mean. In his TED talk, Dan Ariely shows a great example of selling a more expensive option by introducing an entirely meaningless alternative in a choice of newspaper subscriptions. Like this:   – Web subscription – $ 59 – Print subscription – $ 129 – Print subscription and web subscription – $ 129   You’d imagine that no sane human being would choose to pay the same price to get only the print version of the newspaper. But this irrational choice serves a purpose. When the middle option was included, 16% of people chose the cheap option and 84% the more expensive option. When Ariely removed the middle option and then asked a reference group to make a selection, only 32% went for the more expensive option. Get it? Add the middle alternative – the one no one buys — and 84% will buy your more expensive alternative. Remove it and only 32% will select that expensive option. The takeaway? A good way to get someone to make a certain choice is to offer a slightly worse variant of the same thing.  

So, what’s my conclusion?

Designing questions and answers in a CPQ solution might seem like a simple task. But as this example shows, just a small tweak will dramatically change the configuration and the order value. That’s why a close analysis of user behavior not only benefits usability, but, as this example shows, it gives us a clear understanding of when an irrational choice serves our purpose. Adding that irrational choice can actually boost your sales.

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Whose turn was it to do what, and when?

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Have you ever had an argument with your significant other about for example who’s turn it was to go grocery shopping, what to buy or what not to buy? I know I have!   This is a discussion that takes place once in a while at home: – Honey, did you go grocery shopping today? – Was it my turn? I thought it was you who was supposed to do it? I am pretty sure I did it the last time. – No, it was definitely your turn. We agreed on that last Tuesday, remember?   The next day, a discussion very similar to the previous one, happened. – Hi sweetie, so I went grocery shopping today! – Great, did you buy milk? – Milk… no…I don’t remember you saying anything about that… – *Sigh* I did, when we talked over lunch, remember?! Wait, what, did you buy more bread? We already have the whole freezer full of bread!   Six days later, the same thing: – Hi sweetie, I went grocery shopping today! I bought everything on the grocery list, nothing more, nothing less! – !!! …you too? It was my turn today, I also bought everything on the list! Both: *sigh*   This is all a very low level of communication and something most families face, and solve, one way or another (thank the universe for grocery list apps!). I guess most people have evolved to understand that communication and giving instructions verbally has its limits, especially when it comes to who should do what, when and how.  

You are not running your business this way, right?

  Most companies have evolved one step further, usually by emailing instructions to one another, having meetings where responsibilities are set, and so on. This works most of the time. But at a certain rate of complexity, this system, too, will break down. This is especially true for product development. More specifically, software product development.   This is something we at Tacton know very well, having developed and fine-tuned Tacton Configurator during more than 20 years. We also know how important it is that every type of user request finds its way into the development priority list, gets a problem owner, a history of discussions, and so on so that everyone knows what to do and when to do it!   We know our customers face the same type of challenge when creating configuration models with Tacton configurator. That is why we are now launching Tacton Administration. It is a fully integrated support system in which you create tickets for bugs and development requests, dedicate a problem owner and trace every single change to the configuration model. No longer will you end up in discussions on who made what, or who was supposed to do what, when and why! We believe this will greatly assist our customers in making sure no issue is left unhandled, and that no one gets an unexpected result because of an overnight fix.   Unfortunately, what this new tool cannot do is assist you, and your family, in who to go grocery shopping, when and to buy what! But we could add a ticket about solving that in v2.0!   If you want to read more about our CPQ platform, you’ll find it here.

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Winter olympics

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For a sports nerd like me, every great sports event, like the upcoming Winter Olympics in South Korea, is like Christmas to me. There is something incredible about how dedicated athletes can train and optimize their bodies and minds to perform as well as possible for their particular sport with its given rules. A snowboarder has to have full control of his or her body, be brave and have perfect balance whereas an ice skater has to be explosive and have massive leg muscles. Two completely different body types are needed for each sport, but they are both the end result of years of practice and endless dedication.   Another thing that impresses me as well with the Olympics, in general, is the scheduling of all the different events. Have you ever given this a thought? You have a finite amount of ski slopes, ice skating arenas, cross-country skiing slopes, and a finite amount of time to perform every event. Each slope has to be prepared for every event and you need to include pauses between certain heats to give the athletes time to rest. And that doesn’t even include the fact that many athletes compete in similar sports as well! For example, a slalom skier is likely to be a giant slalom skier as well, so you can’t place these two events too close to each other in time. It gets even more complex when you include the TV audience, who wants to follow as many events as possible with each exciting goal passage separated.   This scheduling nightmare is not too far from typical configuration problems we sometimes see in hardware configuration. You have a set amount of (time) slots that can be filled by a resource (in this case sports events). As mentioned, some of these slots must have a certain time window in between, you must allow preparation time to change a ski slope from, for example, slalom to giant slalom etc, and you also have to optimize so that two popular sports events in different locations doesn’t collide for the TV audience who wants to see the 1000m speed skate final, as well as the ski jumping final – even though they don’t share the same physical place.   For fun, I’ve played around with creating a configuration model for the scheduling of an event like this. I would be delighted to discuss the topic further with someone who is in charge of the Olympic schedules. If you are playing around with similar configuration issues related to your business, give us a call or send us an email and let’s initiate a discussion.

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Supercharge your CPQ with a constraint solver

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There are plenty of CPQ solutions on the market today, but not many can claim to be powered by an intelligent constraint solver. In this post, we’ll explain what a constraint solver is and how it can help your business. Imagine you work for Zippy-Zappy Electric, a manufacturer of electrical equipment and the enclosures that protect this equipment. Your company has quite an impressive product catalog and even wants to expand its offering, and management is starting to contemplate growing its operations abroad. Sounds great, right? But lately, you’ve been noticing that your sales reps, especially the new hires, have been running out of zip. Spreadsheets are flying. Phones are ringing. And the reps are spending more and more time on administration and poring over complicated product catalogs than on selling and nurturing customer relationships. You know that a configure-price-quote (CPQ) solution helps you more easily configure complex products, produce custom quotes and get approvals. What’s less obvious is that the type of “engine” that powers the configurator in a CPQ solution can make a huge impact on your business: how quickly you can create accurate product configurations, how easily sales teams can discount, price and sell the products, how much time and money you’ll spend on future maintenance and, ultimately, how confident your customers feel about buying from you.

