A Conceptual Framework for Stage Configuration

Increased competition for creating best business cases in the ETO and capital goods industry forces companies to provide increased variety of product configurations to match diverse operating conditions, while simultaneously reducing the cost of supply. The ETO and capital goods industry is further characterized by rapid new technology introductions, constantly setting new standards in product performance and by an external environment with frequently shifting local regulations. To remain competitive in this volatile and unpredictable situation, this paper suggests a conceptual framework enabling companies to align new product development with sales order processes in a step-wise approach using product configuration. This alignment supports a five-stage approach in committing order specifications, thereby postponing configuration decisions according to the maturity of the sales order. Moreover, the stage-wise postponement enables the management of product specifications on different aggregation levels. The committed level of specifications, targets the relevant decision-making processes in product configuration without needless over-specification of the product. The stages are (1) qualifying a sales opportunity, (2) recommending an optimal solution, (3) signing the sales offer and performing supply chain planning, (4) releasing the order for production and completing customer specific design, (5) executing production, transportation and service operations.