CLARITY.SHOW Podcast: The right configuration approach for complex products with AVC/LO-VC
In this interview, Karyna Mihalevich, CLARITY CPQ Functional Lead and Marin Ukalovic discussed about various SAP configuration products, including Advanced Variant Configuration (AVC), why Variant Configuration (VC) is so important for specific industries, how a customer can find the right Configuration Solution, and much more.
Our guest is Marin Ukalovic, VP + Chief Product Owner, Digital Configuration Lifecycle, who has been with SAP since 1999.
Organizations from various industries, such as manufacturing, consumer goods, and many more, are increasingly offering customized products to their customers. Delivering customized products in a timely manner is one way to stand out from competitors. By using configuration, sales teams can offer custom solutions that best meet their customers' needs and optimize their profits.
A wide range of industries uses configuration capabilities, including manufacturing, public services, high-tech, automotive, discrete manufacturing, and industrial manufacturing components. These are the companies that have the task of delivering so-called “Lot Size of One” products. Customers demand customized products; they want them to be tailored to their exact specifications.
And here are several ways to solve this issue:
The simple approach: just add material numbers.
You have a product, and you could easily define a standard product, a standard bill of material, and a standard routing with production steps for each specification. Then you'll very quickly end up with millions and billions of master data records. With so much data, it's easy to see that it's the wrong way to create customized products.
More advanced approach: use material variance.
You can add characteristics, values, and rules to one configurable product. The end result will be a fixed material, known as a material variant. Then, at least, you save all of the BOMs and routings for these vast numbers of master data records, which is better than just adding material numbers; however, this approach is still not ideal.
The recommended approach: use configurable materials.
You should be flexible and agile, offer a very complex solution for your customer by reducing complexity inside the company, and reload the “Lot Size of One” process by using configurable materials.
You have one material master, one bill of material, and only one routing. Of course, the routing is more complex and intelligent, but it is much easier to maintain than running thousands or hundreds of thousands of them. And you can still get material variants. If you know that this is a product that is frequently sold in this special declaration, you can stock it, sell it from stock, produce it in batches, produce it cheaper, and still deliver it to your customer.
The main recommendation is to really configure as much as possible to clean up the process. You'll need some assistance with this, and SAP offers it through several configurators, including SAP LO-VC and SAP AVC.
The Bottom Line
Businesses can remain competitive in the marketplace by having such customization options, and they can not only support a huge product catalog but, more importantly, have variance. With SAP Variant Configuration, you can create products that are specifically designed to solve each customer's problems.
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