What’s unique about sales and product configuration in the heavy vehicles manufacturing industry (or in other words – CPQ for vehicle manufacturing)?
I might be the person that has analyzed and spoken to most truck manufacturers in the world in relation to CPQ for vehicle manufacturing. I’ve met 7 out of the 10 largest truck corporations in the world. I thought I might summarize the unique requirements of this industry:
Legacy
All truck manufacturers are heavy users of semi-old legacy systems. They have all been configuring their products since the ’80s or ’90s. This means that whatever system (and specifically CPQ) you introduce – needs to be heavily adjusted to fit into the existing system landscape. Many of these systems are very specialized – and sometimes uniquely built for the manufacturers. Since they are often old, good APIs may be missing.
Systemized BOM usage
It’s quite common generally in the manufacturing industry to separate Engineering BOMs from Manufacturing BOMs. It’s also getting common to introduce a Service BOM. Since truck companies have been working with configurable products for so many years – they’ve systemized the usage of multiple BOMs.
One thing that most truck manufacturers use is the concept of a Sales BOM (they might call it something else like ‘Variant Codes’). The idea is to separate the ‘As-sold’ BOM from the ‘As-delivered’ BOM. This also separates engineering updates of BOM-items from Sales. So only when engineering updates actually changes the function the customer receives – that’s the Sales BOM item is updated. This decreases the need for maintenance of CPQ during the product lifecycle.
Localized needs
The needs of the customers differ quite a bit between markets, due to environmental, regulatory, or cultural reasons. Local market offices have a big influence on all the three letters of CPQ (configuration logic, how to price the product, and the look-and-feel of the quotes).
Bodybuilder integration
A truck is nothing without its body. And bodybuilders are usually local, specialized, and (most often) small companies. Ideally, the customer should be able to configure the vehicle and the body in one CPQ – but that requires a tighter co-operation between the two types of manufacturers.
As a bare minimum, the CPQ needs to allow for sharing CAD-drawings for the bodybuilder before the truck is actually built. An easy workaround is of course to limit the configurability – and use semi-standardized drawings – but that limits the sales. Note that this does not only apply to mechanical CAD but also circuit diagrams etc.
Calculations
There are a number of calculations that need to be done as a part of the sales configuration (e.g. turning radius, weight distribution per axle, powertrain optimization). Some of these calculations are simulations. Let’s take the powertrain optimization: the optimal combination of engine, gearbox, and axle gears for specific usage of the vehicle can’t really be configured. Essentially you have to use heuristic rules to find the most likely good combinations – and then run an external simulation of the combinations. This means that the CPQ has to be ‘open’ for including these calculations – during runtime.
Complex Configuration
A truck consists of a large number of configurable options (500+), and each option can consist of many alternatives (20+). This means that the theoretical number of configurations is even larger than the most complex configurations. Most manufacturers solve this by creating ‘sub-models’ – a sub-set of the product which they let their sales reps offer. However, one big issue with this approach is that quite often neither the customer nor sales rep knows exactly which model is the optimal one.
Traditional guided selling just doesn’t do the trick – because you might not be able to know the best model until you’re halfway through the configuration. The trick here is to let the user configure the whole product family at the same time – and let the configurator help the user find the optimal solution – not necessarily a predefined model.
There are a lot of unique complexities in CPQ for the vehicle manufacturing and truck industry. These challenges are further complicated by the ongoing COVID-19 pandemic. With less time spent with actual customers in-person, vehicle manufacturers must find ways to engage and optimize their sales processes. With CPQ for vehicle manufacturing, it’s easier than ever to connect the end-to-end buying and selling journey through integrations, visualization, guided selling, and more. Learn more by scheduling your specialized demo with our truck manufacturing experts today!
Sustainability in Truck and Trailer Manufacturing
According to the United States Environmental Protection Agency (EPA), medium to heavy commercial trucks make up 23% of transport emissions in the country. Countries and customers both are taking notice of increasing emissions challenges as we grapple with climate change. Manufacturers play a key role in a shift towards a more environmentally sustainable transport sector.
While this may be a challenge for the heavy vehicles industry now, it will also present an opportunity for manufacturers to take bold action to meet standards and appeal to a new more conscious buyer. Let’s look at some of the challenges and opportunities for trucking manufacturers:
Changing customer demands
It is now a norm that customers are asking for more data and information from the providers they purchase from, and commercial vehicle buyers are no different. This information includes clear and transparent sustainability metrics that span the lifecycle of the product. A recent Tacton survey found that 12% of manufacturers have seen a significant increase in information requests about the environmental or climate impact of your products.
While this may seem like a challenge at first, manufacturers who can quickly and accurately provide data based on customers’ sustainability requirements will have a better chance of closing deals and giving peace of mind to the customer.
New legislations and requirements
Federal and state legislators are taking the lead in introducing climate regulations for all manufacturers, including truck and trailer manufacturers. Manufacturers must be able to share data about greenhouse gas emissions, waste and more to regulatory officials. When estimating these manufacturers are also asked to consider emissions from the use phase of the products they manufacture, trucks. These emissions are counted as Downstream Scope 3 in carbon accounting.
In the United States, the SEC has proposed a climate disclosure rule, this rule change would require publicly listed companies to disclose climate risks, including their Scope 3 emissions. This of course adds another layer on the calculations that go into configuring trucks and trailers.
New challenges require new solutions:
We’ve noted the importance of CPQ for the day-to-day operations of vehicle manufacturers, a new feature will further help these businesses take their sales pitch a step further by giving customers a holistic view of the climate impact of any product.
Tacton’s Environmental Footprint Configuration (EFC) helps manufacturers configure products using life cycle assessment (LCA) software. Before EFC, manufacturers would need to manually leverage LCA information that would require manual work from experts Traditionally LCAs takes weeks up to months, and tailored LCAs would be performed on the request of the customer, not part of the quoting process.
With EFC it’s possible to see significant cost savings and will help customers make informed decisions that will help reduce their climate footprints. This integration also makes it easier to report to regulators, by incorporating the climate footprint into various documents and reporting requirements, business can effectively streamline their compliance efforts while prioritizing environmental considerations.
Acting on climate change
Truck and trailer manufacturers have a golden opportunity to generate new revenue with CPQ and Environmental Footprint Configuration. Sustainability goals are here to stay, and manufacturers who find ways to offer these products will find themselves winning new customers. These truck manufacturers will also find themselves more appealing to investors as sustainability is an increasing focus for the modern buyer. Manufacturers who offer the most sustainable solutions will win more than ever. Find out how Tacton is enabling leading manufacturers to meet and exceed their sustainability goals by scheduling your demo today!
This originally appeared on CPQ.se written by Patrik Skjelfoss Principal Business Consultant at CPQ.se
Before co-founding cpq.se Patrik worked with Tacton CPQ for 13 years focusing on Heavy Vehicles and Manufacturing Equipment.
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