The ETO-to-CTO Journey: How They Did It in the Construction Industry

MISCHA VAN BRANDWIJK: So welcome, everybody, at this case study session around the ETO to CTO journey within the construction industry. First, let us introduce ourselves. My name is Mischa van Brandwijk. I'm working in the role of Customer Success Manager at Cadac Group. I have around 30-plus years of experience in manufacturing and construction industry. I'm helping customers with their digital transition and implementing an ETO to CTO strategy, give awareness on product thinking, configuration management.

So who is Cadac? Cadac is an Autodesk Platinum and Microsoft Gold partner. Have their headquarters in the Netherlands, with several offices around Europe with 250-plus experts. And Cadac has over 35 years of experience in optimizing customer processes that come into contact with digital design and product information. And in those years, we have developed thousands of solutions that enable companies like you to design, build, and operate even more efficiently. So, Jan Harmen, your turn.

JAN HARMEN WIEBENGA: So hello, everyone. My name is Jan Harmen Wiebenga. I'm Chief Technology Officer at Van Wijnen. Van Wijnen is a leading Dutch construction company, which I will introduce later on in this presentation.

I have a background in software and the manufacturing industry. And I have worked more than 10 years in the automotive industry, mainly focusing on digital transformations and digital strategies. Since 2021, I moved to the construction industry in my current role as CTO at Van Wijnen. But first, Mischa, take us to the goals of this session.

MISCHA VAN BRANDWIJK: We see a trend in the demand for how companies can make a configure to order transition. This is the reason why we defined the method for this within Cadac several years ago. This helps companies really to do the CTO transition. One of those companies, Van Wijnen, will be introduced during this class.

And in this class, we want to help you to understand the industry challenges and how to beat them, learn from real life experience what the CTO transition is for a large organization, discover new insights that will help participants implement their own strategy, and understand the software framework necessary for facilitating a CTO process within construction and manufacturing industry.

Before we dive into the session, I want to reference the AU industry class from last year in New Orleans, where we did the introduction of the ETO to CTO journey. But first, it's good to look at some industry challenges we see.

In current times, we see a number of general challenges that many companies struggle with. Finding the right balance between product leadership and customer intimacy and operational excellence is not easy. In addition, we see companies that, due to a great diversity in the product portfolio, must be able to follow multiple strategies and business processes.

Where product leadership speaks over more time for innovation, innovative products, and short time to market, operational excellence speaks over reduced failure costs, increased turnover, and shorter order lead times. And customer intimacy is all about reduced quotation lead time, introduce new products faster, and optimal customer experiences.

Let's make the challenges the construction industry faces day in and day out more specific. The construction industry is known for its traditionally low margins. Globally, earnings before interest and tax on construction activities is just 5.5%. So even the smallest mistake can make or break the project.

Projects are becoming increasingly more complex, yet the schedules keep shrinking. Reports tell that 98% of mega projects experience delays. And data and information is extremely siloed, making much of it unusable. 95% of all data in engineering and construction goes unused.

AGC, the construction association, reported that 80% of the construction companies cannot find the workers they needed. Teams are also becoming more and more distributed, with stakeholders split between various offices and the field. Only 80% of the firms report consistently using mobile applications to access product data.

And many of these challenges bring uncertainty and risk into the industry. KPMG found that 78% of engineering and construction companies believe that company and project risk are increasing. So let's share our perspective on the configure to order way of working and how this can be a strategy to help overcome the challenges that a lot of companies are facing today.

So when we take a look at our customer processes, we recognize, in general, three types of primary business processes. We identify these processes as configure to order, engineer to order, and design to order. There are two main differences that separate these three types of processes and how they can be recognized.

The first difference is about the moment in time when the required product data is being created. For configure to order, the product data is already prepared and available upfront in the process. For engineer to order, some adjustments or small new designs are created after the order is received. And for design to order, more development cycles are required, so the actual useful data is being created at a later stage in the process.

