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Abstract

This article presents a study of the benefits obtained from applying product configuration systems based on a case study in four industry companies. The impacts are described according to main objectives in literature for imple-menting product configuration systems: lead time in the specification processes, on-time delivery of the specifica-tions, and resource consumption for making specifications, quality of specifications, optimization of products and services, and other observations. The purpose of the study is partly to identify specific impacts observed from implementing product configuration systems in industry companies and partly to assess if the objectives suggested are appropriate for describing the impact of product configuration systems and identifying other possible objectives. The empirical study of the com-panies also gives an indication of more overall performance indicators being affected by the use of product configu-ration systems e.g. increased sales, decrease in the number of SKU's, improved ability to introduce new products, and cost reductions.
OBSERVED BENEFITS FROM PRODUCT CONFIGURATION SYSTEMS
Lars Hvam1, Anders Haug2, Niels Henrik Mortensen3, Christian Thuesen4
Department of Management Engineering1
Operations Management
Technical University of Denmark
Building 426, DK-2800 Kgs. Lyngby
Email: lahv@dtu.dk
Department of Entrepreneurship and Relationship Management2
University of Southern Denmark
Engstien 1, DK-6000 Kolding
Email: adg@sam.sdu.dk
Department of Mechanical Engineering3
Product Architecture Group
Technical University of Denmark
Building 426, DK-2800 Kgs. Lyngby
Email: nhmo@mek.dtu.dk
Department of Management Engineering4
Production and Service Management
Technical University of Denmark
Building 426, DK-2800 Kgs. Lyngby
Email: chth@dtu.dk
Abstract
This article presents a study of the benefits obtained from applying product configuration systems based on a case study
in four industry companies. The impacts are described according to main objectives in literature for implementing prod-
uct configuration systems: lead time in the specification processes, on-time delivery of the specifications, resource con-
sumption for making specifications, quality of specifications, optimization of products and services, and other observa-
tions.
The purpose of the study is partly to identify specific impacts observed from implementing product configuration sys-
tems in industry companies and partly to assess if the objectives suggested are appropriate for describing the impact of
product configuration systems and identifying other possible objectives. The empirical study of the companies also
gives an indication of more overall performance indicators being affected by the use of product configuration systems
e.g. increased sales, decrease in the number of SKU’s, improved ability to introduce new products, and cost reductions.
Significance
Product configuration systems are increasingly used in industrial companies as a means for efficient design of customer
tailored products. There are examples of companies who have gained significant benefits from applying product config-
uration systems. However companies considering use product configuration systems have a challenge in assessing the
potential benefits to reach from applying product configuration systems. This article provides a list of potential benefits
based on a case study of four industry companies.
Keywords
Mass Customization, product configuration, engineering processes, performance measurement, complexity manage-
ment.
Received: ;Accepted:
1. INTRODUCTION
Customers worldwide require personalised products. One way of obtaining this is to customise the products by use of
product configuration systems (Tseng and Piller, 2003), (Forza and Salvador, 2007),(Hvam et al 2008). Product config-
uration systems are increasingly used as a means for efficient design of customer tailored products, and this has led to
significant benefits for industry companies. However, the specific benefits gained from product configuration are diffi-
cult to measure. This article discusses how to assess the benefits from the use of product configuration based on a sug-
gested set of measurements and an empirical study of four industry companies.
Several companies have acknowledged the opportunity to apply product configuration systems to support the activi-
ties of the product configuration process (see for example www.configurator-database.com). Companies like Dell Com-
puter and American Power Conversion (APC) rely heavily on the performance of their configuration systems, as a con-
figuration of their complex product portfolio would not be feasible if the product configuration processes should be car-
ried out manually (Tiihonen et al., 1996).
A product configuration system generates specifications as e.g. quotations, bills of materials, lists of operations, user
manuals, drawings etc. (Hvam, 2001), (Hvam and Ladeby, 2007) A specification is a concept which we all know from
everyday life. A specification can be defined as a description which can unambiguously transfer needs or intentions
from one group of people to another. Examples of specifications include baking recipes, assembly instructions for an
item of furniture from IKEA, or directions for driving somewhere.
In industrial companies where many people are involved in developing, marketing, selling, producing and servicing
products, specifications make up an important part of daily life. Descriptions of customer requirements, product draw-
ings, lists of parts, assembly instructions and service manuals are examples of specifications in industrial companies.
