Glossary: What are we talking about?
In the areas product configuration, pricing, and quotation (CPQ) there are many abbreviations and technical terms not necessarily clear to everyone immediately. To make it somewhat easier, here you will find all explanations.
Mass customization is a production concept, in which the benefits of mass production are used and the customer’s requests for individualization of his/her product are satisfied at the same time.
The targeted market is the mass market. The focus is to create an individualization through varying just a few but relevant features of the product. Typical individualization dimensions are, for example, design characteristics or fittings. The concept of modularization is often used as well. This means, that a product can be put together individually by combining different modules.
Mass customization enables meeting individual customer requests, with costs laying only slightly above the ones of a standard product.
The product data management (PDM) (see also PLM) is an integration platform for all IT applications generating and using data. It enables to organize the data and process management.
The PDM’s information management enables it to be an efficient navigation system for the entire engineering data stock. Enterprises of the manufacturing industry use it as a strategic tool for the ideal use of the production factor information as well as to optimize the success factors time, costs, and quality.
PLM is the abbreviation of product lifecycle management and denotes the uniform storage, administration, and retrieval of data generated during the creation, storage, and sale of products.
Due to its complexity, a PLM system is not a product which can be purchased. It rather is a strategy which must be implemented through appropriate technical and organizational measures in each individual business.
Ideally, all areas or systems coming into contact with the product access the same database: starting from planning (PPS/ERP), construction (CAD), calculation (CAE), and manufacture (CAM) over to controlling, selling, and service.
Due to the fact that the majority of incoming and administrative data and processes can be collected with PDM and ERP systems, they form the basis for a PLM system. Other important components are the supply chain management (SCM) and the customer relationship management (CRM). The system is implemented through organizational specifications (for example which system has the data sovereignty at a specific time or under which criteria the data access takes place) and appropriate technical measures.
The generation of bills of materials helps, for example, ordering the right materials when a specific product shall be produced after receiving the customer’s order. It is one of the most important processes of a manufacturing company. Ultimately, the bill of materials serves the purpose of ordering the right materials or withdrawing them from the warehouse, when a specific product shall be produced after receiving the customer’s order.
During the generation of the bill of materials, it should be possible to use several production processes and planning methods. Existing knowledge of the planning process must be easy to administrate. Existing master data should be used via interfaces to an ERP. It should also be possible to create current and complete process plans (see also process plan configurator).
VDMA is the abbreviation for Verband Deutscher Maschinen- und Anlagenbau e. V. (Mechanical Engineering Industry Association). It represents more than 3.000 mostly medium-sized companies in the capital goods industry, making it the largest industry association in Europe.
Mechanical engineering, being a key technology and economic driving force, is one of the largest branches and most important employers in Germany.
It represents the diverse customer-supplier relationships within the value-added chain and allows the companies to have branch-specific as well as cross-sectoral cooperation.
The order configuration generates detailed order bills of material/production bills of material for a product, which is to be produced. It is crucial to gather information efficiently and to ensure the correctness of the data.
- Bundesverbands Informations- und Kommunikationssysteme (BVB) (Federal Association for Information and Communication Systems)
- Bundesverband Informationstechnologien (BVIT) (Federal Association for Information Technologies)
- Trade associations of the VDMA (Mechanical Engineering Industry Association)
- Communication technology in the ZVEI (German Electrical and Electronic Manufacturers‘ Association)
- Unternehmensverband Informationssysteme (UVI) (Business Association Information Systems)
- Deutsche EC/EDI Gesellschaft (DEDIG) (German service society)
CAD is the abbreviation for Computer Aided Design.
Computer Aided Design (CAD) configurators are mainly used to configure complex products and different arrangements.
The aim is to derive a variant from the available components and options and to automatically add new components or arrangements to it, if needed.
The priority in CAD configurators is to use the parametrical 3D model, resulted from product configuration, related sketches, and further technical data during the whole process chain, from marketing to product assembly.
CAS is the abbreviation for Computer Aided Selling. It is an interactive software application for sales support, systematization of market cultivation and to increase sales.
Computer Aided Selling (CAS) configurators are used to configure complex products with many options. The aim is to derive one or more variants (alternatives) from the available components and options, to assess them and to determine a price.
The priority is to react quickly and accurate to customer requests in the technical sales with offers and other relevant pre-offer data and information.
At present, CAS systems are often integrated in CRM solutions.
CRM is the abbreviation for Customer Relationship Management. It is the integrated adaption of communication policy, distribution policy, and quotation policy between a company and its customers.
E-business comprises all sorts of business processes carried out electronically. This includes many business task fields, such as initial business contact and business processing, marketing, accounting, development, and customer service. The main communication platform in e-business is the intranet.
The term electronic commerce is not used uniformly. There is disagreement on which activities, if any, going beyond electronical commerce with goods and services, also fall under this generic term. Here, the term e-business is interpreted in a broader sense than e-commerce. It also includes online activities in the divisions procurement, human resources, or financing.
E-commerce comprises the electronic business transactions via the internet or similar open or closed computer networks.
E-commerce can be divided into two main sections:
Business to Business (B2B):
Commercial transactions between companies, e.g. between a manufacturing plant and a wholesaler. The main goal is the reduction of costs and throughput times.
Business to Consumer (B2C):
Commercial transactions between companies and consumers, e.g. online shopping (internet shopping, online shop, e-commerce law). The goals are the reduction of distribution costs and a higher customer focus.
ERP is the abbreviation of enterprise resource planning. It comprises the efficient and often software supported planning of operational processes using the resources available to the company (capital, operating assets, or human resources).
ERP systems consist of complex application software to support the resource planning of an entire company. The most famous software provider at present is SAP.
The task of ERP systems is to provide a view of all business processes of a company. An end-to-end integration and the departure from isolated applications lead to a recentralized system. This provides a company-wide administration of resources.
Typical functional areas of an ERP software are:
- Materials management (procurement, warehousing, disposition, assessment)
- Finance and accounting
- Human resources management
- Research and development
- Sales and marketing
- Master data management
The need for the listed functional areas as well as the available investment volume for hardware, licenses, and implementation frequently depends on the company’s size. For example, small and medium-sized companies often do not need integrated controlling and accounting modules. Different economic sectors may have requirements on an ERP system that differ a lot. Because of that, most large software providers offer industry solutions.