The second difference is about the people that are involved in these processes. For the configure to order process, very little people can be involved since the product data creation can be automated. It goes directly from sales to the production department. Engineer to order has mostly sales engineering and engineering involved to get clarification on requirements and specifications. And within design to order process, new functionality can be designed which involve the R&D department and additional support required from all other departments to come to a new functional product.

At this slide, we see a typical construction order process, often defined as design to order. The process begins with a customer and a salesperson or an architect getting clarity and an agreement on the commercial and technical requirements. Once there is an order, the engineer starts by designing the product. And data is communicated to the operation departments.

Within these processes, people speak about their products referring as one of a kind products, special, or customer-specific solutions. It's always a building, but every project has a unique design.

In the bottom, we see how the processes are being experienced by the people within the process. Due to all kinds of missing information and unclarities within the specification process, a lot of communication and rework needs to be done to be able to deliver a functional product. It appears that every time these processes are being executed, they are being experienced for the very first time. So to have a better understanding, let's take a look at some first time experiences.

In the Netherlands, everybody is used to ride a bike. We have about 70 million people and 22 million bicycles. So to be able to survive on a bike in the Dutch traffic, we need to learn to ride a bike on a very early age.

How was it like riding a bike for the very first time? I will share some personal experience. For me, it didn't work out that well. As well as driving a car for the very first time, the first time, it didn't go so well either.

So try to imagine what happens if you perform a cycling activity for the thousandth time. We have developed and prepared our equipment. We know where to go. We know when to finish. We are able to improve by every time we perform the activity. It goes a lot better.

And of course, it's the same experience for our Dutch national hero, Max Verstappen, when driving his Formula One car. He's able to improve by every training activity. And of course, he will win the Las Vegas Grand Prix this weekend in Vegas during Autodesk University.

So the keyword that we are looking for is repetition. If you are able to create repetition within our product and processes, we are able to automate them. How does configure to order help you out by creating a repetition?

First thing is to establish a common language. So let's show some of the language you will have to learn when stepping into the CTO world. And afterwards, everybody looks a bit like this because those are a lot of difficult words when you see some for the very first time.

So in order to establish a common language, we clarify at least the highlighted words. And for this clarification, we use examples of the most modular product ever that everybody knows and where we all grew up with. Yes, indeed-- it's LEGO.

Imagine the LEGO car on the right of the slide is one of the specific products from your customers. For a manufacturing company, this product could be a machine. For a construction company, the product can be a house.

And every product consists of some typical components. These collection of components we call modules. In general, we see that a module is a generic collection. It has no physical representation or identification.

On the screen, we see five modules-- a front module, an engine module, a chassis module in the center, a body module, an axle module on the right side. So when we zoom in on the front module, we can imagine the module comes in different representations. Within the highlighted circle, we have a front of a car executed with a radiator. We call this a variant of the front module. Next to the radiator variant, we also have a variant without the radiator. This is the second variant, highlighted in the circle.

So horizontally we speak about modules. These are generic. Vertically we speak about variants. These are specific. In case of variants, specifications are known. Costing and involvement are known. We know the interaction with other variants. And we are able to define their interfacing.

As you can see here, there is one exception, the chassis located in the center of the slide. There is only one variant of this module. So this means that every car uses the same execution of the chassis. This makes a lot of people happy.

All right. To create a product, we need a certain set of interface variants which can be combined. The product in the yellow circle on the right we call a configuration. So if you want to create a different product, we use a different set of variants to create a different configuration.

So the collection of all these variants, we call this a product platform. It is important that the content of the product platform matches the market needs for a certain period of time. This is where product management begins.

In this example, the LEGO platform consists of 11 variants. And this is the sum of variants. Instead of the sum, we can now multiply the variants. This gives us 36 unique product configurations. So with 11 variants, we can create 36 configurations. And we maintain the specifications and documentations of only 11 variants instead of 36 products. So that's a huge difference in terms of workload for the organization.