How CPQ with a constraint solver can charge up your sales

Not all configuration engines are created equal. Tacton’s intelligent configuration engine ­– a “constraint solver” in geek-speak ­– enables companies to configure and sell sophisticated products in a flexible yet completely accurate way. Here’s how. Back at our fictitious company Zippy-Zappy Electric, a sales rep is working together with a customer to configure a custom solution based on one of its machines, the Z Machine. The rep is using guided selling with a rules-based configuration engine. The first product configuration questions define the power of the electrical equipment, which defines the size of the machine. After sizing the machine, the enclosure needs to be configured. But at this point, the sales rep realizes that there is a conflict between the machine size and the enclosure, and based on external size restrictions the sales rep can’t increase the volume of the enclosure either. In a conflict like this one, the sales rep will need to go back and change the answer to the initial questions about power, and then confirm that all other questions leading up to the volume are still correct. This, in turn, may lead to new conflicts. So, your sales reps will become experts – not in selling, but in manipulating the configurator to give them the right answers. By contrast, the constraint solver in Tacton’s configurator does not depend on sequence or order because each constraint states an independent fact. Customers can answer as many or as few questions as they like, in any order they prefer, and change their minds during the process. The solver validates their choices and automatically finds the optimal solution based on any incomplete answers. Using this kind of intelligence, the sales rep can drive the selection process based on specific customer needs. The solver will “solve” the complete solution space after each selection, minimizing the risk of order errors and speeding the entire sales process. By optimizing, weighing and prioritizing different criteria, the constraint solver finds the solution that promises the best chance of winning the deal. With a configuration solver that’s truly constraint-based, our rep at Zippy-Zappy Electric can ensure a streamlined, tailored customer experience that presents only the most optimal products and options. No conflicts, no errors, no waiting around.

The smart, sales-friendly CPQ solver

In short, with Tacton’s constraint solver you can:
  • Produce totally accurate, validated configurations, every time
  • Automate the sales process and spend more time on winning business
  • Slash the time needed to create and maintain configuration rules
  • Gain your customer’s confidence and trust (and, hopefully, repeat business)
The constraint solver never presents any alternate facts – just real-time product and pricing data that provide a fact-based starting point for fruitful sales negotiations. It enables Tacton CPQ to automatically generate fully priced, accurate sales quotes and BOMs containing many thousands of components – helping keep your business a super-charged sales machine.

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Meet the People at Tacton: Bénédicte Wipliez

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  Life has a way of sending you in unexpected directions. This is something Benedicte Wipliez is well aware of. She found her way from the north of France to Tacton and Sweden through the extravagant desert city of Dubai. At Tacton she works in the marketing department. One of her responsibilities is to analyze which, expected and unexpected, directions the visitors of the Tacton website take.   About a year and a half ago you went from Dubai to Stockholm. How was that transition? It is certainly a big difference between Dubai and Stockholm! Obviously, there is a great difference in climate. In Dubai, the weather is lovely a great portion of the year but almost unbearable during the summer, where you tend to stay indoors as much as you can. In Sweden it is similar but the opposite, where the winter is the time to stay indoors!   The work climate is very different as well. I loved the multicultural environment in Dubai where you work and negotiate with people from so many different cultures. It is not always easy but you learn something new every day! When I came to Tacton I was happy to find the same international feeling. My coworkers are from different countries and we work towards international customers all the time.   What have you discovered about Tacton during your time at the company? Outside of the international environment, I’m happy to see how open my coworkers and my boss are to new ideas and to question the way we work – all in order to improve. I learned a lot from working at Dassault in Dubai (and France) and although those ideas were different compared to the way Tacton worked, I’m able to use and test those ideas at Tacton. No one ever said “This is not how we do it here” or “We have always done things this way” but instead allows me to work in my own way. I like that lack of prestige and the pragmatism where the end result is all that matters.   Another thing that is quite apparent is the rapid growth Tacton is going through as a company. Although it can be stressful at times, I love the environment it creates. An environment where you need to take fast decisions and take responsibility for them, create processes, and to be efficient in your work. It is a highly developing environment to be in as a professional.   One of the things you do at Tacton is to analyze leads. Why is that important? If you think about it, all our current customers have started as just a phone call, an email, a website visit, or perhaps an elevator chat with a coworker. You never know where the next big deal is going to come from! At the same time, you cannot chase every opportunity either. My work is about seeing through all the incoming data and see which people and companies are most likely to benefit from our products. If we focus mainly on the suitable customers we won’t waste our time nor, more importantly, our customers’ time.   I hear you are quite active in your spare time. Oh, yes. I do lots of different things! I love cooking pastries, climbing, painting, photography, but also to hang out with friends – especially over a glass of Belgian craft beer! I also love traveling and prefer to travel by myself – you meet so many interesting people when you travel alone!   1 year, 3 months at Tacton | Lead Generation Manager Passionate about: Traveling & Belgian beer

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How to simplify maintenance of Design Automation projects by using constraints

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A Design Automation project lifecycle is longer than you would think. You might consider the work done when it is set into production, but I would argue otherwise. Rather, a Design Automation project is a living thing which will be updated with new product data and variants during its lifetime. And as it gets older and more experienced, the project needs to be maintained to stay efficient. But here’s the tricky part: the more data you have, the harder its maintenance will be. A common problem is that when a new variant of a part or subassembly is added, logic needs to be changed in order to define how this new variant will fit into the Design Automation system. Old rules need to be edited and new rules might need to be created. So, is there a way to simplify this? Yes, there is. In this blog post, I’ll show you how you can separate your data from logic, as well as update your product data without having to change your logic, by using a constraint-based Design Automation approach.  

Let’s start with the basics.

We will look at a simplified example of a conveyor model (picture 1). More specifically, we will concentrate on the Beams and the Rollers (picture 2).  

Picture 1

 

Picture 2

  In our example, there are three variants of beams, and three variants of rollers. The ways in which these can be combined are shown in the matrix below:  
BeamA BeamB BeamC
RollerA Allowed Not Allowed Not Allowed
RollerB Allowed Allowed Not Allowed
RollerC Allowed Allowed Allowed
  I will first describe how you would go about a configuration using a sequential approach. Then, I’ll show how to handle the same configuration using constraints and the benefits of using this approach.  

