Engineer to Order (ETO) is a manufacturing mode involving collaboration with a customer on the engineering phase of the product lifecycle in order to arrive at a product design that meets the customer’s functional requirements.

Touted as a common business model in industrial manufacturing, aerospace, defense and the energy industry, Engineer to Order is distinguished from other to-order manufacturing modes including Make to Order and Configure to Order in that engineering or product design are a core part of a manufacturing project that requires specific manufacturing project management processes. The engineering component of the project often overlaps with early stages of manufacturing and ordering of long lead time raw materials, which means that processes must be in place to issue purchase orders and work orders before a finished design is released to manufacturing. ETO requires a management team master not only product lifecycle management (PLM), but also project lifecycle management and customer lifecycle management.

Engineer-to-Order Enterprise Resource Planning (ETO ERP)
Definition - What does Engineer-to-Order Enterprise Resource Planning (ETO ERP) mean?
Engineer-to-Order Enterprise Resource Planning (ETO ERP) is a class of Enterprise Resource Planning (ERP) systems designed to support manufacturer requirements for the unique engineering designs of their customer products. Specific processes are involved in each phase of product manufacturing, including estimates, materials, engineering changes, cost allocation, tracking, communication and customer interaction. Most manufacturing organizations have unique processes, size variations, resources and end products. Thus, not all manufacturing processes are suited to a standard ERP.

Techopedia explains Engineer-to-Order Enterprise Resource Planning (ETO ERP)
Supplier and Make to Order (MTO) manufacturer interaction processes stand in sharp contrast to those between suppliers and ETO manufacturers. Supplier and ETO manufacturer interactions are more critical, as these customers order unique sets and bills of materials. Because ETO materials are project specific and not frequently used or ordered, they usually have long lead times (months or years), compared to MTO manufacturers (days or weeks). Tight scheduling is expected with no scope of error. 

Key ETO ERP characteristics include:

  • Tight and complete system integration
  • Access to current information related to all financial and technical data
  • Informed decision making capabilities
  • Potential warning and alert systems for each project component
  • Enhanced inventory control
  • Capacity planning for improved on-time delivery
  • Vendor management
  • Evaluating estimates and quotes provided by project customer