Configure-to-order (CTO) manufacturing. Engineer once, not every order.

What is configure-to-order manufacturing?

Configure-to-order is a production model in which a customer order is a selection of pre-designed, pre-validated modules. Your engineers define the modules once, together with the rules for how they combine.

For example, a door above a certain width needs a reinforced frame, or a motor type only fits one gearbox. Every combination within those rules can then be quoted, priced, and produced without going back to engineering.

This works for made-to-measure products too. S2, a Dutch manufacturer of door and window hardware, makes door thresholds to the millimetre. Each one is unique, but none of them is a new design. The engineering is in the rules: which profiles fit which frames, which dimensions are possible, and what each choice means for production. Every order submitted is one S2 can build.

How does configure-to-order differ from ETO, MTO, and ATO?

The four production models differ in one thing: how much work a customer order sets in motion. Ordered from the most work per order to the least:

• Engineer-to-order (ETO). Every order starts new design work, from drawings and calculations to new parts. It has the longest lead time, and the highest engineering cost per order, but it is the only model that handles requirements you’ve never built before.
• Configure-to-order (CTO). Every order is a combination of existing modules, validated by rules. Engineering happens once, when the rules are written, so production can start as soon as the order is confirmed.
• Make-to-order (MTO). The product design is fixed, and production only starts when an order comes in. There’s no engineering per order, and no choice beyond the products in your catalogue.
• Assemble-to-order (ATO). Components are produced and stocked in advance, and the order triggers final assembly. This gives the shortest lead time of the four, but customers can only choose from the components you keep in stock.

In practice, CTO and ATO often meet: the configuration is done with rules, and production assembles it from stocked components. The difference lies in where the choice is made, not in the factory.

Is build-to-order the same as configure-to-order?

Build-to-order (BTO) is not a separate production model. It describes timing: nothing is produced until a customer orders it. Make-to-order, assemble-to-order and configure-to-order are all forms of build-to-order.

So a configure-to-order product is always built to order, but a build-to-order product is not always configurable. The opposite of build-to-order is make-to-stock, where products are produced for inventory before anyone orders them.

Why are manufacturers moving from engineer-to-order to configure-to-order?

Engineer-to-order gives customers exactly what they ask for, but every order carries its own engineering cost. As volumes grow, that cost grows with them.

The advantages of engineer-to-order:

• It handles the genuinely new. One-off projects, new applications, and requirements you have never built before need an engineer, and no set of rules replaces that.
• There is nothing to set up first. Engineering time is only spent when a request comes in, so you can start quoting without building modules or rules up front.

The disadvantages of engineer-to-order:

• You pay before you win. Every quote carries drawing work, calculations, and internal reviews, including the quotes you lose.
• Engineer-to-order is hard to scale. More orders mean more engineering hours, so sales can only grow as fast as your engineering team.
• Knowledge sits in people’s heads. When the person who knows which combinations work is away or retires, quoting slows down or stops.

The advantages of configure-to-order:

• Quotes no longer need an engineer. Sales teams and dealers configure valid products themselves, so engineers spend their time on new products instead of repeat quotes.
• Fewer errors reach production. The rules block combinations you cannot build, and the configuration moves on to the Bill of Materials and production without being retyped.
• Lead times get shorter. Without a design step between the order and the factory, production can start as soon as the order is confirmed.

The disadvantages of configure-to-order:

• The work moves to the start. The engineering that used to happen per order happens once, before the first quote, so the investment comes before the return.
• The rules need an owner. An outdated price or component produces wrong quotes faster than a person would, so someone has to maintain the rules after go-live.

How do you move from engineer-to-order to configure-to-order?

These drawbacks to ETO are why more and more manufacturers look at CTO for at least part of their range. Few switch everything at once, though. They first look at which product families repeat often, and go from there:

• Start with your order history. Look at the products and options you quoted over the past year or two. What comes back often and costs engineering time on every quote is where configure-to-order pays off first.
• Turn the repeat work into modules and rules. Capture which components combine, which dimensions are possible, and how each choice affects price and production. This is the engineering you do once.
• Keep a route for the exceptions. Decide how requests outside the rules reach engineering, so nothing a customer asks for gets lost along the way.

HACO, a manufacturer of press brakes and shears that sells through dealers worldwide, did exactly that. Its in-house quoting system could configure every option the company had ever built, including machines produced only once.

"We removed options that are only sold once every three years," explains Sam Hast, IT Manager at HACO. The company is reaping the benefits: administration has been simplified, internal sales teams create quotes faster, and the production process is immediately initiated and managed through a seamless integration with ERP.

Where does Hive CPQ fit?

Hive CPQ is built for the part of your range that repeats. Your engineers capture the modules and rules once, and sales teams, dealers, and customers configure within them. Prices calculate as they choose.

Every confirmed configuration produces its quote documents and a Bill of Materials for your ERP, so orders reach production without being retyped. Requests outside the rules keep their own route to engineering.

Hive CPQ also lightens the two costs of the switch. Hive AI helps your team build configurator logic faster, and the low-code Design Studio lets your own people maintain the rules after go-live.

Want to know which part of your range is ready for configure-to-order?

Book a demo.