Overengineering the Quote – Part 1 – The Admin Process

At Paperless Parts, we’ve watched 100’s of quotes get engineered using a variety of different methods. Estimating and quoting take a significant amount of time in job shops around the world. The most experienced employees or the shop owners themselves perform these activities. They are critical and have a direct impact on the business.

Here is the problem:

Job shops spend too much time engineering quotes. This contributes to the growing skills gap. It takes the most experienced machinists off the shop floor.

Most shops have a win rate of 20-30%. This means 7 out of 10 quotes sent were estimating efforts that resulted in no revenue. So why are you spending so much time engineering estimates?

A caveat before we proceed: I wrote this article for prototype and low volume jobs. Production work requires more effort. The buyers are often price sensitive and the margins are much lower.

Let’s talk about the way quoting process usually goes:

 

Step 1: Receiving RFQs

The RFQ comes in from a new or returning customer. This takes two forms, direct email or generated by the quoting form on the shop’s website. Either way results in some sort of email exchange.

The challenge: Customer information does not get saved in a good format for marketing. In “No Quote” situations, a simple and timely response makes the interaction valuable. Email queues do not provide the shop quick access to data on how repeat customers interact in the quoting process. This information includes: response times to quotes, revenue in the last 30 days, and buying preferences from past orders.

 

Step 2: Using Email to Manage a Work Queue

Estimators often work from an email queue. This is often the only way they make sure that quotes get prioritized and sent in a “timely” fashion.

The challenge: selecting which quotes to send first. The potential for clutter in email queues causes some quotes to never get sent. There is no scalable way to track the performance of the estimating team. This results in lost opportunities and potential customers think the shop is unresponsive. 

 

Step 3: Collecting Requirements for the Quote

The estimator opens the RFQ email and reads the text in the body. This often contains supplemental information from the customer about the quote. This includes: quantities, lead times, and special instructions for manufacturing the attached files. This information is often printed and stored in a folder with the drawings for use in quoting.

The challenge: one primary reason for lost orders is miscommunication. Friction happens when a buyer does not explain a key piece of information. Examples are the urgency of the request or the need for prices on several quantities. This causes unnecessary back-and-forth in the process that usually leads to lost work. This also happens if the estimator misses something in the body of the email and the outcome is the same. There is a high potential for human error in reading unstructured RFQ data from the body of an email.

 

Step 4: Storing Files from the RFQ

The estimator downloads the quote files to a shared drive on the shop’s local server. They are often attached to the email in a zip folder for non-ITAR quotes. For ITAR, there is usually a link with a separate password to access the files through a secure drive.

The challenge: there are many security risks with the servers used to store job files. See our posts on ITAR and Data Security and Why Run Your Job Shop On the Cloud. Storing files on-premise also limits accessibility and indexability of data for future quotes. After winning a job, the risk of producing incorrect parts is higher due to the number of saved versions.

 

Step 5: Viewing CAD Files and Drawings

The estimator then opens the files one by one. These are often solid models and drawings that need grouping if not already done so by the customer.

The challenge: this takes time. There are many clicks and often require an estimator to be onsite at the shop with access to CAD/CAM software. In some cases, shops do not use solid models in the quoting process because they cannot open the file format provided by the customer. In this case, they reverse engineer the solid model from the drawing leaving room for human error.

 

The estimator has not even started pricing parts yet, and already you can see the problems in the process. Most shops miss out on the opportunity to save data in a useful manner for future use. Additionally, experienced people should not do the tasks we have discussed so far. Their time is more valuable on the shop floor managing quality, on-time delivery, and training junior machinists.

 

The series continues in  Part 2: The Quoting Process and Part 3: The Paperless Solution.

 

This article was written by Jason Ray

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Jason Ray is the Co-Founder & Chief Executive Officer at Paperless Parts. Jason drives the company’s product vision, while building relationships with manufacturers and partners. Before Paperless, he served as an officer in the US Navy and led the implementation of additive manufacturing technology. Jason holds a BA (Trinity) and MBA (Babson).