So if this is possible with LEGO, or within the manufacturing industry, why not within the construction industry? So I mention this example with facades, doors, window openings, window frames, and bricks. In this example, we have already 324 different configurations as an end product for the facade.

Let's take this a level higher and look at a house. Take the roof, the facade, which is built up from the facade platform from the last slide, and take the housing dimensions also in the equation. Now we can make millions of housing configurations for our customers.

I hope this will give some inspiration about the possibilities for the construction industry. The basis of configure to order is always a well-defined, modular product platform. So let's make it more practical and start with introduction of Van Wijnen and their journey. Jan Harmen, take it away.

JAN HARMEN WIEBENGA: Let me first introduce Van Wijnen. So Van Wijnen is a leading Dutch construction company. The company has been founded in 1907 and has grown to a company with 27 locations across the Netherlands. Van Wijnen employs 2,400 people active in project development, renovation and transformation, maintenance, and its main activity, the building of houses and apartment buildings in the Netherlands. In 2022, the revenue of the company was 1.2 billion euros with a net income of 25 million euros.

So in recent years, Van Wijnen has recognized that the construction industry has a large impact on our globe. Did you know that 17% of our global water drinking consumption is actually used in the building industry? That the building industry is responsible for 33% of our global CO2 emissions? That it produces 30% of the waste produced globally? And that it consumes 45% of the global raw materials?

So, clearly, the building industry has a major footprint on our Earth. And at Van Wijnen, we are determined to reduce this footprint by changing the way we build. At the same time, we are also facing the challenges as introduced by Mischa earlier in this presentation. So also, at Van Wijnen, we are facing thin margins. We are facing tight building schedules. And we are facing labor scarcity. So, last but not least, we have a major shortage of housing in the Netherlands, especially a major shortage in affordable housing.

So these have been the main reasons for Van Wijnen to change the way we build in order to achieve our goals and become future proof in 2025. Our mission is to build a space for a better life. And this requires a different way of building. It must be faster. It must be more predictable and more sustainable. So as we say at Van Wijnen, we have to build more and better with less.

So to become future proof as a company and additionally reduce the footprint which we have on our world with our building activities, Van Wijnen decided to change the way we build, using a CTO strategy. Implementing a CTO strategy at Van Wijnen meant building an entire new organization, developing a new CTO product, designing new business processes, and introducing a new IT landscape.

Implementing such a CTO strategy proved to be a major challenge, which I will explain in more detail in the next slides. And after that, I will show the results of the CTO strategy implementation at Van Wijnen.

So in the implementation of the CTO strategy, we have considered four pillars. I will go through them in the next slides. The four pillars which we consider are the product, the process, the organization, and IT. And these four pillars will have to be in balance, like a chair. And IT is just one of these pillars, but you need to consider all pillars to successfully implement the CTO strategy.

So let's first start with the product. The product is the intellectual property which we will put on the market. And in case of Van Wijnen, we have done a lot of market research to define a product platform that matches the market needs. And in our case, we have developed a CTO housing and apartment platform with a large amount of variation to meet the customer demands while also ensuring that the product remains affordable, because that is one of the key goals of Van Wijnen-- to address the need for affordable housing in the Netherlands and solve the housing crisis.

Next, we had to design a set of new processes within the organization. As a traditional construction company, many processes needed to be introduced related to the CTO strategy. At Van Wijnen, this meant ensuring that, for example, the sales process is aligned with the order process, as indicated in yellow. In other words, the sales teams needed to sell the CTO product and nothing else in order to ensure an effective and efficient production process.

In addition to that, we needed to design and implement new processes-- for example, for the product development process and the change process, which were not in place in a traditional construction company. On the basis of the new processes, the organization will have to be adjusted on certain points as well. But in case of Van Wijnen, we had to introduce a new organization. And this has been organized in a new business unit.

So we started with a greenfield organization. This meant attracting and retaining new people, introducing new roles that were not known to a construction company. So in the last three years, we managed to build an organization which now employs close to 400 people in parallel to building a new IT landscape.

