Configure Price Quote
Configure Price Quote ( CPQ ) is a term that describes a process chain in sales or in sales processes. The terms mainly refer to varied and customer-specific products and services that have to be configured and priced before they can be sold or prepared.
The terms can be translated as follows:
- Configure = configure the product and / or service individually
- Price = pricing / price calculation
- Quote = create offer directly
Configure Price Quote Software - CPQ Software - Configure Price Quote Systems
Configure Price Quote Software (CPQ Software) or CPQ systems are systems in the classic sense that support the users (in most cases sales employees) within the offer process in preparing the offer and thereby significantly accelerate the process of preparing the offer. CPQ systems are usually either linked to a CRM system or integrated within the CRM system.
CPQ solutions contain 3 core functionalities:
- Rule-based product configuration
- Automated and rule-based pricing
- Automated generation of offer documents
CPQ systems as part of Industry 4.0
Expansion stages of Configure Price Quote (CPQ) systems
Most providers of CPQ systems have developed significantly over the years and continue the process chain described above through to production. In other words, after the end customer has created and accepted the offer, the configuration created in the CRM system is automatically transferred to production via an ERP system.
This raises the question of how CPQ systems can accomplish this, since a production instruction for products with a large number of variants requires specific parts lists and the sales department normally does not sell any parts lists to the end customer or does not talk to the end customer about specific parts lists in the offer phase.
The product configurator within the CPQ software closes the gap between sales and technical production. The sales configuration and product identification is not set up in parts lists or individual components, but is designed or translated in such a way that it is understandable for sales and end customers. The product configurator then automatically converts the product configuration, which is understandable to the end customer, into a technical, feature-controlled product configuration that is suitable for immediate production.
Furthermore, there is even the possibility of designing the product configuration so easily that it can be created without sales and even directly via dealers or sales partners. Such product configurations are then z. B. integrated directly online into a B2B portal or dealer portal and linked in the background with the ERP system and thus with production. This is also often referred to as online configuration or online configurator.
Another simplified online configuration can even be integrated directly into a web shop. In other words, sales personnel are no longer required. If this is the case, products in the online configurator are often supported by product visualization in the form of 2D or 3D.
In the ideal case, the entire process chain from sales / end customer and CRM system to production is covered via a website with online configurator via the ERP system.
CPQ maturity levels - maturity levels for CPQ systems and companies towards Industry 4.0
Depending on the expansion level of the CPQ solution used, the companies and CPQ systems can be defined using different CPQ maturity levels. Since the maturity levels of the companies are directly dependent on the maturity levels of the CPQ systems, these are equated.
The main users of CPQ systems are
- Account manager / account manager
- sales staff
- Dealer (B2B portal) or
- End customers (webshop)
Break-even point / amortization
The break-even point after the introduction of a CPQ system is on average between 3 and 12 months, depending on the degree of maturity.
Advantages of CPQ systems
General advantages
- Reduce order and processing errors
- Improvement of the quality in the configuration process
- Reduced configuration, quotation and order times
- Reduction of the resources required
- Increasing sales
Benefits for salespeople
- Shortened induction and familiarization time for new employees
- Time savings for sales staff
Benefits for end customers
- Predefined products or services as the basis for your own configuration
- Improved quality of individual product creation
- Simplification of the creation of a customized product
- Support in the decision-making and configuration process
- Improved tailoring of products to the needs of customers
Use of CPQ systems
CPQ systems and CPQ software are an essential part of Industry 4.0 in the direction of digitization, automation and standardization.
- Accelerated order and ordering processes, reduced throughput times and thus cost and time savings [up to 70%]
- Automated order processing
- Automated production control
- Guided selling for sales, dealers and customers, thereby relieving the sales force and possibly reducing the number of sales staff
- Reduction of the training period for new sales employees
- Sales support
- Support and relief for production staff
- Minimizing the loss of know-how by eliminating a long-term sales representative
- Documentation of the product variety
- Documentation of knowledge about products
- Lowering production costs
- Reduction of the susceptibility to errors - error-free production / order preparation / preparation of offers
- Quickly create error-free and complex offers without product experts
- cost cutting
- Increase in sales
- Centralized product knowledge through the transfer of product knowledge into software
- Competitive advantage as faster and more efficient on the market for new products
- Optimized and accelerated sales processes through increased standardization and automation
- Increase in the order volume at B2B dealer portal
- Transfer of product knowledge to the customer
- Reduction of the product complexity
- Improved cross-selling and upselling
- More time for other things / concentration on the essentials
Individual evidence
- ↑ a b c d Felfernig, A .: Knowledge-Based Configuration: From Research to Business Cases . Ed .: Newnes. 2014.
- ↑ a b Haug, A., Hvam, L. and Mortensen, NH: Definition and evaluation of product configurator development strategies . In: Computers in Industry . tape 63 , no. 5 , 2012, p. 471-481 .
- ↑ a b Hvam, L., Pape, S. and Nielsen, M. K: Improving the quotation process with product configuration . In: Computers in Industry . tape 57 , no. 7 , 2006, p. 607-621 .
- ↑ Haug, A., Hvam, L. and Mortensen, N. H: Implementation of conceptual product models into configurators . In: Proceedings of MCPC 2009 . 2009.
- ↑ Trentin, A., Perin, E. and Forza, C: Product configurator impact on product quality . In: International Journal of Production Economics . tape 135 , no. 2 , 2012, p. 850-859 .
- ↑ Vanwelkenhuysen, J .: The tender support system . In: Knowledge-Based Systems . tape 11 , no. 5-6 , 1998, pp. 363-372 .
- ^ McGuinness, DL and Wright, JR: An industrial-strength description logic-based configurator platform . In: IEEE Intelligent Systems and their Applications . tape 13 , no. 4 , 1998, pp. 69-77 .