When making an offer or executing an order, there are a series of specifications which specify the product and how
the product is to be produced, assembled, transported, used, serviced and recycled/scrapped. In the case of a mass-
produced product, it is possible to work out all the specifications in connection with development of the product, and
subsequently these specifications can be used every time a new product is produced.
If, on the other hand, customer tailored products are manufactured, it will be necessary to work out some of the speci-
fications every time an offer has to be worked out or an order is received for a customized product. The term specifica-
tion processes denotes the business processes which analyse the customer’s needs, create a product which is adapted to
the individual customer, and specify the activities which have to be performed in connection with, for example, pur-
chasing, production, assembly, delivery and servicing of the product concerned (i.e. the product’s life cycle properties).
A product configuration system is capable of supporting the activities of specifying products and their life cycle prop-
erties in the specification processes (Mortensen et al, 2010), (Mortensen et al, 2011), (Hvam et al 2012). The activities
in the specification processes include an analysis of the customer’s needs, design and specification of a product variant
which full-fill the customer’s needs and specification of e.g. the product’s manufacturing, transportation, erection on
site and service (specification of the product’s life cycle properties). The activities in the specification processes are
characterized by having a relatively well-defined space of (maybe complex) solutions as a contrast to product develop-
ment, which is a more creative process (Schwarze, 1996), (Hvam & Have, 1998).
The concepts specification and specification processes are introduced as a consequence of the significance of having
complete and error free specifications in the subsequent business processes in e.g. manufacturing, assembly, transporta-
tion, installation and after sales service (Guess 2002), (Nielsen, 2007), (Forza and Salvador, 2007). Furthermore opera-
tions management literature only has little focus on specifications and specification processes.
Typical goals for the specification processes are the ability to find an optimal solution according to the customer’s
needs, high quality of the specifications (complete and correct specifications), short lead time and a high productivity in
the specification processes.
This article focuses on the possibilities offered by product configuration systems (Hvam, 1998), (Haug, 2010) as to
the support of the specification processes and on how to assess the benefits to obtain from applying product configura-
tion systems in the specification processes. In Section 3 suggested groups of targets for applying product configuration
are listed. The targets focus specifically on benefits derived from the product configuration systems in the specification
processes. Based on the empirical study, the targets will be evaluated and possible more overall targets observed cover-
ing other functions of the company or the total company will be discussed.
2 LITERATURE STUDY
Most configuration literature focuses on technical solutions, methods and techniques, while only a minor part of this
literature focuses on empirical studies of the benefits from applying product configuration systems. In the following,
some of the literature with an empirical perspective is presented.
(Barker and O'Conner 1989) describe the case of Digital Equipment Corporation (DEC). DEC uses configurators for
validation of the technical correctness of customer orders and for guiding the actual assembly of these orders. They state
"overall the net return to Digital is estimated to be in excess of $40 million per year", and that the configurators are
"contributing to customer satisfaction, lower costs, and higher productivity"; "insures that complete, consistently con-
figured systems are shipped to the customer"; "simplifies field and manufacturing training needs and avoids confusion
about new products which can delay time-to-market significantly"; "increases manufacturing’s flexibility"; "increased
the technical accuracy of orders entering manufacturing"; "assures that when the components of the order come together
for the first time at the customer site the system will work"; and "major positive impact on cycle times, inventory levels,
and manufacturing costs".
(Ariano and Dagnino 1996) describe the case of a manufacturer of modular wooden office furniture who applies a
configurator for the creation of bills of materials. They claim that the benefits achieved from the configurator are many:
"a new and more organized way of structuring the company’s product line"; "allows for a more consistent, faster, easier,
and more comprehensive way to enter an order"; "while the order is entered, the system verifies that the configuration
of the products is correct and compatible with the company’s offerings"; "helps in quoting an accurate pricing to the
company’s products"; and "implies a reduction in the duplication of information, pricing deviations, and configuration
inconsistencies".
(Fleischanderl et al. 1998) describe the use of a configurator for configuring large telecommunication systems. They
claim that the configurator: has "improved the quality of the configuration results"; helps "avoiding error-prone manual
editing of parameters"; has "revealed numerous errors, such as cables having wrong length codes"; and "makes the
knowledge about the EWSD [telecommunication systems] configuration explicit".
