Monday, November 17, 2014
Bringing Speed and Accuracy Into Your Manufacturing Quotes
Configure Price Quote, iQ / CPQ
Written by Aaron Korsen
For custom equipment, contract, and job shop manufacturers, quoting is the lifeblood of their organizations. Quote too high and risk losing the business; quote too low and risk taking a bath on the job. So how do the most successful companies find the right balance? It all starts with bringing speed and accuracy into your manufacturing quotes.
If you understand your true costs, you have more control and visibility into which jobs you want your organization to win and which ones you’d rather pass to a competitor. Unfortunately, there’s another twist…due to the “got-to-be-now” pace of today’s business climate, time is always a time constraint and that means you have to make better decisions faster. Clients almost seem to purposely create quick deadlines to force a best guess, as if they hope you make a mistake and under-bid.
So, how do you understand your true costs? In a distribution environment, your costs are driven from supplier costs and complexity may come from managing tight margins or having the right tools to incorporate value-add services such as service contracts or supplies. In a manufacturing environment, it means the roll-up of a complete Bill of Material (BOM) and Bill of Operations (BOO). These bills might may contain many assemblies indented by several levels and factors such as setup times, scrap, overhead rates, labor rates, and the number of machines or resources required. All of these, of course, can significantly affect the real cost of production.
Once you are confident in your material and operations data, the power can be yours to make the best decisions possible around tightening margins to utilize available capacity or increasing margins to maximize profits on limited capacity.
But what about time? Is it really possible to achieve this level of detail and accuracy AND meet your deadlines? The answer is yes. With the proper manufacturing-focused tools, companies can have speed and accuracy together. Below are a few strategies to help get the job done:
- A manufacturing-focused Configure, Price, Quote (CPQ) engine can provide users with intuitive questions and answers that can generate comprehensive multi-level BOMs and BOOs. More than a simple part selector, a configurator should accommodate various inputs, including numeric entry for weights and measurements. The values and rules can then generate near production-ready bills, which aid in accurately understanding costs during your estimating process.
- Continuous improvement can play a critical role in this process. Having the ability to quickly search your past jobs and see your historical results can provide a solid understanding of your costs and create a template to use on future quotes. Effective data collection solutions and business practices are an essential part of this process.
- Integration with your ERP and CAD systems can provide multiple benefits, such as a single point for maintaining master data such as parts, pricing, materials, labor and overheads rates, and customers. A comprehensive integration can also provide a fast transition when you are ready to move from sales into production.
- In a perfect world, all of the tools you provide your customer-facing employees should be housed in a single platform to eliminate jumping around to various solutions or the need to learn multiple environments. A robust CRM solution like Salesforce provides powerful marketing, selling, and support tools and can serve as the central platform for all of your applications, making them available to your team from anywhere on any device.