So next, and based on the CTO product, the new processes, and the new organization, we have designed the IT landscape with which the organization will work in the coming years. And in a few slides, I will introduce the IT landscape which we have developed, including the Autodesk technology, and show you the results.

But first, this brings us to the question, how to implement a CTO strategy which covers all four pillars? So at Van Wijnen, we have used a program approach for the CTO transition. Program management ensures a controlled implementation of a company-wide change by executing activities and projects. And as a new result, new competencies are developed and anchored in your organization. And these make it possible to achieve new and revised business goals.

So we work from right to left. Always start from a vision and business objectives. And don't be tempted to start with IT. The vision should answer the question, where do we want to be as a company and an organization in four to five years?

And from there, we work towards the sub-goals and arrive at the competencies and a blueprint of the organization that is necessary to achieve this business objectives. And finally, to develop competencies, you need various activities and projects in order to realize the implementation and achieve the required results.

So next, let's look at the results of the CTO strategy implementation at Van Wijnen, starting with a short movie.

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So at Van Wijnen, we have divined a new way of building based on a CTO strategy. So let's go through the CTO process from a customer perspective.

So the customer journey starts online in an online portal, where we disclose our CTO product to the customer through a configurator. The configurator enables our customer to configure a project, for example, a building location where a customer wants to build houses and/or apartment buildings. The customer is then led through the configuration process supported by our sales team.

So in the configurator, we enable our customer to configure a house, apartment building, or complete residential area step by step, with countless variations. The customer chooses from many product features which are immediately visualized and stored in the configurator.

These images show you the variation of housing types customer can choose from in the configurator-- clearly a large variation, all based on the same product platform. In addition, these apartment buildings can be configured, again, from the same product platform, and visualized and stored in the same configurator. Moreover, both the houses and apartment buildings follow the same business processes, make use of the same IT landscape, and are managed by the same organization.

So this animation gives you an impression of the sales configurator. It allows the customer to configure a project, first on a low level of detail, so on a plot level, and later on, on a detailed level, so on the level of a house. During the configuration process, the customer is real-time informed about the related costs, which are dependent on the customer choices.

One of the unique features of our configurator is that the customer can also configure the brickwork. This can be done per house or a block of houses, and is done in cooperation with this architect. Here, you see how the brickwork is configured, whereby different brick types, colors, and thicknesses can be chosen from by the customer. And once the configuration is completed, it is sent to the robots in the factory, as this brickwork is applied in a fully-automated way.

Once the customer has completed the project configuration in the configurator, the next step is to generate the project. This means that the project configuration is run through our design automation tools to generate all information to produce these houses. Various documents and files are generated automatically, like the 3D geometry of all houses and the related engineering bill of material. Additionally, technical documentation to the drawings and robot files are generated, used for production on a file-to-factory basis.

So this animation finally shows you the complexity of our 3D house models. Every house configuration is customer specific and built up out of elements like walls, roof elements, and facade elements. Every element contains thousands of articles based on the customer configuration, all included in the bill of material. So on a project level, it's a large assembly, including tens of thousands of articles forming the basis for the production and assembly process of this specific project.

Now, once the generation of the project is completed, the project is then being sent to the factory for production. The production is entirely controlled in a digital way based on a file-to-factory principle. This means that production information is based on the configuration made by the customer. And to enable this, we have developed a new IT landscape, as shown in this image.

At the left, you see our configurator, which is based on Epicor technology. In the center, you see the Autodesk technology for the design automation and the used PDM tool, including Autodesk Revit, Autodesk Inventor, and Autodesk Vault.

Our software products are all connected through the integration platform Cadac Connect, as you can see at the bottom in red. And at the right, you see the Enterprise Resource Planning software from Microsoft Dynamics.

Now the project information received by and processed in the ERP system comes from our PDM system, which is generated in PDM by our design automation process. Now from ERP, we generate our production orders and send these production orders to our manufacturing execution system. So the MES, as shown at the top right here, is the system which controls all production systems, including the robots in the factory.