(Forza and Salvador 2002a) describe the case of a small company producing voltage transformers. They mention the
effects of the use of a configurator: a "reduction to almost zero of the errors in the configurations released by the sales
office"; "reducing the total time necessary for generating the tender"; made it "possible to recover a notable volume of
man-hours, which freed part of the sales personnel for tasks with greater additional value"; "made it possible to increase
technical productivity, both as regards product documentation release and design activities"; an "increase in technical
department productivity"; a "formalisation of the company knowledge"; and enabling "the transformation of individual
competencies into organisational competencies".
(Forza and Salvador 2002b) describe a project of implementing product configuration software into a small manufac-
turing company producing mould-bases for plastics moulding and punching-bases for metal sheet punching. They claim
that two main kinds of advantages have been achieved: (1) "reduction of manned activities in the tendering process
(tendering lead-time from 5–6 to 1 day)"; and (2) "increase in the level of correctness of product information (almost
100%)". They argue that the case study shows that the company obtained: a rapid payback of the investment in configu-
ration technology; a competitive advantage; and better inter-firm co-ordination.
Based on studies of twelve Danish firms that were using product configurators, (Pedersen and Edwards 2004) present
the results of the twelve companies' answers to the question of which beneficial effects their configurator projects have
realized. In the study, the firms were to estimate effects by giving scores from 1 to 5, where 1 equals “very small”, and
5 equals “very large”, while 0 equals “without influence”. The three top scorers are: improved quality (avg. ~ 4.4); low-
er turnaround time (avg. ~ 3.6); and less use of resources (avg. ~ 3.3).
(Forza et al. 2006) describe the case of a company that produces electric motors. They state that the configurator: "en-
hances product assortment communication"; "makes it easier and faster to explore the solution space offered by the
company"; "enables a faster, accurate generation of a feasible offer without consulting the technical office”; "enables a
faster, accurate creation of product code, BOM, and production cycle"; "allows storage of a large amount of customer
data collected during the exploration and configuration phases"; and "allows rapid retrieval of past configurations for
maintenance or repair purposes".
(Petersen et al. 2007) describe the case of Aalborg Industries, who makes steam and heat generating equipment for
maritime and industrial applications. (Petersen at al. 2007) state that because of the (sales) configurator the company is:
"gaining significant benefits, and has learned much about the challenges of implementing product configuration in
ETO".
(Hong et al. 2008) describe the case of Gienow Windows and Doors, where a configurator is used for: modelling the
designs based on customer needs; creating requirements of materials, machines, and personnel; and identifying the op-
timal production schedule. They claim that "the lead time from a customer order to the product delivery has been re-
duced to 3 weeks compared to the average of 2 months in this industry".
(Ladeby 2009) and (Hvam and Ladeby, 2007) describes the configurator project at NNE Pharmaplan, who uses a con-
figurator for 3D visualisation system of plant layouts. It is stated that a main benefit of the system is that "a customer
does not have to wait for weeks before he sees drawings and illustrations of what has been agreed upon".
(Ladeby 2009) describes the configurator project of GEA Niro, who designs and supplies spray drying plants. The
configurator of GEA Niro focuses on the quotation phase, and it is used in about 50 percent of the first quotations sent
out to customers. He states that: "the process of making quotations has become more standardised end formalised";
"product knowledge has become more standardised"; the sales person "gets the whole quotation served on a plate and
sends it to the customer"; and "preservation of knowledge has been a motivation for the configurator project".
3 HYPOTHESIS
The literature refers to numerous examples and a few surveys (Haug, 2011) on the impact of applying product configu-
ration systems. However, the benefits are described in many different ways, and it is often uncertain whether the bene-
fits claimed have been obtained from the product configuration system or from other initiatives in the company (Haug,
2012). In order to make a more specific assessment of benefits obtained a list of suggested benefits from applying prod-
uct configuration in the specification processes has been made. The suggested measurements include:
Lead time in the specification processes
On-time delivery of the specifications
Ressource consumption for making specifications
Quality of specifications
Optimization of products and services in the specification processes
Lead time refers to the interval of time from when a specification process is initiated until a finished specification is
available. An example is the number of days from when a customer makes an enquiry until the customer receives an
offer.
