The Golden Triangle: The benefits of integrating CPQ, PLM and ERP

  • 10/05/2024

The Golden Triangle of CPQ, PLM, and ERP not only addresses issues related to product configuration and quoting but also drives digital transformation in manufacturing. By automating key parts of the sales process, CPQ systems cut down on mistakes, boost efficiency, enhance customer satisfaction, and lead to improved business outcomes.

Causes of inefficient processes

Currently, numerous manufacturing companies are struggling with inefficiencies in their processes for configuring, pricing, and producing products in demand. These inefficiencies often trigger a a snowball effect throughout the production cycle. Typically, these issues originate from the initial phase where sales representatives directly engage with customers to tailor products to their specifications. During this crucial stage, various problems can emerge:

Errors and miscommunication

Vendors often face challenges in verifying custom configurations. Without access to up-to-date, detailed, and accurate product information, the seller may inadvertently sell configurations that are not practical or cost-effective, which can lead to errors and dissatisfaction for both the production and the customer.

Departments are dependent on each other

Traditionally, verifying a product's configuration involves multiple departments: sales, design, development, and production. Each one must check if the proposed specifications can be met with current capabilities and resources. This process slows down response times and raises the risk of miscommunication.

Manual data management

Without an integrated system, data management becomes a manual, time-consuming task. Salespeople frequently use outdated spreadsheets to align customer demand with production capacity, a method that is inefficient and not scalable.

Delayed responses and customer frustration

The time it takes to manually check and confirm product configurations can lead to significant delays in responding to customer requests. This frustrates customers and puts your company at a competitive disadvantage - especially in industries where efficiency and accuracy are critical to customer satisfaction.

The Golden Triangle

Integrating a CPQ (Configure, Price, Quote) system with PLM (Product Lifecycle Management) and ERP (Enterprise Resource Planning) presents an effective solution to current challenges, ensuring seamless information flow and enhancing both efficiency and customer satisfaction. We call this interaction between ERP, PLM and CPQ "The Golden Triangle". The interaction between the system areas is crucial for meeting customer demands precisely, efficiently, and in alignment with available resources.

CPQ - Configurator

CPQ tackles inefficiencies in the product configuration process, enabling your business to accurately determine pricing across a broad and evolving range of variables. It empowers the sales team to tailor products to customer specifications, ensuring that these configurations are both feasible and cost-effective from a production standpoint.

Key features:

  • Product Configuration: Enables the creation of product combinations following predefined rules, guaranteeing that the suggested configurations are feasible.
  • Pricing: Automates the calculation of prices based on the chosen configuration, considering discounts, customizations, and quantities.
  • Quoting: Efficiently produces precise quotes, ensuring all details are accurate and adhere to business regulations.

The synergy between CPQ, PLM and ERP

The Golden Triangle fosters synergy, ensuring seamless sharing of data on product configurations, specifications, and production capacities. This integration guarantees that all departments align with a singular truth, minimizing inconsistencies and miscommunications that often result in errors and delays.

Benefits of Integrating CPQ with PLM and ERP:

  • Optimizing sales and production cycles:The CPQ system ensures only viable configurations are selected, preventing the expensive corrections and delays that manual processes often incur. This streamlines the sales cycle and enhances production planning and execution.

  • Seamless data integration with ERP:Upon quote approval, the CPQ system seamlessly transfers detailed order data to the ERP system. This system then oversees production schedules, material procurement, and delivery logistics. Automating this data transfer reduces manual errors and accelerates the production timeline.

  • Enhancing customer experience: CPQ technology enables quicker, more accurate responses and offers personalized to customer needs and preferences. This level of personalized service greatly enhances customer satisfaction and loyalty, fostering a superior customer experience.

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