CPQ and PGC – what’s the difference?

In a previous blog post, we talked about “Why your company needs a configurator.” In this post, we’ll dig deeper into the subject and talk about some terminology and the logic behind our specific solution.

In a number of industries – office/contract furniture, kitchen and bath, material handling, industrial machinery, healthcare, laboratory, demountable walls, shelving and so on – products are manufactured as components that can be pieced together.

For example, a chair can be configured with different arms, headrests, frame finishes, lumbars, cushions, base options and so on, adding up to thousands of potential combinations. The example below is a single chair that, given its various components, can produce 2,304 potential combinations.

Now picture a desk. A desk can be configured with different lengths, heights, legs, finishes, etc. But a desk can also be configured in relation to other products; attaching the desk to another desk may require supports and additional components or removal of legs to adjoin the two products. This adds several additional configuration possibilities, often adding up to hundreds of thousands of combinations (read more about this way of thinking here: http://configura.com/blog/future-space-planning)

With all these different combinations, imagine specifying an entire office space with hundreds of desks and chairs and workstations. The number of variations quickly adds up to something in the millions.

Now, think about the products that you make and sell. How do they change depending on different configurations? And how many parts and pieces are required to make various scenarios work?

… It’s an overwhelming number to even think about.

Specifying varying combinations of products used to require many people who would spend days manually making calculations. Often, specifiers would fall back on product combinations that they were used to selling – because trying new products and combinations meant venturing into confusing, time-consuming and error-prone territory.

But modern technologies simplify this complex process – and make it easy to efficiently and accurately specify endless combinations of products. Just as CNC machines and robotic devices have streamlined production and manufacturing, software technology has streamlined sales and order processes.

Configure Price Quote (CPQ)

Configure Price Quote (CPQ) is a commonly known term in the configuration-industry to simplify configuration processes. CPQ is an interface for guided selling and generation of quotes, proposals and documents. It usually feature dropdown menus in which the user is prompted to fill in various numbers and information, with the software then calculating the results.

CPQ software simplifies the complex job of configuring, designing and selling customized products because a constraint-based configurator removes the need for detailed product knowledge. It also helps sales teams to calculate the correct pricing, discounting and product rules for these products to create fast and accurate quotes and propose the best possible solutions. Tacton is an example of a company that makes CPQ software. You can learn more about CPQ on Tacton’s website.

So, how is Configura’s solution different?

Parametric Graphical Configuration (PGC)

At Configura, we do things a little differently. Instead of using drop-down lists and numbers to generate configurations, which is a common practice that works really well for product configurations, we focus on the industries that need to visualize their configurations and calculations in a given space.

To do this, we create a visual space planning configurator, which means that our users get similar benefits as with other CPQ software (such as customer focus, faster quotations, accurate pricing, increased revenue etc.) but they get these results by working in both 2D and 3D to create a visual image of their space.

This is a new type of design software that does not fit any traditional classification such as CAD, specification tool, drawing package etc. This is Parametric Graphical Configuration – PGC.

How it works: PGC looks at the relationship between products.

So how can this possibly work? How can you create configurations using images? How do they know how to behave?

With PGC, all product rules are built into the software so the designer doesn’t have to know the relationship rules between the products. The software does all the calculations and changes automatically.

The strength with this kind of software is that a single symbol can represent a large number of parametric variations and options, as we could see in the image of the chair above. The design software is further refined as the products know how to behave, which other products they can interact with and all required parts are automatically added to the drawing.

As the users are placing the products, everything is immediately configured graphically to represent what the final solution will actually look like. On top of this, the products in your visual environment are added to the calculation dialog as you go along, giving you immediate pricing and documentation, saving you many hours on specification and calculations.

Such design software allows the designer to focus on design and customer solutions instead of technical product rules. And as with other CPQ software, PGC software can integrate directly with other systems such as ERP systems, hence eliminating many steps in the sales process.

The result: PGC is about people, the way you work and better results

So far, we’ve established the technical aspect: PGC does all your calculations in a visual environment. The inevitable result is that PGC is also about people: the way they work to accomplish tasks and the improved results this leads to.

With PGC, the interface of the program is driven by images. Instead of using drop-down menus and article numbers, PGC uses graphic representations of the products. This eliminates the need of knowing product numbers by heart and opens up the possibility to work together with clients on the spot. This leads to shorter project times since decisions can be made immediately and in collaboration.

PGC uses drag and drop to create a natural workflow. The user gets immersed in the design process instead of getting pulled out of the experience by technical specifications and terms. This tends to lead to more innovative solutions and more beautiful design, which makes for happier customers.

PGC looks at the individual company to customize and automate the solution for their needs. Through a thorough analysis, PGC can work on an individual level to automate many of the common tasks in the sales and order process for each company. This eliminates unnecessary steps and the number of clicks it takes to get from point A to point B. This results in a more efficient sales process which in turn means more time for new business.

PGC in action

Though we see more product configurators emerge on the market, we at Configura have so far found that we’re still unique. We see many other great solutions for product configuration and a large number of space planning software out there. However, it is still very rare to come across a software that can proficiently handle both - the relationships between configurable products in a space.

Who needs CPQ and who needs PGC?

Companies with complex products and sales processes need CPQ. Companies with complex products and sales processes and space planning/visualization requirements need PGC. If you manufacture system products, then a PGC-based solution may be right for you.

Interested in learning more about PGC? Read our whitepaper: How Parametric Graphical Configuration Solves the Problem of Complex Selling. http://configura.com/whitepaper.

By Peter Brandinger

Vice President Business Development at Configura's US office.