On-time delivery for specifications is defined as the number of specifications out of the total number of specifica-
tions which are completed within the agreed time span. On-time delivery is normally specified as the percentage of the
total specifications which are completed at the agreed time. An example is when working out offers, where the compa-
ny has promised the customers that they can always expect to receive an offer within at most 3 working days. A sample
of 100 random offers shows that 45 of them are delivered within 3 working days, while 55 are delivered after 4 working
days or later. In this case, the percentage of on-time delivery for offers is 45%.
Resource consumption for making specifications. The frequency of the individual specification activities, com-
bined with the duration (use of man-hours) of the individual specification activities, reflects where the largest use of
resources in the specification task lies, and where uniform tasks are executed with high frequency.
In order to be able to reveal the use of resources and find uniform tasks that are performed with high frequency, an
analysis can be made of the activities performed in the specification process. The analysis can be carried out as a fre-
quency study to find out how much of employees’ time is spent on given tasks – defined in terms of the specification
result or the specification method (activity).
Quality of specifications can be defined in several ways. One aspect is understandability/readability of the specifica-
tions, for example whether or not a customer understands the central elements in an offer he has received, or whether or
not the production engineer understands the design drawings on which he is to base production. The basic question here
is if the specification in question is able to pass on to the receiver an unambiguous and complete description, for exam-
ple of the product’s design. This aspect of a specification’s quality is obviously difficult to measure, both because it can
be a question of subjective evaluation on the part of the receiver, and because receivers of the specification can have
different backgrounds for interpreting a specification.
Another aspect of quality is the number of errors. Errors in specifications can be defined as the proportion of the spec-
ifications containing errors. Here, errors are defined as those errors that, if they are not discovered, will lead for exam-
ple to manufacture of a faulty product – so such errors as insignificant typos are not to be counted. An example is the
number of lists of parts with errors, compared to the total number of lists of parts produced. Another example is the
number of offers in which the pre-calculated cost price differs by more than 5% from the cost price arrived at by post-
calculation.
Optimization of products and services in the specification processes. Using a configuration system makes it possi-
ble to optimize products in relation to the customer’s requirements, or for example in relation to production costs or
maintenance/service.
The suggested targets and how to exactly measure each of the targets are further elaborated in (Hvam et al 2008). The
impact from product configuration has been studied in four different companies based on the suggested measurements.
Besides these targets for the specifications processes other targets measuring the more overall impact from product con-
figuration would be relevant to include (Hvam, 2006). Based on the literature and observations made from the case
study, possible candidates for measuring the overall impact of product configuration systems will be identified and dis-
cussed.
4 INDUSTRY APPLICATIONS
4.1 Impacts from product configuration
In the following we shall give a brief introduction to the 4 industry companies of this case study, of their configuration
projects and discuss the impacts observed.
4.1.1 Company A
Company A is an engineering and industrial company with an international market leading position within the area of
development and manufacturing of cement plants. The company has a turnover around 1 billion USD.
A modern cement plant typically produces 2-10,000 tonnes of clinkers per day (TPD), and the sales price for a 4,000
TPD plant is approx. 100 million USD1. Every complete cement plant is customized to suit the local raw material and
climatic conditions, and the lead-time from signing the contract to start-up is around 2½ years.
The company has implemented and used a configuration system since 2000 to support the quotation process. The first
version of the configuration system was implemented on a budget at approx. 1 mio. USD. Today the company has a
configuration team with 8-9 employees responsible for implementation and running of 10-12 configuration systems
used in sales and engineering. The quotation process is carried out in two steps. The first step is a so-called budget quo-
tation, including an overall dimensioning of the cement factory, a process diagram and a price estimate. The next step is
a so-called detailed quotation, including a detailed description of the processes and machines in the cement factory. The
configuration project focused on the budget quotation because the budget quote included fewer details, and because all
significant decisions as to the cement factory’s capacity, emissions, total project costs etc. are made during the budget
quotation. The process analysis revealed that the process of making budget quotations was very resource consuming,
with a long lead time and leading to quotations of varying quality. A gap analysis indicated that the lead time for mak-
ing budget quotations could be reduced from 3-5 weeks to 1-2 days, the resources spent could be reduced from 15-25
man-days to 1-2 man-days and, finally, by using a product configuration system it would be possible to optimize the
cement factory with respect to e.g. capacity, emissions, price and the use of previously designed machines. The impacts
observed are outlined in the table below:
Lead time Lead time for making quotations reduced from 3-5 weeks to 1-2 days.