How a sequential approach will give you never-ending work… 

The sequential way to set this up is to have three rules stating that if a certain Beam is chosen, some Roller is allowed. See an example of a rule set which would achieve this bellow: If Beam A then RollerA or RollerB or RollerC If Beam B then RollerB or RollerC If beam C Then RollerC   Let’s imagine that we now need to add a new roller, “RollerD”. This roller should work for BeamA and BeamB. To ensure a correct set-up, we would need to change two of the rules we created earlier to take this new roller variant into account. If Beam A then RollerA or RollerB or RollerC or RollerD If Beam B then RollerB or RollerC or RollerD If beam C Then RollerC  

… and why constraints will radically simplify maintenance 

With a constraint-based tool, rules refer to properties of the variants rather than the variant values or the variants themselves.  This enables us to create a rule saying why the Rollers and Beams fit together, rather than in what combination. In our example, the reason for the allowed combinations of rollers and beams is that the Roller Diameter cannot be larger than the Beam height. We begin by creating a table for rollers and beams A-C, with the necessary properties.  
RollerDiameter (mm)
RollerA 10
RollerB 20
RollerC 30
 
RollerHeight (mm)
BeamA 35
BeamB 25
BeamC 15
  Now, we need only one rule to describe how these can be combined. In this rule, we will only include logic which refers to the properties, rather than specific values or variants, since our aim is to separate the data from logic. RollerDiameter<RollerHeight The result will be the same as with the previous rules. The difference is that this rule is compact yet easily understood. We have been able to replace the 3 rules, shown in the sequential approach example, with just one. If we now want to add a new Roller, we simply add a new row to our Roller Table and no change in rules is necessary.  
RollerDiameter (mm)
RollerA 10
RollerB 20
RollerC 30
RollerD 22
 

So, what do we learn from this? 

In real Design Automation projects, the dependencies between components are generally complex with a lot of dependencies between different components. This increases the importance of separating the data from logic, as we have done in this one very simple example. By using a constraint-based approach, you can easily separate your logic from data, inevitably simplifying maintenance. Working with constraints means you get a lot fewer rules, as well as an easier way to update your product data without having to go through your logic and find all the rules which need to be edited.   Learn more about Tacton Design Automation for your specific CAD below.  If you are a SOLIDWORKS user, click here. If you’re an Autodesk Inventor customer, read more here. If you use PTC Creo, learn more about our offer here.

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How to price your product or service

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Imagine two completely different customers walk into a store looking to purchase the exact same product. Now, does this mean that these products should have the exact same price? Before jumping to any conclusions, ask yourself these three questions:
  1. Will this product bring the same value to these two customers?
  2. Did both products cost the same for the company to sell?
  3. Will the product really generate the same amount of repeat business?
Most likely, the answer will be no, no and no. This is when you start to think that one of the customers should actually pay a higher price than the other – even if the products are identical from a production and delivery point-of-view. Unfortunately, this is something we just can’t do. What if the customers realize that they paid different prices – they’ll probably be upset, right? Especially the customer who paid more.  

The subtle art of price differentiation

If you think about it though, this kind of price differentiation is actually already among us. It’s just hidden behind a misleading name – ‘discounts’. If sales know their offer isn’t superior to the competition, there will be discounts offered to compensate. So, how do successful companies work with pricing? How do they turn the pricing around? How do they understand the value they deliver? They identify that when a product is more useful to a certain customer it’s possible to sell it at a higher price. Start to identify these situations and get it into your price list. It’s basically a situational customer perspective.  

How to get the customers to pick your product

For a brief moment, try to ignore if the product is sell-able or not; the more important question is whether it’s buy-able. This is a better perspective to understand how your product is received by the customers. Don’t pay too much attention to the production cost at this point. If your pricing is a recalculation of the production cost, your formula simply isn’t ready for the future. (Of course, you can’t sell with an insufficient margin, but other than that – pricing has nothing to do with cost.) Don’t make your pricing standard. Some of your included services deliver significant value to certain customer segments. For others, it might not increase the value at all. Do you really understand what part of your product offering generates business? It might not be the core product at all. It might not be your patented technology. It could actually be something else that makes the customer pick your solution. When your products deliver superior value, there will be a slightly higher price. And with IoT, we know more about situational contexts and customer intent and identity than ever before. This makes sense — and it’s a fair game.  

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Enabling the company that enables factories of the future

