CPQ – Configure, Price and Quote
By Scott Cranford
What is CPQ and how can it benefit make to order manufacturing companies?
C – Configure
A customer facing product configurator allows your client base to work up a custom configuration of your products. Configurators offer the ability to create models, features and options, and define rules and formulas. Often enough, this can replicate the knowledge of your best sales person. They help to ensure valid configurations and generate bills of materials and routings for the manufacture of the custom item.
Configurators allow the creation of a “smart part number” and support the need to create a standard bill of material and routing that could be re-used at some future date. Configurators are ideal for companies involved in the manufacture of dimensional products, as the formulas feature can calculate quantities of raw materials and components based upon dimensions provided during the configuration process. The user experience for a customer facing configurator is particularly important as it needs to be highly intuitive, visual and image based.
P – Price
Pricing can be done in a variety of formats within a make to order focused software solution. The configurator calculates the pricing based upon the chosen features and options. Some configurators also offer a pricing matrix, whereby the pricing can be determined by a series of variables. An example being sizing, or dimensions, of an option varying the pricing. This aspect of CPQ allows the customer to see detailed pricing in a simple, self-service web application.
Q – Quote
Finally, the output of the C and the P is a self-service generated quotation. This contains all the details on feature, options, special requests, pricing, delivery, lead times, terms and conditions. Upon acceptance of the quote, an integrated solution can flip that quote into a booked sales order.
The benefits of a make to order manufacturing company are that a CPQ system can improve the efficiency of your sales team. It helps to ensure valid, buildable quotes. It offers a built-in manner to upsell the customer. It provides a 24/7 tool to allow customers to perform self-paced quote generation and is an excellent tool of standardizing product offerings for make to order manufacturing companies.
To learn more about CPQ or any of Visibility’s make to order capabilities, please contact us!