So the next step is to produce the elements of the houses and apartment buildings, which is done in Europe's largest housing factory, which we have built recently.

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So the unique feature of our housing factory is that it is controlled one-to-one from the online portal and configurator. This allows the customer to put together its own home and complete residential areas step by step with countless variations. Production is then also digitally controlled. This means that all robots, screens, and lasers are fed from one and the same digital product, as shown at left here.

So facades, walls, and floors are produced in endless dimensions and variations and leave the factory finished, as you can see in the center images. So the elements are then stored outside the factory, as shown here at the right, ready to be transported to the building site and to be assembled into a house.

So let's finally look at some facts and figures of the factory. In the factory, which is an investment of 200 million euros, we can produce 4,000 homes per year. This means 20 homes per day, which are built up out of 350 elements, which include floors, walls, and fully-finished facades.

As you can see as well, 50 skilled workers and more than 70 robots are doing the work that traditionally required 1,315 construction workers. So, clearly, the CTO strategy and digitalization has resulted in a highly effective and efficient production process, also beating the challenge of labor scarcity.

So once the elements have been produced, the next step is to assemble a house. And the modular concept of the house allows us to assemble one house per day with a team of only eight to 10 people. So let's have a look at the construction of a recent project.

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Another example of a recent project is shown here. These images show the complex and high-quality brickwork as the elements come together at the building site and form the house. The images in the middle show the high-quality finish inside the house, including the stairs, the prefab bathroom, which is also fitted in the house during the assembly phase. So the prefab modules, as we call them, is also a CTO product which we developed and which is configured by the customer in the configurator.

The prefab modules are also produced by ourselves as well in a recently built module factory. So the module includes the bathroom, the toilet, and all the technology required in a house, such as the heating and ventilation systems. And the amazing thing is that this project includes 10 houses and was assembled in only 10 days. So let's have a look at the results.

[MUSIC PLAYING]

This new way of building results in significant advantages, as shown in these facts and figures. Our new way of building allows us to build a house in one day with minimal impact on the environment. Finishing the house until the customer can actually move into the house takes only 15 days. In traditional construction, this takes 110 days.

And in addition, we reduce waste by 95%. And we use far less raw materials and water. And finally, as also shown in the movies, we can build sustainable houses which are beautiful and of high quality and, last but not least, are affordable for everyone.

So all in all, our ETO to CTO journey has a major impact for the company, as it has increased our competitive edge. But more importantly, we are able to build affordable homes for everyone with minimal CO2 emissions, with less waste and less use of raw material, thus also minimizing the impact we have on our world. So back to you, Mischa, for some conclusions we can get out of this session.

MISCHA VAN BRANDWIJK: Yes, thank you, Jan Harmen. So the takeaway after this session are implementing a CTO strategy requires considering four pillars-- product, process, organization, and IT. And again, don't start with IT. Follow a program approach to implement the CTO strategy. Start with definition of a modular product platform. And don't forget the change within your organization. It's team effort.

As a construction company, you can benefit from a manufacturing process with the manufacturing tooling like Autodesk Inventor Vault Professional, Cadac Organice Vault, Cadac Connect and Fusion 360 Manage as a foundation for your CTO strategy. Future proofing the company, increasing your company's competitive edge, and also the social impact-- sustainable, beautiful, and affordable housing for everyone. And of course, beating global challenges reduce our global footprint.

We hope we have inspired you with this case study class and gave you some insights about the configure to order journey possible with the construction industry. Of course, we hope to see you step into this journey, like many others do in the industry. We believe configure to order is the method to achieve more wins, build greater, better, and sustainable products, and stay ahead of your competition.

Be sure to check the handout available online in the session with a lot more of in-depth information on this subject. And if you have questions, don't hesitate to reach out to us. Add a comment to the class page. Or if you like this class, please recommend. And thanks for your attention.