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I know many companies hesitate to introduce a configurator because they think ‘Our products can’t be streamlined. Our combinations are too complicated’. We also heard these comments in our company. There were people who said it wouldn’t be possible, but it was.
  These are the words of Dr. Michael Klos, General Manager of Yaskawa’s European Robotics Division.   Yaskawa is a world-leader in industrial automation and robotics. With products like the collaborative Motoman Robot, the company is at the forefront of the smart manufacturing revolution – its products equipping the factories of the future.   Yaskawa’s reputation is built on innovation and pin-sharp precision. And yet the company couldn’t offer the same accuracy and quality when it came to its quoting process.   We sat down with Dr. Klos to discuss why Yaskawa decided to look at an advanced CPQ tool.   Can you tell us about the quotation process at Yaskawa before Tacton? We sell over 120 different robot models, all with numerous configurable options and add-ons. Each customer has a unique set of requirements for their factory, and on top of this we’re usually dealing customer-specific pricing agreements and discounts. This means the situation gets very complicated, very quickly.   Our field sales team was using Excel to capture a list of customer requirements. This was then handed over to an inside sales team who would manually create an offer based on requirements in the list.   For each sales case, the team would spend time chasing down information internally, sometimes even needing to involve the Japanese organization to get clarification on product availability, lead times and compatibility.   Selecting the wrong component or not having a configuration dependency properly clarified could create a mess, and just one missing option could hold up the entire process. A quotation typically took eight days and sometimes up to two weeks for the more complicated or unusual configurations.   The quality of our documents was also a big issue. Our quotations looked more like a spare parts list. They were very product-focused and cryptic and said very little about the benefits of the product and its functionality – which is, of course, the part that is of interest to the customer! Sometimes we’d even need to explain a quotation after we sent it out, delaying the buying process further.   Even though Yaskawa’s current situation was inefficient, the team deliberated carefully before switching out their existing process. And you can’t blame them. If you’re to upgrade such a key tool, it has to provide substantial benefits in every aspect of the sales process.   As Dr. Klos mentioned, there were some serious doubts within the company as to whether a configuration tool could handle the complexities of the product suite.   What were your goals and key requirements for the project? We need to be sure that everything that we sell is 100% technically correct. Our reputation is built on that. Our broad goal was to reduce quotation lead times and to eliminate the risk resulting from our quotation process. We also wanted to cut out all the time wasted chasing information internally.   Our team set the goal of reducing quotation time from an eight-day average to one day. The ultimate target was to be able to leave a budget quote with the customer at the end of a sales visit.   It was very important for us to use a standard software tool as we wanted to avoid going too deep into customization work. Of course, the quality of quotation documents was also a major factor, as was ease of maintenance – we wanted to have a system that could be used and updated by people who are not IT engineers. Integration was another critical factor – we wanted BOMs to be generated automatically and transferred to the ERP system once a quotation turned into an order.   You went with Tacton CPQ. How has the project gone and what have some of the outcomes been? The biggest success is the fact that we are able to react so quickly and get quotes to our customers immediately. That one-day target was easily reached, and some of our sales are even impressing by doing configurations together with the customer and leaving a budget quotation at the end of their visit.   We can include tailored brochures, drawings and illustrations and everything is gathered automatically by the configurator. The sales team are achieving this without the need to involve the inside sales operation. I feel that our salespeople are now proud when sending out quotations. The feedback from our customer base is very good and we are much more professional in the eyes of our customers.   What about the skeptics? We never came to a point where we stalled or where the software had limitations that were a show stopper for us. We were always able to implement all our ideas within the standard software. In fact, we only had one minor customization for the whole project.   Does your CPQ tool answer the right questions? When companies approach us, they usually share problems similar to that of Yaskawa – they are relying on a CPQ or quoting process that the company has outgrown. Quite often, the system only keeps track of what goes with what and doesn’t offer the intelligence, speed and agility needed to respond to the customer in a good way. When you have a complex product offering, your CPQ tool needs to work harder than that. You need to be able to answer the questions your customers ask, and you need to do it quickly.   Usually, that’s not “Does A go with B?” More often, it’s, “I need the solution to do this…and I need it to fit with that. What can you offer me?” And, “What happens if I change that, or increase something there? Can you meet my need?”   This scenario requires an advanced CPQ tool that can be used as a smart knowledge base – not just as product data storage. And that’s Tacton.   Sound interesting? We’d be happy to tell you more, put you in touch with Dr. Klos, or show our solutions in action.

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Are jaw-dropping order error rates the norm?

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Surprisingly, the answer seems to be yes

A couple of weeks ago I was excited to meet one of the bigger global brands in complex machinery for a discussion on configuration. A couple of hours into the meeting I heard something that makes it possible for me to use one of my favorite English words – flabbergasted. And the reason for my surprise? Well, my host casually explained that the error rate of the company’s manufacturing orders was around 50%. 50%! Half the orders were wrong! He went on to explain that sometimes these errors were minor, but sometimes they could also generate incorrect purchase orders and cause manufacturing errors. The sales person would have to go back to the customer and explain that they had to change the order – sometimes even at a cost to the customer. This problem apparently generated a lot of friction with the resellers. No wonder! I couldn’t help but start to crunch the numbers in my head. How much of the company’s margin was being lost this way? Huge numbers, percentage points on the bottom line.

So, what was the underlying problem?

Engineering change orders were frequent, customization was an important sales argument and resellers were working with a sales configuration tool that was not properly integrated into the back-end systems. There was no real connection between the different product representations in product management, product development, sales, and manufacturing. It was a disconnected information chain. Maybe I shouldn’t have been that flabbergasted (twice in one text!) since I know that another of our customers reduced their quality cost (cost caused by bad information) from 2,5% to 0,5%. These are percentage points that go straight to the bottom line. What CEO wouldn’t love to present such a margin change to his board?

How to get the order right – first time, every time

This is increasingly a discussion we are having with our customers. What companies don’t need is another point solution disconnected from the rest of the business information. What they do need is transparency in product definitions between the different stages of product development all the way through to manufacturing. And a common language that allows engineering to update product information and make it available to sales – without weeks of delay. This way, quotes will always be based on accurate information. And when the sale is made, the information gets automatically transferred into orders – orders that are correct!

An initiative with a significant bottom-line impact that is entirely within your grasp

I sincerely hope that my kind host will enlighten his CEO on the potential he has to increase his margins. He doesn’t have to expand into a new market, spend money on an expensive ad campaign, or rebuild a factory to make more money for his company. He just has to connect the information flows and empower his resellers with the right sales portal solution. This is easy to say, and I’m not suggesting that it can be achieved without a lot of work. But it is a potential for improvement so big that few companies can afford to ignore it. If you want to know how Tacton can help you slash your order errors by more than 80%, watch this video:

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Engineers vs Salespeople

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Not too long ago, we worked with a wood panel manufacturer. They lacked a smooth, well-functioning process between two crucial departments – sales and engineering. Here’s a typical conversation, to give you a feel for the kinds of problems they dealt with. Maybe you’ll recognize it:   Salesman: Yesterday’s meeting with Wood Panel Professionals went really well. However, there was one situation that caused problems. The distance between the saw and the pallet was too short, so I solved the problem by making it 10 meters longer. That works, right?   Engineer: Well, no, that doesn’t work with the Small Conveyor they’ve requested before. If they need a conveyor that’s 10 meters longer, they need the Big Conveyor. What you’ve offered them is not possible to deliver with the current set-up.   Salesman: Well, I’ve already said yes – so I need you to find a solution!   These conversations were a common sight, and often meant a lot of extra work and uncomfortable conversations with the end-customer.   When you offer customization of your products, you can’t expect sales to know all product details and their compatibility by heart. Neither can you expect engineers to provide sales with all the possible and impossible combinations and correlations. So, what to do? Our customer chose to ask us for help (obviously).  

With a Tacton solution in place, the previous problem is now non-existent.

