Configure-to-Order: Opportunities, Challenges, and the Role of PIM
What does “Configure to Order” mean?
Today’s customers demand choice and customization. Learn how structured information management forms the foundation for a successful Configure-to-Order strategy.
Configure-to-Order (CtO) refers to an order fulfillment strategy that allows customers to choose from components and predefined options, configuring and ordering the product according to their preferences. Most people are familiar with CtO from buying a laptop or PC through an online retailer, where, for example, the RAM, processor, or other components can be selected.
Configure-to-Order is becoming increasingly important, particularly in mechanical engineering, electrical engineering, and B2B e-commerce.
Customization without sacrificing efficiency
As a manufacturing model, CtO fundamentally follows the Make-to-Order (MtO) approach: production of a product begins once the order has been received. Thus, the art of CtO lies in responding to a wide range of customer requirements with a single product and its configuration options, without losing the efficiency and cost advantages of mass production.
For which industries and companies is Configure to Order suitable?
The CtO strategy is driven by the goal of efficiently meeting today’s expectations regarding product diversity and variety. CtO is typically used in the electrical and IT sectors, in mechanical and plant engineering, by vehicle manufacturers, and by kitchen and furniture manufacturers. What these industries have in common is that customization is in demand in the market and the products can be sold according to a modular, building-block principle. If this is not the case, or if highly customized solutions are required that would need to be developed from scratch in each instance, other order processing approaches such as EtO (Engineer-to-Order) within a traditional project framework are more suitable.
The biggest challenges in configure-to-order
In an increasingly customer-centric market, the pressure to deliver customized products quickly and cost-effectively is growing. However, implementing CtO is a decision that requires careful planning and the selection of appropriate technological solutions. Manufacturers that succeed in adapting and integrating their production and information processes can successfully implement CtO and establish a sustainable market position with a broad range of configurable products.
Mastering Product Variants
Modular products enable a wide variety of product variants without significantly increasing manufacturing complexity. The use of standardized modules and components reduces manufacturing lead times. Production capacities can be utilized optimally, as many processes can be completed prior to ordering.
A look at real-world practice shows, however, that the stumbling blocks in introducing CtO lie less in product logic and more in the maturity of the data landscape and the integration of all relevant information processes. Existing weaknesses such as data silos and media breaks become even more of a problem with CtO.
Managing the Information Supply Chain
A key obstacle is the end-to-end management of product-related information along the technical information supply chain, particularly in legacy system landscapes with many isolated solutions. CtO requires seamless data and information flows between different departments and across various systems such as ERP, PIM, CPQ (Configure Price Quote), PLM, and commerce applications. If this is not ensured, errors and delays throughout the entire CtO process are inevitable.
Ensuring Data Quality
As product diversity grows, so does the volume of data that must be managed, maintained, and exchanged in the CtO context. Even minor errors or inconsistencies—which can easily occur when using Excel spreadsheets and disparate systems—lead to incorrect orders, delays, dissatisfied customers, returns, or costly rework. Therefore, every CtO initiative should begin with the establishment of a
visualization of configurations
After all, the CtO strategy also brings new challenges in product presentation. Customers must be able to understand their options and their implications at the touchpoint. In addition to detailed product descriptions, tables, graphics, and images for the entire product range, this also requires configuration-dependent real-time visualizations, whether on the company’s own website, the online store, or third-party e-commerce platforms. Effective visualization not only contributes to a better user experience but also helps ensure valid configurations and reduces order errors.
How a PIM system supports configure-to-order
A PIM system is fundamentally designed to help companies manage, maintain, and deliver product data, and—depending on the provider and use case—can cover all product information and digital assets, ranging from master data and technical details to marketing content. A PIM system enables the establishment of a single source of truth for product information within the company, from which all systems can be equally fed. Development, production, sales, marketing, and customer service thus work with the same, secure data foundation. Integrated validation rules ensure that predefined standards are adhered to and safeguard data quality within the system.
PIM is, of course, also ideal as a central data source in a CtO context. Compared to using an ERP system—which is often expanded with a configuration solution for CtO—a PIM system offers the advantage that its data model is inherently designed to map complex product structures and relationships. Furthermore, a PIM system simplifies and accelerates product communication processes, from exchanges between departments and business partners to the delivery and real-time display of content via APIs to websites, web shops, and other touchpoints.
- The role of a PIM system at a glance
- Centralized management and maintenance of product-related data
- Mapping of product structures, variants, attributes, and configuration rules
- Secure data source for downstream systems along the information supply chain
- Data hub for channel- and audience-specific product content
Best Practices: Successfully Implementing Configure-to-Order with a PIM System
Consider the data model when making a selection
The value that a PIM system delivers depends entirely on the underlying data model, which determines how information and digital assets are stored and structured within the system. For CTOs, products in the PIM should be mapped in great detail—including their variants, attributes, component relationships, and compatibilities—and linked to rules. In general, a generic data model is recommended, as it allows you to remain flexible in your product logic and scale without significant programming effort.
Develop Data Governance Policies
CTO involves challenging data management and maintenance. While PIM systems are capable of supporting companies in this regard—for example, through automation—the validation rules that the system is to apply must first be defined as part of a data governance strategy. It is important that those responsible consider the requirements and guidelines across systems, processes, and business units so that the entire company can benefit from them.
Ensure system integration
For CtO, all relevant systems—such as PIM, ERP, CPQ, CAD, and commerce applications—must be integrated to ensure optimal control of the information flow. Only through a consistent information architecture can customer requirements be seamlessly translated into quotation, order, and manufacturing processes. Accordingly, when selecting systems, the focus should be on an API-based architecture that enables seamless system integration without significant programming effort. Here, too, it is important not to think in isolation, but to view software integration as part of the information supply chain within the CtO context and beyond, and to design it accordingly.
The Configure-to-Order strategy requires sophisticated information management to efficiently bridge the gap between customization and standardization and to manage the complexity of order processing. A PIM system can serve as the technological backbone in this regard.
