How HVAC Manufacturers Cut Lead Times by 50% 

Executive Summary

Cut HVAC Lead Times by 50% Without Sacrificing Customization or Profitability.

For HVAC manufacturers operating with an Engineer-to-Order (ETO) model, long lead times are a persistent problem. From initial inquiry to final delivery, every step—custom engineering, procurement, manufacturing, and testing—adds delays that frustrate customers and increase operational costs. 

 The hard truth? If your lead times are 20% longer than competitors, your customer retention drops by 15%, and your profit margins shrink by 10%. 

Many manufacturers try to fix this by expanding capacity, automating quoting, or predesigning certain products. But these solutions only address pieces of the problem. The real issue is how products are designed and configured. 

Leading HVAC companies are solving this by shifting from ETO to Configure-to-Order (CTO) with modular product architecture—enabling them to: 

• Reduce lead times by 50%, delivering orders faster while maintaining flexibility. 
• Cut engineering workload per order to zero, eliminating bottlenecks. 
• Streamline procurement and manufacturing with pre-engineered modules. 
• Ensure faster, more reliable fulfillment, improving customer retention.

What You’ll Learn in This Blog

This blog explains why traditional lead time fixes don’t work, how modular product architecture enables true order-to-delivery speed, and what leading HVAC manufacturers are doing to stay ahead.

By the end, you’ll understand: 

• Why ETO models create permanent lead time problems and how they impact profitability. 
• How a modular approach to product configuration eliminates unnecessary delays. 
• How leading HVAC manufacturers are achieving faster, more scalable order fulfillment. 
• Practical steps to transition from ETO to CTO while keeping customization intact. 

Want to take the next step?

Download The HVAC Manufacturer’s Guide to Transitioning from Engineering-to-Order to Configure-to-Order to explore how structured product architecture can transform your business. 

Introduction: Why HVAC ETO Lead Times Are Too Long 

HVAC companies who engineer their products for each order have lead time problems. It’s inevitable. From the time that a customer first engages in the process, learns about the possible solutions, requests a quote, formalizes the order and waits for delivery, there are inherent activities that add up to a long lead time. 

Human interaction is needed in almost every step. Scarce experts guide the solutions and make design decisions starting way back in the quoting stage. Quotes take time to refine and agree upon the exact specifications. Engineering work needs to be completed, and bills of materials generated before parts can be purchased and manufacturing begins. Errors occur and rework is required. Assembly and testing must take the time to understand the nuances of each order to ensure quality. It all adds up to a long list of activities that are easily disrupted when challenges arise.  

HVAC companies with lead time problems will not become or remain market leaders. It’s been shown that companies in this industry who fall behind their competitors with 20% longer lead time will see an average of 15% drop in customer retention. They also see a corresponding 10% drop in profit margins. 

With leading HVAC companies finding ways to cut lead times by 50%, the followers are in big trouble.  

Situation: Why Traditional Fixes Don’t Work 

“Why Haven’t Your Lead Time Fixes Worked?” 
 

Numerous fixes have been implemented to reduce engineering-to-order lead time. Many of them do not work or the negative consequences do not outweigh the gains. One such fix is the scaling up of operations including sales, engineering and manufacturing. More people, more space and more capacity. This is costly and can work to a certain extent, but the limiting factor ends up being the number of skilled technical resources that are available to do the difficult work. 

Another type of fix is automation. This is often done with the quoting process. A tool is deployed to improve communication between engineering, sales, and the customer. The accuracy of quotes is improved, and fewer errors occur, but it has little impact on the downstream process. The lead times for engineering design, manufacturing and testing remain the same. 

Design automation is sometimes implemented as another method that eliminates engineering constraints within the inquiry-to-delivery lead time. This has the added benefit of presenting customers with the ability to have extreme customization on certain parameters. In HVAC products this might include variables such as footprint, airflow, capacity, etc. However, the engineering effort needed to create and maintain the models needed to execute this approach is high and typically drives even more downstream cost and complexity. 

Some companies have developed sets of standardized products that are predesigned and target specification hot spots. Along with forecasting, inventory, and standardized manufacturing and testing, a set of products can be offered at drastically reduced lead time. It’s a great idea, but it doesn’t work for this industry. There is too much variation in each customer application and installation to fully package it up ahead of time. It’s the market, in the first place, that has driven HVAC companies to use the engineer-to-order approach. 

The answer is not to remedy your approach. It’s to change your approach. Rethink how you offer the variance in your products, reducing the time within all steps. Along the way, you also must figure out how to reduce the dependency on experts during the time-critical steps.  

Solution: Configure-to-Order Significantly Reduces Lead Times via Modular Platforms & Digital Configuration  

“The Answer Isn’t Working Faster—It’s Working Smarter with Modular Platforms.” 
 

Leading HVAC manufacturers are cutting lead times by 30-50% by shifting their approach from Engineer-to-Order (ETO) to Configure-to-Order (CTO). Using modular platforms and digitally connected configuration tools, they rewrite their processes, eliminating and/or greatly reducing activities in every step. 

Modular platforms are the foundation for this transformation. Companies embed their vast knowledge and market experience along with the strategy of the company into building blocks that are pre-engineered and configured for each customer. Each module has a clear role in providing variance to customers or it is optimized for cost, quality and lead time. The portfolio evolves over time with the addition of newly designed module variants, and it can be accelerated with the engineering resources who are freed-up from delivering orders.  

To obtain the value, the configure-to-order approach needs to be implemented across company functions and business systems. Digital configuration means that the quote and order are completed in a software tool that is digitally connected to PLM and or/ERP systems that generate bills of materials. A consistent approach to how products are structured and how module variants are applied allows for greater optimization across procurement. manufacturing, testing and installation. 

This isn’t just about speeding up production—it’s about building a better way to deliver the variety demanded by the market. 

Table 1. Lead Time Reduction by Process Step: ETO vs. CTO. HVAC manufacturers achieve a 50% reduction in total lead time, driving faster order fulfillment and greater operational efficiency. 

The table above highlights the significant lead time reductions possible when shifting from ETO to CTO. The Gantt chart below in Fig. 1 provides a visual representation, showing how each process step is shortened, resulting in an overall 50% reduction in total lead time.

Figure 1. Lead Time Comparison – Engineer-to-Order (ETO) vs. Configure-to-Order (CTO). The chart illustrates how each process step is significantly reduced under a CTO model, leading to a 50% decrease in total lead time.

Summary & Conclusion 

HVAC manufacturers, who have switched to a configure-to-order approach, have reduced lead time by 50%. Stop relying on fixes that are not suitable for this market or only impact a portion of the value chain. The strategic shift to configure-to-order provides a competitive edge over manufacturers still stuck in manual processes. Modular platforms enable configurable product variety and automatic configuration workflows resulting in faster and more reliable delivery with improved customer retention and loyalty. 

Next Steps

Long lead times? Manual quoting? Too much custom engineering? t’s time to move from ETO chaos to CTO clarity. Here’s your fast-track to cutting lead times by up to 50%:

The HVAC Manufacturer’s Guide – Learn how HVAC leaders are reducing costs and speeding up delivery with modular platforms.

Product Complexity Self-Assessment – Diagnose where complexity is holding you back.

Modular Product Architecture Roadmap – Follow a proven 5-step path to scalable, fast, and efficient product delivery.

Are you ready to explore how strategic modular product architecture can optimize your business. Let’s start the conversation.