With the tight integration between Tacton CPQ and Tacton Design Automation, all product rules and data are at the fingertips of our customer’s sales rep. This effectively steers and helps to offer the best (and correct) solution. Simultaneously, accurate and valid information is sent directly to the engineer. And not only that – the automatically generated 2D and 3D CAD files also make the order ready to be sent straight into production, significantly speeding up delivery time.   Tacton automatically adjusts the entire configuration based on user input, regardless if the conveyor needs to be 10 meters (30 ft) longer or 10 centimeters (3 inches) wider. This way, neither sales nor engineers need to worry about invalid choices. Instead, these departments rely on their Tacton solution for a configuration that’s ready for production and delivery – and also provides exactly what the end-customer wants.   This has greatly increased our wood panel manufacturer’s collaboration and workflows. It’s also easier to promise, produce, and deliver high-quality products. But business isn’t the only thing that’s improved: our customer no longer has uncomfortable or tricky conversations. The improved atmosphere that’s followed? Consider it a bonus.

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Do you have a strategy for staying competitive?

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So, I’m on this flight. I’ve been sitting here for six hours. There are another six hours to go before we land in San Francisco. And I can’t help but think of how this flight is the perfect example of how a company could change the entire market it operates in, just by changing the way the company itself operates. To give you some background we’re currently at the infamous Lufthansa flight LH458. This flight represents any (and I really mean any) flight across the Atlantic. This 12-hour flight is like any other flight: it’s too long. I’ve realized that the pain of sitting on a transatlantic flight to attend a Silicon Valley boot-camp workshop is actually the perfect example of a problem that could be solved with CPQ.   The question I ask myself is this: “What would happen if an alternative flight covered the same distance in less than 10 minutes?”   Would that be good or bad for Lufthansa? Would they have to change the price to this particular non-luxurious experience of business travel? Yes, I think so. Because if there actually was an alternative that could take me halfway across the globe in 10 minutes I would gladly pay a premium price to not be sitting here. Do you hear me Lufthansa? I would gladly pay twice as much if you could solve this 12-hour travel-thing-issue!   So, what’s the lesson learned for manufacturing companies? Currently, you are running transatlantic flights, and the value it brings is getting from A to B. But this will no longer be enough; you must offer more than that. Somewhere in the not-too-distant future, someone will solve your 12-hour problem in less than 10 minutes. This isn’t rocket science, and yet many companies fail to consider the impact this would have on their business.  
…To stay competitive in today’s environment warrants not only the skill and will to adapt to change but also the foresight to anticipate it.
  Do you have a strategy to stay competitive going forward? If not, don’t worry. We have CPQ. With it, you have a powerful tool that can turn your slow, uncomfortable and expensive flight into a lightning-fast jet.   Read a customer case and get started on your digital transformation journey. Siemens has found a new way for their steam turbines. We’ve partnered with robotics world-leader Yaskawa in their digital transformation. This health-care giant now has its destination clear in mind with our AI-powered CPQ.

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Why Packaging Manufacturers Need Intelligent CPQ

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The fourth industrial revolution, generally referred to as Industry 4.0 or Smart Manufacturing, is enabling manufacturers to reach new levels of excellence and connectivity between sales and production.  
“It is the leap from digital back to physical—from connected, digital technologies to the creation of a physical object—that constitutes the essence of the Industry 4.0 concept”
  Indeed, enabling connectivity is a real challenge for packaging manufacturers that struggle with efficient data management, increasing customer demands, and ensuring error-free and high-quality products.   But connectivity is at the core of the manufacturing industry’s digital transformation, and crucial to staying competitive.   So, how can manufacturers get started?   As a first step, I would recommend you read our Q&A piece with Tacton’s Chief Product Officer, Nils Olsson. Nils holds a deep knowledge of the packaging industry with more than a decade’s experience from TetraPak, a multinational processing and packaging solutions company.   Download our Q&A to get insights on the specific challenges that packaging manufacturers face, and how intelligent CPQ enables digital transformation success.

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Building trust and GDPR compliance with CPQ

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It’s only 10 days left until GDPR, the European General Data Protection Regulation, goes into effect. Is your organization ready? If you’re shaking your head, you’re not alone. Statistics show that only about 15% of companies expect to be fully compliant by May 25 – and it’s especially challenging for global enterprises. I had a quick chat with Esther Bergmark, Director of Product Marketing and Senior Product Manager, to talk about the reality of enterprise compliance to GDPR, and how AI-powered CPQ is key to successful data management.  

Esther

What challenges do manufacturing companies face with the new regulation?

Esther: According to research, two of the most pressing challenges for companies are data portability and cross-border data transfer. I would say that this is especially common for global manufacturing enterprises. Companies we work with usually have a big system landscape with separated systems. The lack of integration means detached data, which in turn means it’s hard to keep track of it. On top of this, a lot of the data in the systems is redundant and just taking up space. These factors combined make it difficult to be GDPR compliant. When a company employs different ERP or CRM systems globally, it is impossible to handle the data in an efficient, smooth way. Usually, the bigger the company is, the harder it will be to comply with GDPR.

How does Industry 4.0 fit into the picture?

Esther: Industry 4.0, or Smart Manufacturing, is the concept of connecting the digital world with the physical. Traditionally, it has been hard for global manufacturers to use their data across platforms. This often results in order errors, long sales cycles and a lengthy time-to-market. With the technologies now available, it is much easier to achieve excellence in this area. Relating to GDPR, SaaS software brings a lot of advantages. Since you subscribe to the application, the responsibility for compliance lies on the supplier, not you. Simply put, it’s your suppliers’ job to enable you to stay compliant – not yours. SaaS is an effective way to eliminate the cost and risk of data management, if you choose the right supplier. This is important to keep in mind when evaluating SaaS solutions; can they support your organization optimally?

How does Tacton support manufacturing companies in becoming GDPR compliant?

Esther: Because all organizations have different standards for what is considered personal or sensitive data, all applications on our smart manufacturing platform are configurable to support each organization’s specific needs. This gives our customers great flexibility in their data management. In all Tacton products, it’s possible to classify your entries. Tags make it easy to identify a certain kind of data and simplify the erasure process significantly. Additionally, once you delete the data from your Tacton application, it will also be deleted from all data bases connected to it. This includes previous versions of the application, so the data will be deleted from there too.

What about American companies? Should they care about being GDPR compliant?

Esther: Definitely. Any company that deals with European citizens in any way must adhere to the GDPR. It should also be noted that we do not know if a similar legislation will be proposed in the United States. Regardless, companies need to be ready.

