Configuration Versus Customization for Package Procurement - Which Approach is Better?
Let me start off with a couple of definitions. For the purpose of this discussion, configuration is the implementation or activation of a supplier's standard features or options for a package. These are features the supplier included in the design of their package that the user of the package could choose to implement or activate. Customization is the inclusion of non-standard features in the fabrication of a package that are imposed by the user. These features are called out in the user's specifications and are not pre-engineered by the supplier. These requirements force the supplier to modify their package and manufacturing processes uniquely for the user.?
I have written in many other articles that a user should never customize a supplier's standard package. Almost regardless of the level of customization, 5% or 25%, the customization increases the cost of the package by a minimum of 30%. This increase includes the physical inclusion of the actual modifications but also includes the larger cost of the additional steps and modifications to the standard processes that the supplier must perform. This can include the supplier's proposal team that must put together the proposal package that includes all of the requested customizations. It includes the additional engineering necessary for the customized features. It includes the modifications to the standard manufacturing processes. It includes the additional inspections and testing for the requested customizations. It includes an extended FAT and a possible pre-FAT by the supplier to ensure the customized features are installed properly. It includes the additional costs associated with servicing the modified package.
To truly and consistently reduce the cost of package equipment requires eliminating all customizations by the users. This is a challenge for most users who believe they know best how a package should be designed or who believe their unique requirements provide them a strategic advantage over their competition. Typically, the justification for the modifications is determined by comparing the value of the benefits to the physical cost of the modifications. However, as indicated above, the cost of the physical modifications is only a small portion of the overall cost by the supplier. There are other costs associated with the time and resources for the proposal team, the additional engineering, the modifications to the manufacturing processes, the additional inspection and testing and the additional services. Additionally, there are additional costs to the users. This includes the specification development, the proposal reviews, the multiple design reviews to ensure the customizations are properly included, the additional inspection and the extended FAT. The sum of all the additional costs by the supplier and the user is significant to the user. If all of these costs were considered in the justifications for the modifications, there would be significantly less modifications justified to the standard packages.?
If there are features not standard to a supplier that a user feels with certainty that they must have, the user should convince the supplier to make the features standard options that would be fully engineered and could be selected by a user with the check of a box. The user would need to show that these additional options would be purchased by all their other clients. This is a key to the supplier agreeing to offer the additional options. The users should also consider ALL of the costs associated with the customizations by both the suppliers and the users and that should result in less customizations being justified.?
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Suppliers would prefer to only sell standard packages. Any customizations by a user forces additional costs, extends delivery and can cause rework to correct errors in the implementation of the non-standard features. Suppliers will support and encourage discussions with their clients to eliminate customized features.
Users should work with their suppliers so that they can configure their supplier's standard packages and not have to customize these packages. This will significantly reduce the cost of the packages, shorten deliveries and actually improve the quality since everything provided will be standard for the supplier.?
DyCat Solutions Inc. Instrumentation and Controls SME
2 年Agree 1000%! Should be more discussion about this subject to share war stories. It is a major contributing factor to overblown budgets and poor designs. Customization is also known as "preference engineering". I have lost track of how many times I've been told that a preferred design is the one which will work. After seeing a multitude of the "only way to do this design" I've come to the conclusion it's quite often best to take what is offered by the mechanical package vendor. Also, have come across some major problems where we just had to make some "absolutely essential" adjustments to the standard vendor designs (which had been used extensively beforehand). The result was that there were some unforeseen interactions causing commissioning delays and major rework. We had pushed the vendor outside their experience. That's what happens when we tinker with proven designs; we get unexpected consequences.
Digital Manufacturing Transformation Consultant - Manufacturers are at a pivotal tipping point requiring Digital Manufacturing Transformation to succeed and prosper or become non-competitive.
2 年Excellent observations and analysis.