One of the most frequently asked questions by manufacturers, regardless of size, is: “Should we make our product standard or custom-engineered?”
Most companies do not answer this question based on which way is “best” because most companies do not design and build their products in the same way, stock them, or warehouse them; therefore, understanding the differences between the design and manufacturing of standard versus custom products is how they can scale efficiently while also being able to meet their customers’ expectations.
Understanding the Nature of a Standard Product
Standardized products were designed with the capacity to repeat themselves. They are manufactured in the same method over and over again after being initially designed and perfected. Consistency, predictability, and speed are the goals of standardization.
To determine what customers want to purchase before they produce any single unit, manufacturers analyze market demand for the best common results across a broad spectrum of customers. Engineering is completed in advance, and the specifications for the product will be changed only when they are finalized. Mass manufacturing has been enabled due to the stability of the manufactured products.
Due to the predictable nature of demand, the production of these types of items typically utilizes an MTS (Make-to-Stock) production model. Once a product is manufactured, it is kept on hand as inventory until an order is placed and shipped whenever possible. The amount of customer involvement during design and production is low, and the production times are short and dependable.
You can find this model across all categories of consumer goods, electrical components, ordinary mechanical components, and commodity-based industrial items.
Understanding the Nature of a Custom Engineered Product
Custom-engineered products are different. They do not start with a pre-designed product; they begin with an end-user requirement. Each product will have different capacity, dimensional requirements, performance, and integration needs.
The engineering work is not done until after the order is confirmed. Engineering teams work closely with the customer to determine what the product should be able to do, develop a concept of how it will function, and create an engineered drawing/3D model. Only after that is complete does manufacturing begin.
Typically, custom-engineered products are built using either the MTO (Make to Order) or ETO (Engineer-to-Order) manufacturing models. Raw materials are procured for each project, production occurs on a project basis (timelines may vary by complexity), and testing, validation, and sometimes commissioning on-site are done as part of the delivery process.
Custom-engineered items are prevalent within industrial machinery, automation systems, capital equipment, infrastructure projects, and complex integration of systems, where “one size fits all” does not work for the application.
Where the Real Difference Lies: Process Flow
The only difference between a standard product and a custom-engineered product is the timing and manner of decision-making.
When a design decision on a standard product is made, that decision is locked in at the production stage/pre-sales; therefore, a manufacturer will generally rely on forecast data in order to manufacture the product successfully. Thus, the success of producing a standard product depends on repeatability and volume.
In contrast to standard options, custom-engineered products consider the parameters of the design process after being sold to the buyer. This is because a specific order from a customer causes the manufacturing of the product to commence, with the overall outcome of the final product depending directly upon the success of the engineers, execution, and coordination between multiple departments.
In Short:
– Standard products are created with the intent of producing at high speed and on a large scale.
– Custom-engineered products are designed to be precise and specific.
Why Most Companies Need Both
Today’s market has seen very few successes in organizations relying on a single model to continue to be successful.
Standard products provide companies with constant availability, quicker delivery, and the ability to control costs. Custom-engineered products allow manufacturers to solve difficult issues, create a technical differentiation, and offer customers a more comprehensive solution at a higher value.
Several manufacturers have purposely chosen to operate both types of business models simultaneously, depending on the complexity of the product, customer expectations, order volume, and strategic goals.
The Rise of the Hybrid Approach
The hybrid model is a compromise between the two extremes – Efficiency and Flexibility. Some elements of the business (the core platform) can be standardized; others (customized features, capacities, and interfaces) need to be designed for each customer specifically.
Utilising this type of model minimises engineering effort, reduces time-to-market, and enables the end product to meet the specific needs of individual clients. As such, this is a reasonable example of what today’s manufacturing processes actually do in practice.
Conclusion
Quality, innovation, and capability are not what separate a standard product from a custom-engineered product; the difference lies in their process alignment.
Standard products are designed so they can be made repeatedly, consistently, and produced in large quantities (scale). Custom-engineered products are designed for the flexibility of design; each piece will meet the unique requirements of the customer (alignment), so that they will produce specific results.
With the understanding of these different types of processes, companies can develop better manufacturing processes, enhance supply chain strength, and create more productive engineering teams, all to meet the needs of the marketplace.
Palanivel Muthusamy is a seasoned expert in the Engineering, CAD, CAE, PLM, and PDM domains, boasting over 20 years of experience in project and product engineering within industrial companies. He holds both a Bachelor’s and a Master’s degree in Engineering, complemented by numerous certifications. Palanivel is highly proficient in engineering processes, including engineering change orders, notices, and quality processes, bringing a wealth of knowledge and hands-on expertise to the field.