Are there any additional benefits of investing in CPQ than “just” being compliant?

Esther: Tacton’s smart manufacturing platform is a great tool to build trust. The right to be forgotten is really important for consumers – in their private life, but also in their professional roles! This means that managing data with respect for individuals’ privacy is equally important towards your customers as it is for your employees. CPQ also makes it a lot easier to maintain data quality. It helps you stay updated on what data you have and hold, and it simplifies the clean-up once you decide to remove some data. This means your internal processes become more efficient, which inevitably reflects towards external stakeholders in anything from marketing communication to product configuration.   Want to learn more about how Tacton supports effective data management? Send an email to Esther at esther.bergmark@tacton.com.

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Equipment manufacturer Meyn is using Tacton CPQ to maximize both sales and delivery performance. You should too.

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How do you provide customers with accurate and competitive quotations that can be efficiently manufactured and delivered? Many suppliers of complex equipment face this challenge. It is not that it can’t be done. It is more about the time and effort it takes to create a winning quotation and the very real risk of losing out to more nimble competitors. Meyn, the world’s leading manufacturer of poultry processing equipment, was struggling with this very issue. The Dutch company is famous for the quality and reliability of its products, and innovation has always been the key to its success. But rapid growth presented some real challenges. With the number of quotation requests growing to over 2,000 per year, the company needed respond with a minimum of effort – without compromising on accuracy. By partnering with Tacton, Meyn has been able to grab this challenge by the horns and turn it into a competitive advantage. We sat down with Jan Ras, Manager of Sales Support, and Sicco Saft, Business Analyst, to get into the details of how they managed to transform the quotation process and how they are using CPQ to stay ahead of the competition.   When did you realize you needed a new CPQ tool and why did you choose Tacton? Ras: “We already had a configurator in place, but it required our sales reps to answer up to 70 questions about product features and options. Early in the sales cycle, the sales team wouldn’t have the insight to answer all the questions, they might only know how many chickens per hour and the weight range of the birds. But without input to each question, the configurator couldn’t produce a valid quote. On top of this, because of the sequential nature of the configurator, a requirement could come up at the end that could affect the entire configuration right back to the beginning and you’d have to go back and adjust everything. It was just too complicated. You needed a lot of knowledge to be able to generate a quote, and even then you could end up configuring a line with errors in it. Our sales people would turn to product specialists, who in their turn often needed to contact the customer again. It took us days to produce a quote, in some cases up to a week. With growing volumes, it just wasn’t working. Our hit rate at the time was around 30%, so a lot of this effort didn’t amount to anything.” Saft: The old system was a sequential, rule-based configurator. We realized that it would never meet our needs. We needed a tool where we didn’t have to answer the same question every time there was a change to a requirement. A tool where we could simply define the customer’s business need and for those requirements to automatically filter through to all affected areas. All our customers are different in the way they approach us, so we also wanted to be able to start at any point in the configuration. If you don’t need an answer to a particular question, it shouldn’t matter – the configurator should do the thinking for you. And that is exactly what Tacton does.”   What outcomes were you looking to achieve? Saft: “We needed a tool that would allow us to quote quickly and accurately at the initial stage of the sales cycle. By simplifying the quotation process we could save time and money and focus efforts on the sales cases that were further along in the process. Our mantra for the project was – quick in the beginning and detailed at the end. Specifically, we wanted to reduce the number of questions it took to configure a line by 50%, and we wanted more ‘first time right’ quotations.”   What are the main benefits of the Tacton solution? Ras: “When you’re working with the Tacton configurator, your starting point is an already valid configuration. This makes life a lot easier for our sales reps. They can focus on fine-tuning the configuration for the specific customer needs instead of worrying about defining product details. The need to involve product experts is pretty much history. We can produce a quote for a single machine in less than 15 minutes. A budget quote for a complete processing line takes just 3-4 hours. This is a huge improvement from where we were before.” Saft: “Today, instead of working through 70 sequential questions, our sales reps only need to answer 15 to configure a complete production line. Bearing in mind these lines can consist of up to 300 types of equipment – this is quite extraordinary!”   You are also using Salesforce CRM. How does this work? Saft: “By combining Tacton with Salesforce we feel like we’ve got the best of both worlds. Tacton is the best CPQ tool you can find for complex manufacturing and Salesforce is the best CRM tool. Not a lot of vendors can handle our kind of complexity and offer an application that actually performs. And the fact that Tacton integrates so well with Salesforce makes it all the better. Information about customer location, regulatory environments, products and plant & equipment is directly available and can act as default values in Tacton CPQ when you start a configuration. It makes for a very streamlined process.”   Any plans for the future? Saft: “Tacton and Salesforce fit perfectly into our digital transformation strategy. Ultimately, we want our customers to be able to order the products themselves. This includes after sales, such as providing service contracts or recommending spare parts.”   If you want to know all the details of Meyn’s digital transformation, download their full success story here.

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4 key issues to keep in mind for your CPQ selection

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Navigating the jungle that is the CPQ market is easier said than done, and many companies struggle with knowing what they should focus on in their selection. From more than 20 years of working with CPQ projects, we have identified four critical aspects that are paramount to your selection but are rarely considered as such (here’s another good read on the topic). Below are our top-4 things you should keep top of mind when selecting a CPQ solution.

1. Look beyond CRM integration – it isn’t enough for most companies

In general, CRM integration is mentioned as the main strength of many vendors and CPQ is often seen as a CRM-exclusive “quote-to-cash” tool. It is correct that CRM integration is essential, but a company looking to stay competitive and relevant within the coming years must look beyond its sales efforts. Quote-to-cash might bring quick results and sales efficiency, but it does not address operational excellence, an increasingly important issue for global companies. Sales efficiency has nothing to do with the development, production or delivery process of your products, and that is why it’s critical to look beyond CRM integration and search for additional ones. Simply put, capturing an order is not enough – you must also know how to deliver on that order. Because let’s face it: what does it matter if you have the best sales tool, if you can’t deliver what you promised your customer?  

2. Fully synchronized enterprise systems speed up digital transformation

A modern CPQ should offer full integration to all business-critical systems and host them on the same platform – not just synchronize them. The CPQ solution you ultimately select should have enough power to connect all your key-processes: from product development, sales and through to production. This enables all company divisions to work holistically and will have a direct impact on product quality and time-to-market, which is crucial to speed up delivery and meet your clients’ requirements to a T.   Tacton provides full integration for e-commerce, ERP, CRM, PDM, PLM, and CAD systems on our smart manufacturing platform, connecting the customer, factory and product.  

