Order fulfilment could be a tedious task, which could further improve with the right CPQ software for manufacturing. For instance, you work for a small manufacturer of special delivery trucks. A company calls you to request ten trucks for their fleet. Next, you contact the manufacturing floor to talk to engineers and machinists about the bill of material (BOM). Also, look at the customer’s specifications to see if these can be met. Finally, you will need to keep track of all this information and determine the cost and what customizations you’ll need. Once you have done all of this, you can calculate the cost and provide a quote to the customer. CPQ is the best option to enhance this cumbersome process.
What does CPQ mean?
CPQ is short for Configure, Price, Quote. It’s software that manufacturing companies use to generate quotes and place orders for configurable products.
Let’s take a look at each one of these ideas.
Distinctive repetitive manufacturing, where you produce a product without variations, make it to stock, pick and deliver upon receipt of an order. However, there is a growing trend towards mass customization. Customers want products tailored to their needs, and they want them now. For instance, Spotify and iTunes allow us to create custom playlists for any occasion or mood. Customers should expect the same opportunities from larger companies.
Manufacturers used to offer limited options and give customers few choices. However, the landscape has changed, and customers will move to the competition if they don’t find what they are looking for.
This may sound too complicated to do, but it is not for your competition. You leave your market open to your competitors if you don’t allow for extensive product configuration.
Pricing might not be difficult if you sell your products in a standard configuration with minimal variation. However, if you offer a lot of configurations for your products, pricing might be straightforward.
CPQ’s pricing component ensures that prices can be established without manual intervention across all market segments, geographies, and sales channels. You can use discount approval workflows, discount structure, favourite customer pricing, and variable price books to maximize revenue. Pricing can be determined by BOM characteristics, production cost, features, options, or combinations. Your business requires software to track all pricing structures so that quotes are accurate.
You can create a quote for your customer by combining extensive configuration options with accurate pricing. The quote must be presented professionally and contain the actual quote. CPQ for manufacturing software manages both of these easily.
The first thing you need to do is create a formal quote. This will ensure that your customer understands and is clear about the information you are providing. This eliminates rework, customer concessions, and product returns.
Harnessing the potential of CPQ software for manufacturing will vastly improve your processes and help you stay ahead of the competition.