On-time delivery Now 95-100 % of quotations are delivered on time. Before, only 50 % of the
requests were even responded to by a quotation, now 100 % gets a quota-
tion.
Resource consump-
tion Resources for making quotations reduced with 50 %.
Quality of specifica-
tions The quotations become more uniform and of better quality. More accurate
calculation of sales prices.
Optimization of
products/ and ser-
vices
Possible to simulate different solutions to the customer. More structured
negotiations with the customers.
Possible to optimize the plant with respect to increased use of previously
engineered and produced equipment.
Other observations The configuration system ensures that the sales man obtains all necessary
information before the quotation is made. This leads to an improved quality
of the quotations and the subsequent engineering process. Application of the
product configuration system has led to an increase in the sales of more
standardized machines, which leads to significant savings in the engineering,
production and erection on site
Table 1. Observed impacts from product configuration in company A
The suggested metrics give an unambiguous measurement of the benefits realized in the specification processes. Lead
time, on-time delivery and resource consumption were possible to measure exactly. The quality issue was assessed by
comparing the content of the quotations generated from the configuration systems with quotations made outside the
configuration system.
The suggested measurements focus on the quotation process. However, the company claims that other benefits, which
are more significant than the improvements in the quotation process, have been obtained. These benefits include an in-
crease in sales as all requests are now being responded to with a quotation and a reduction of costs in engineering, pro-
duction and erection on site due to an increased sale of previously engineered and produced equipment. Even though
1 A 4,000 tonnes per day (TPD), complete kiln line, semi turn-key, service, supervision, vehicles, training, steel plates to
local manufacturer, and civil design.
these benefits have been measured, it is not possible to state how much the configuration system in itself has contribut-
ed to these benefits and how much come from other initiatives, such as product redesign, reengineering of business pro-
cesses or improvement/ implementation of other IT-systems.
4.1.2 Company B
Company B is an international engineering company with a market leading position within the area of design and sup-
ply of spray drying plants. The company is creating approx. 340 mio. USD in turnover a year. The products are charac-
terized as highly individualized for each project.
The configuration system was implemented in company B in 2004 and it is in many ways similar to the configuration
system of company A. Today, the company has a configuration team with 10-12 employees running the configuration
system and doing external configuration projects for other companies in the industry group. The configuration system is
used in the quotation process. The aim of introducing a product configuration system is to reduce lead times and re-
sources spent on making quotations, optimization of the spray drying plants and the formalisation of product
knowledge, in order to make it accessible to relevant persons in the organisation. The impacts observed are outlined in
table 2 below.
Lead time Lead time for making quotations reduced from 3-5 days to 2 hours.
On-time delivery Between 95 and 100 % after implementing the configuration system.
Resource consumption Resources used for quotations reduced from 20 to 2 hours per quotation
Quality of specifica-
tions The quotations become more uniform and of better quality. More accurate
calculation of sales and cost prices.
Optimization of prod-
ucts/ and services Mass flow diagrams and process simulation is integrated with the configura-
tion system, which makes it possible to optimize the performance of the
plant and single machines.
Other observations The modelling of the products for the configuration system has led to an
increased formalization of engineering knowledge. Increased sales due to a
more efficient quotation process. Shorter total lead time. More standardized
products in the projects leading to reduction of project costs.
Table 2. Observed impacts from product configuration in company B
Application of the product configuration system has lead to a reduction of lead times and resources spent in the quota-
tion process. On-time delivery and quality of the quotations have been improved as well. It has been possible to meas-
ure those benefits, and it is clear that these benefits come from the application of the product configuration system. As
with company A, other and more overall benefits have been observed like reduction of costs in engineering, production
and installation due to sales of more standardized products. However, it is not possible to define how much the configu-
ration system has contributed to these benefits.
4.1.3 Company C
Company C produces data centre infrastructure such as uninterruptible power supplies, battery racks, power distribution
units, racks, cooling equipment, accessories etc. The total turnover is approx. 4 billion USD (2008). Company C has
implemented and used product configuration systems since 2000. Today, Company C has 8-9 product configuration
systems. The company has formed a configuration team with approx. 25 employees. The configuration team is respon-
sible for development and maintenance of the product configuration systems, which are used worldwide.