3. The importance of the CPQ back-end

App response time is quite often mentioned as a common weakness of many CPQ solutions. But it’s not really about the app. Instead, it´s the configuration engine that is the real deal-breaker for your CPQ success. The app response time is just a reflection of what configuration engine you use. The engine and the speed of the app are highly correlated. Thus, companies need to think both one and two times about what level of product complexity their CPQ should handle. This will ultimately decide how quick and easy the app will be to work with and is a crucial consideration for companies with complex product offerings.  

4. The added benefits of AI-powered CPQ

Connectivity is key to a seamless customer experience, which in turn is critical to stay competitive. An AI-powered CPQ helps you optimize your offer for each customer and deliver exactly what they ask for; all while keeping your internal processes connected and up-to-date. It’s a win-win, really, and necessary if you want to stand out from the competition.   Tacton’s smart manufacturing platform is the result of ground-breaking research from the Swedish Institute of Computer Science on artificial intelligence and knowledge-based systems. Ever since, we have helped some of the world’s leading manufacturers digitally transform their business. Our customers include companies like Caterpillar, GE Healthcare, Siemens, Swisslog, Yaskawa and Meyn.  

Closing thoughts

When done right, CPQ is a highly strategic tool that will have a significant impact on your organization going forward. But to be strategic, CPQ must cover all critical functions within your company; it must speed up sales and bridge silos to ensure continued excellence. Because the essence of digital transformation is not sales efforts. It’s connectivity.   If you want to know how Tacton can help you connect customer, factory and product – watch a video here.

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Meet the People at Tacton: Bénédicte Wipliez

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  Life has a way of sending you in unexpected directions. This is something Benedicte Wipliez is well aware of. She found her way from the north of France to Tacton and Sweden through the extravagant desert city of Dubai. At Tacton she works in the marketing department. One of her responsibilities is to analyze which, expected and unexpected, directions the visitors of the Tacton website take.   About a year and a half ago you went from Dubai to Stockholm. How was that transition? It is certainly a big difference between Dubai and Stockholm! Obviously, there is a great difference in climate. In Dubai, the weather is lovely a great portion of the year but almost unbearable during the summer, where you tend to stay indoors as much as you can. In Sweden it is similar but the opposite, where the winter is the time to stay indoors!   The work climate is very different as well. I loved the multicultural environment in Dubai where you work and negotiate with people from so many different cultures. It is not always easy but you learn something new every day! When I came to Tacton I was happy to find the same international feeling. My coworkers are from different countries and we work towards international customers all the time.   What have you discovered about Tacton during your time at the company? Outside of the international environment, I’m happy to see how open my coworkers and my boss are to new ideas and to question the way we work – all in order to improve. I learned a lot from working at Dassault in Dubai (and France) and although those ideas were different compared to the way Tacton worked, I’m able to use and test those ideas at Tacton. No one ever said “This is not how we do it here” or “We have always done things this way” but instead allows me to work in my own way. I like that lack of prestige and the pragmatism where the end result is all that matters.   Another thing that is quite apparent is the rapid growth Tacton is going through as a company. Although it can be stressful at times, I love the environment it creates. An environment where you need to take fast decisions and take responsibility for them, create processes, and to be efficient in your work. It is a highly developing environment to be in as a professional.   One of the things you do at Tacton is to analyze leads. Why is that important? If you think about it, all our current customers have started as just a phone call, an email, a website visit, or perhaps an elevator chat with a coworker. You never know where the next big deal is going to come from! At the same time, you cannot chase every opportunity either. My work is about seeing through all the incoming data and see which people and companies are most likely to benefit from our products. If we focus mainly on the suitable customers we won’t waste our time nor, more importantly, our customers’ time.   I hear you are quite active in your spare time. Oh, yes. I do lots of different things! I love cooking pastries, climbing, painting, photography, but also to hang out with friends – especially over a glass of Belgian craft beer! I also love traveling and prefer to travel by myself – you meet so many interesting people when you travel alone!   1 year, 3 months at Tacton | Lead Generation Manager Passionate about: Traveling & Belgian beer

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4 key issues to keep in mind for your CPQ selection

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Navigating the jungle that is the CPQ market is easier said than done, and many companies struggle with knowing what they should focus on in their selection. From more than 20 years of working with CPQ projects, we have identified four critical aspects that are paramount to your selection but are rarely considered as such (here’s another good read on the topic). Below are our top-4 things you should keep top of mind when selecting a CPQ solution.

1. Look beyond CRM integration – it isn’t enough for most companies

In general, CRM integration is mentioned as the main strength of many vendors and CPQ is often seen as a CRM-exclusive “quote-to-cash” tool. It is correct that CRM integration is essential, but a company looking to stay competitive and relevant within the coming years must look beyond its sales efforts. Quote-to-cash might bring quick results and sales efficiency, but it does not address operational excellence, an increasingly important issue for global companies. Sales efficiency has nothing to do with the development, production or delivery process of your products, and that is why it’s critical to look beyond CRM integration and search for additional ones. Simply put, capturing an order is not enough – you must also know how to deliver on that order. Because let’s face it: what does it matter if you have the best sales tool, if you can’t deliver what you promised your customer?  

2. Fully synchronized enterprise systems speed up digital transformation

A modern CPQ should offer full integration to all business-critical systems and host them on the same platform – not just synchronize them. The CPQ solution you ultimately select should have enough power to connect all your key-processes: from product development, sales and through to production. This enables all company divisions to work holistically and will have a direct impact on product quality and time-to-market, which is crucial to speed up delivery and meet your clients’ requirements to a T.   Tacton provides full integration for e-commerce, ERP, CRM, PDM, PLM, and CAD systems on our smart manufacturing platform, connecting the customer, factory and product.  

3. The importance of the CPQ back-end

App response time is quite often mentioned as a common weakness of many CPQ solutions. But it’s not really about the app. Instead, it´s the configuration engine that is the real deal-breaker for your CPQ success. The app response time is just a reflection of what configuration engine you use. The engine and the speed of the app are highly correlated. Thus, companies need to think both one and two times about what level of product complexity their CPQ should handle. This will ultimately decide how quick and easy the app will be to work with and is a crucial consideration for companies with complex product offerings.  

