The Risks of Instant Quoting Tools

Instant quoting tools are starting to gain a little buzz in the marketplace, but do these solutions live up to the promise? For some jobs, maybe. As the holistic estimating solution for custom part manufacturers, probably not.

For generations, the responsibility of quoting has fallen to a shop’s most experienced talent—and for good reason: quote too high, and you risk losing the job; quote too low, and you’re forced to complete the work at a loss, which eats into profits and undermines your business. Shops across the industry are struggling to hire and train new estimators, so I understand why the idea of instant quoting is appealing, and it’s one reason we have been asked why Paperless Parts hasn’t shifted gears to become an instant quoting platform.

Believe me, we’ve considered it. Back in 2016, Paperless Parts started as a marketplace solution. During this phase of the company, we saw firsthand the drawbacks of this approach. Here are a few of the lessons we learned that fueled our transition to the quoting and collaboration platform we offer today:

Manufacturing is complex.

In the best-case scenario, buyers request a quote by sending a full MBD 3D model, which does lend itself to a lot of automation. However, our data from over 11M part files shows that these fully annotated 3D models only appear about 1% of the time and we have yet to see an instant quoting tool that leverages the GD&T in a model. In a lot of cases, a buyer will have a basic 3D model and a print to define that model. This means estimators are still spending hours reviewing drawings to find all the “gotchas”—those tricky GD&T notations and callouts that require quality certifications, special materials, or extra processes. Today, instant quoting tools do a poor job of extracting data from MBD files and do not have the technology to read prints.

There are three ways to mitigate that risk during the quoting process:

1. Use an instant quoting tool and pad the margins to ensure you’re covering downside risk. Of course, this means you might be pricing yourself out of jobs.
2. Lean hard on an experienced estimator who spends hours inspecting prints and making strategic decisions about what to do with that information.
3. Leverage tools like Paperless Parts that blend the best of both worlds: leaning on AI and automation to extract and organize the correct information, establish guardrails, and give savvy estimators the information they need to make great decisions to optimize outcomes.

Instant quoting tools can drive a race to the bottom.

Instant quoting tools work well for simple parts with limited technical requirements, which means you’re operating in a competitive space where anyone (including Chinese manufacturers) can compete effectively. In this environment, you’re competing solely on price because everyone is offering fast lead times, and even if you win the prototyping work, lower-cost competitors are likely to win for production runs.

Relationships matter.

With instant quoting tools, you lose control of your brand and communication with your customers. Professional buyers rarely purchase through instant quoting websites. When buyers see instant quoting tools embedded on your site, they often assume that’s the only way to interact with your shop. They also assume that you’re only equipped to handle simple parts, as buyers know that complex packages require a more customized approach.

Want to validate whether that’s happening on your site? Check the bounce rate on your instant quoting page. Whether a buyer is sending you a simple part or the most complex assembly, the customer should have a great experience no matter what. Instant quoting tools simply don’t provide that level of flexibility and responsiveness.

Security is more important than ever.

The vast majority of instant quoting tools use online forms that aren’t CMMC compliant, and many buyers want to do a bit more due diligence before sending their IP into the ether. Paperless Parts has invested millions of dollars in CMMC compliance so that when buyers see a “Powered by Paperless Parts” file submission form, they know their information is being handled properly.

 

So who SHOULD invest in instant quoting tools?

Are instant quoting solutions good fits for some jobs? Absolutely. As a tool in your arsenal, instant quoting tools can help knock out the easy stuff. Are they good for every job? Not by a long shot. Shops that work primarily on complex parts, large assemblies, parts with CUI data, or high-touch buyers need to take a slightly different approach.

Paperless Parts Founding Engineer Dana Wensberg once summarized the Paperless Parts approach in a way that hit home for me. He said,

“Estimating is all about making 100 different decisions. There’s the basic questions like, ‘What’s the material?’ ‘Who is the customer?’ or ‘Do I have all my files?’ Then there are the slightly more complex questions like, ‘What machines do I run this on?’ or ‘How many setups do I need?’ Finally, there are the most complex questions: ‘Am I properly accounting for critical tolerances?’ or ‘What should my cycle time be for each of my setups on the mill?’ Paperless Parts automates the answers for the first 80 easy decisions and then gives you a head start on the last 20 most complex questions.”

Using automation and AI to aid decision-making has helped hundreds of shops throughout North America maximize the value they’re creating for their shops and their customers. That said, if fairly simple parts represent a meaningful portion of your business and quoting them is creating a backlog, we have worked with some Paperless Parts customers to build an instant quoting module on top of Paperless Parts to get the best of both worlds. Like anything else, there is no one-size-fits-all solution, as each shop is as diverse as the parts we make to power the world’s economy.

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Sarah McAuley is the Chief Marketing Officer at Paperless Parts.