In theory quoting sounds simple, doesn’t it? Just identify the operational costs involved to produce an order, add in a fair profit margin, and the process reduces to two fundamental parameters: cost and margin. The problem is that none of the variables are obvious.
The real costs are related to the correct allocation of labor, raw materials, and working times. This can be a long process. If the goal is to quote within a few days, it can be a challenge to tap all the technical resources required to document the necessary information.
Experienced job estimators can sometimes refer to a new sheetmetal part that the company has been invited to bid on and, amazingly, within seconds can relay the cost to make it. That skill, however, didn’t come about overnight. It can take years of experience to develop that comprehensive level of tribal knowledge containing myriad pieces of information from all the departments, functions, and possible outside vendors that impact that part. Moreover, undetected mistakes tend to amplify over time.
Here’s the good news: Some comprehensive software platforms now offer a quoting module that can help with this daunting task. In Lantek’s case, the quoting function gathers information from other functions and data within our system, including CAD/CAM programming files, machinery processing times, shipping costs, and profit margins—virtually all the information that used to be plugged in and calculated manually or with a separate piece of estimating software.
The need for quoting speed, accuracy, and flexibility makes another case for working with an all-in-one software platform available today: the integration of advanced calculation algorithms. For instance, from all the data obtained by the CAD/CAM and MES, algorithms can extract the necessary information—without simulations—to know the associated costs of production with a high level of precision. This ability implies that fab shops can make estimates without simulations or advanced technical knowledge, resulting in a precise quotation in minutes.
If only it were that perfect. While automatically generated data provides a great place to start much faster than ever before, it’s the area of machine cutting and/or forming times that will always require a second look by the operator or manager. The machine builder can provide basic information when a new machine is first used in quotes. But there are so many variants that can affect production times, even the temperature and humidity in the shop on any given day, so the experience and data will build over time and the automatic quoting function will become more accurate. Some customers look to us for this information, but no one knows better than the programmer or machine operator how much time a specific machine takes to run through a cycle.
There may need to be some editing to the automatically generated quote and a margin built in for added flexibility. Margins can be fixed or vary based on a fab shop’s strategy. Some adjust the margin for high-volume or loyal customers, increase it for new customers, or have a targeted discount strategy. It’s common to manage these with a CRM that, in addition to organizing the customer and prospectus portfolio, allows pricing policies to be adapted to each case. A few platforms integrate a CRM to manage customers and prices, one that is connected to costs for quick and precise quote generation. Software also can integrate with a shop’s CRM.
Business intelligence is key for making good decisions. Analyzing each ratio—the sales funnel, profitability per customer, material consumption, geolocation—is helpful when the next quote comes in. Maybe this newfound knowledge will become so intuitive over time that your shop will have that smart person who can refer to a job and relay the cost in seconds.
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