4. The added benefits of AI-powered CPQ

Connectivity is key to a seamless customer experience, which in turn is critical to stay competitive. An AI-powered CPQ helps you optimize your offer for each customer and deliver exactly what they ask for; all while keeping your internal processes connected and up-to-date. It’s a win-win, really, and necessary if you want to stand out from the competition.   Tacton’s smart manufacturing platform is the result of ground-breaking research from the Swedish Institute of Computer Science on artificial intelligence and knowledge-based systems. Ever since, we have helped some of the world’s leading manufacturers digitally transform their business. Our customers include companies like Caterpillar, GE Healthcare, Siemens, Swisslog, Yaskawa and Meyn.  

Closing thoughts

When done right, CPQ is a highly strategic tool that will have a significant impact on your organization going forward. But to be strategic, CPQ must cover all critical functions within your company; it must speed up sales and bridge silos to ensure continued excellence. Because the essence of digital transformation is not sales efforts. It’s connectivity.   If you want to know how Tacton can help you connect customer, factory and product – watch a video here.

The post 4 key issues to keep in mind for your CPQ selection appeared first on Tacton.

Why society needs efficient customization

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This is the first in a series of blog posts where I will outline why society needs efficient customization, and how it can be achieved.

  The concept of mass production is a cornerstone of the industrial revolution and modern society. Engineers design a product and a manufacturing process reproduces large quantities of the product very efficiently at low cost. But although mass production has become extremely efficient, contributing to lifting a majority of the world population from poverty, it is in many ways not effective – it does not give us what we want.   In the consumer market, mass production results in enormous waste of products that are never sold, due to the difficulty of forecasting demand and competition. Moreover, excess supplies are heavily discounted and sold to customers who don’t need them and often end up rarely using them. This is not sustainable.   Joseph Pine and others have long claimed that the admired business models of the future will be based on mass customization, an efficient process of making what the customer needs when the customer is willing to pay for it. But this promise is elusive. So far it has been largely wishful thinking. A contributing reason is that customization is more complex than it seems. Complex processes are unpredictable and can therefore not be managed for efficiency.   In manufacturing for the B2B market, where the customer is an organization, there is often too much variation in customer needs and volumes are too low, so that customization is necessary. The equipment used in factories or infrastructure are typical examples. Products like that have always been customized. It would not be economical to meet the B2B demands with a few mass-produced variants – the waste would be too costly.   Although customization is necessary, few people in the B2B manufacturing organizations understand how to customize their products correctly, and different departments of the organization have different views on the problem. The customization process from inquiry to delivery is highly error prone and no one has the full picture of how it works.   Configuration software has been introduced for several decades to automate the customization processes. However, those software packages are not well understood. They merely automate the mess of manual customization, moving the bottleneck from one process to another. The complexity remains.   Customization does not inherently have to be complex. In principle, products can be designed to be customized in predefined parameters in a predictable and fully automated way. In principle, it is also possible to make rational decisions about the range of customizability, estimating its profitability.  
But this requires that we understand the nature of the complexity of customization, and eliminate unnecessary complexity instead of hoping that it will disappear by automation.
  The immediate driver for manufacturers is to reduce costs and risks while increasing revenues. But when we can make the dream of efficient customization a reality, the whole world will benefit. This is not just a matter of avoiding waste. We need a new green generation of products, and we need transparent processes of design, production, maintenance, and recycling to get improvements out to the market quickly.   In the next blog posts, I will discuss the nature of the complexity of customization and what to do about it.

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The avoidable complexity of customization

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In a previous blog post, I talked about why society needs efficient customization.

Now I will describe why the promise of mass customization and configure-to-order has not yet been fulfilled.

  The manufacturing industry is dominated by the mass production paradigm. It is based on the engineering of products and production systems that have a high degree of predictability. The interdependencies in the internal processes are highly complicated but can be managed for efficiency.   Mass production is complicated, but most of the real world is complex: the weather is an example of a complex system. Meteorologists understand the interdependencies that shape weather systems very well, but they will still never be able to predict the behavior accurately. What makes systems complex is the uncertainty of their interdependencies. We may know enough about the interdependencies to explain afterward why something happened, but not enough to predict accurately in advance. Small deviations propagate and escalate in ripple effects that have large unforeseen consequences. The only valid model of a complex system is the system itself.  
Mass production is efficient, but customization is often more effective. It gets us what we need.  
Unfortunately, customization makes the manufacturing business process complex. Even though the products and processes are in principle very similar to mass production, customization introduces uncertainty everywhere. Which customizations are possible? How do we produce them? And what will it cost?   Complex processes cannot be managed. If you try to control the outcome of a complex process, unpredicted consequences follow, which often makes the situation worse. Most people working in complex organizations have experienced this. Luckily the skillful staff in B2B manufacturing companies make workarounds to handle the predictably unpredictable deviations in the process. They make it work. But it is error-prone and inefficient, and no one has the overview to make informed decisions about the product range.   For several decades, B2B manufacturing companies have attempted to systematize the customization process. They design a product which has predefined customizable parameters. Each customer can select a standardized value for each parameter, and millions of combinations are possible, enough to closely match each customer’s specific needs. The selected configuration of parameter values is then made to order. This best practice is called Configure-to-Order, or variations thereof. It can be efficient in principle.   However, the customization parameters have interdependencies. When you change the value of one parameter, others have to change as well. One by one these interdependencies are relatively well understood, but there are many thousands of them, and they interact and influence each other indirectly. It becomes messy and difficult to determine which parameter value combinations are compatible and what the resulting product performance will be.  
So, despite being systematic in principle, customization by Configure-to-Order remains complex due to the uncertain interdependencies.
  The problem is perceived as an efficiency problem. The CPQ market has been growing since the mid-90s to increase the efficiency of quoting and pricing customizable products. However, the CPQ implementation projects do not address the underlying complexity. The CPQ systems become black boxes full of rule coding errors and ad-hoc limitations, and they require manual workarounds to integrate with other business processes.   In the next blog post, I will discuss how to eliminate the avoidable complexity of customization – how to fulfill the promise of systematic Configure-to-Order.

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