The product configuration systems are an integrated part of the company’s business setup. The products are sold
through the product configuration systems, which makes it possible for the company to control a huge amount of sales
personnel and agents around the world. The product configuration, which includes working out quotations and manu-
facturing specifications, is carried out by the configuration system, thereby saving considerably resources. The lead
time for making quotations and manufacturing specifications is reduced significantly. And finally, the product configu-
ration systems make it easier to introduce new versions of the products to the sales personnel and the customers.
Lead time Lead time for making quotations and Bills of Material (BOM’s) and
routes reduced from 3-5 days to less than 1 hour.
On-time delivery 100 % for quotations and BOM’s and routes generated by the configura-
tion system.
Resource consump-
tion Resources used for making quotations and manufacturing (BOM’s and
routes) reduced to less than 10 % of previously used.
Quality of specifica-
tions Specifications coming from the configuration system have significant
fewer errors than “handmade” specifications, leading to fewer costs in
production and installation.
Optimization of
products/ and ser-
vices
The use of the configuration system has made it possible to keep down
the number of items maintained in the company’s ERP-system. The
company has estimated that the cost of an item number is approx. 10,000
USD in its life time
Other observations The company is heavily focusing on keeping down complexity costs and
sees the use of product configuration systems as part of an overall busi-
ness strategy also including market focus and product modularization.
Total lead time from sales to delivery and installation is reduced from
400 days to 16 days. Increased ability to introduce new products via the
configuration systems.
Table 3. Observed impacts from product configuration in company C
Company C has realized significant improvements of the sales and ordering processes from applying the product con-
figuration system. As with Company A and B, it has been possible to measure or at least assess those benefits, and it is
clear that those benefits come from the product configuration system, as the configuration systems now generate the
specifications. In company C, the use of product configuration systems is a part of an overall business model also in-
cluding a modularized product assortment, a focused market strategy and a supply chain based on mass production of
standard modules and assembly of customer tailored products. The total business set-up has led to significant improve-
ments of productivity, quality and delivery times. In this context the configuration system is a necessary part in order to
achieve the total benefits.
4.1.4 Company D
Company D is making electronic switchboards. It has more than 100 employees and a turnover of approx. 15 million
Euros. The analysis of the current specification process for making quotations and BOM’s revealed that the lead-time
for generating quotations and BOM’s was 3 to 5 days, and the company uses 2 to 4 man-hours for each quotation. The
process leads to frequent errors, and often the time necessary for the optimization of the boards cannot be found.
Lead time Lead time for making quotations and BOM’s reduced from 3-5 days to 10
minutes.
On-time delivery On-time delivery for quotations and BOM’s generated from the configuration
system 100 %.
Resource consump-
tion Resources used for making quotations and manufacturing BOM’s reduced from
2-4 hours to 10 minutes. The resources are reduced to zero in the cases, where
the customers use the configuration system directly.
Quality of specifica-
tions Significant reduction of errors in quotations and BOM’s by using the configura-
tion system.
Optimization of
products/ and ser-
vices
The configuration system makes it possible to optimize the products with re-
spect to heat loss, component fabricates and vacant space.
Other observationsre The modelling of the switch boards for the configuration system gave rise to an
evaluation of the components used when designing the switch boards to the cus-
tomers. This has led to an optimization of components used with respect to
number of items, costs and performance. More error-free specifications in man-
ufacturing led to improved productivity.
Table 4. Observed impacts from product configuration in company D
By implementing a product configuration system the company gets a much more structured flow in the specification
process, where the company’s knowledge regarding construction of an electronic switch board is made available to the
customers, and complex calculations can be made very quickly. The desired effects for the company of the application
of a product configuration system are identified as:
A significant reduction of lead time for making quotations and BOM’s from 3-5 days to 10 minutes.
A total elimination of resources spent for making quotations and BOM’s, as the customers can now configure an elec-
tronic switchboard on their own by using the product configuration software available on the company’s homepage.
The opportunity of optimizing the electronic switch boards with respect to e.g. heat loss and price.
In company D the effects on the sales and ordering processes of applying product configuration could be measured
unambiguously, except from the quality and optimization, where the improvements were assessed based on a study of
the specifications generated before and after using the configuration system. Being a small company, those effects have
a significant impact on the company’s total performance. Modelling the products for the configuration system gave rise
to improvements of the products. More error-free specifications have contributed to improved productivity in manufac-
turing.
5 CONCLUSION
The study of the four cases has shown that the application of product configuration systems may lead to significant ben-
efits. The suggested measurements focusing on the specification processes have been tested. The case study shows that
it is possible to measure some of those indicators and also that those improvements can be linked to the application of
product configuration systems. In the four cases studied the lead time has been reduced significantly (94-99 % reduc-
tion). On-time delivery for the specifications has been improved, and is now between 95-100 %. Resources used for
making the specifications have been reduced with 50 to 95 %.
The companies in the case study claim that the quality of the specifications have improved significantly and the prod-
uct configuration systems have made it possible to optimize the products with respect to cost and performance. Howev-
er, further work is needed in order to clarify in more detail how quality and optimization of products and services can be
measured.
Besides the specific measurements on the specification processes, the study of the four companies has made it clear
that other and even more significant benefits have been achieved from applying product configuration systems. These
benefits include:
Increased sales
Reduced total lead time for delivery of products, partly due to more correct and timely specifications.
Improved total on time delivery, partly due to more correct and timely specifications.
Reduction of costs in e.g. production due to sales of more standardized products and more error free specifica-
tions
Reduction of e.g. engineering costs caused by a collection of all needed information via the configuration sys-
tem
Formalization of engineering knowledge
Reduction of item numbers
Further work is needed in order to clarify how these benefits can be measured in more detail, and how the relative
contribution from the configuration system to those overall benefits may be documented. This also includes an investi-
gation of how the product configuration system is seen as a part of an overall business strategy, thus being a needed
brick in the puzzle in order for the company to realise its business strategy.
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... Most configuration research is limited to single-process configurators, that is, sales configuration systems to create fast and precise quotations (Hvam et al., 2008). Sales configurators have gained popularity due to their substantial benefits for the companies, such as shorter lead times for generating quotations (Haug et al., 2011;Hvam, Haug, Mortensen, & Thuesen, 2013;Hvam & Ladeby, 2007;Trentin, Perin, & Forza, 2011), fewer errors (Forza & Salvador, 2002a;2002b), the increased ability to meet customers' requirements regarding product functionality (Forza & Salvador, 2002a;2002b), the use of fewer resources, optimised product designs (Gronalt, Posset, & Benna, 2007;Trentin, Perin, & Forza, 2012), less routine work and improved on-time delivery (Liu, Shah, & Schroeder, 2006;Squire, Readman, Brown, & Bessant, 2004). PCSs are widely used in a broad range of industries supporting ETO solutions, including construction (Kudsk, Hvam, & Thuesen, 2013), process plants (Orsvärn & Bennick, 2014) and the electronics industry (Hvam et al., 2008). ...
... Specifically, the paper investigates the costs and benefits associated with the prosed strategy, as compared to a traditional approach. The paper, thereby, also extends research on the effects of PCSs (e.g., Haug et al., 2019b;Hvam et al., 2013;Heiskala et al., 2007). For practitioners, this study provides insights which may help companies choose more efficient approaches to the implementation of PCSs. ...
... Multiple cases of PCSs used in ETO companies are reported in the literature. However, the cases are usually focused on either sales configuration or engineering configuration as two separate configurations (Haug et al., 2019a;Hvam et al., 2013;Tiihonen, Soininen, Männistö, & Sulonen, 1998). Multilevel configuration systems are introduced to allow a complex ETO company to handle non-configurable components and gradually specify the BOM as the project progresses (Petersen, 2008). ...
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How can a visual configuration system be developed to support the specification process1The term specification process describes the business processes where the customer’s requirements are analysed, a product is tailored and specified according to the customer’s requirements, and the subsequent specification of the product’s manufacturing, assembly, shipping, erection on site and service (the life cycle properties of the product).1 in companies that manufacture customer tailored products? This article focuses on how visual configuration systems can be developed. The approach for developing visual configuration systems has been developed by Centre for Product Modelling (CPM) at The Technical University of Denmark. The approach is based on experiences from a visualization project in co-operation between CPM and the global provider of power protection American Power Conversion (APC). The visual configuration system was developed in 2001–2002 and has during its operation since the beginning of 2003 delivered promising results. The lead-time for approval of quotations has been reduced and the percentages of first-time-completed and correct configuration sessions are increased thanks to an increased user-interaction, caused by the visualization of the product in the visual configuration system.