Quoting: Improving speed and accuracy
Do you know how your portfolio company quotes finished goods? Historically, sales representatives have been responsible for developing the methods of which quotes are produced with little involvement from the parties responsible for buying and producing finished goods. With the ever-changing business environment and customers altering how they work with suppliers, developing a robust quote process that is accepted by key stakeholders and justifiable to business leaders is a must. At times, sales can be inundated with quotes. Although having more quotes equates to more opportunities, inconsistency in the quote process becomes a liability which can lead to the sudden loss of an account.
Where to begin?
Building the framework around the quote process begins with assessing the ‘current state’. The most efficient approach to developing this assessment starts with a model that accurately depicts all functional elements and their relationships to the quote.
Some key functional inputs include:
- Baseline costs e.g. labor & overhead
- Finished good attributes
- Standard production routers (bill of operations)
- Scrap calculation
- Target margin
In addition, clearly defining people within the organization who own or who are responsible for administering, developing, and maintaining the process is important. All too often key stakeholders that should be involved in the quote process are left out. For example, accounting is responsible for updating and communicating labor and overhead costs while production focuses on labor standards and scrap accuracy.
After performing the current state assessment, the next step is to identify process improvement gaps that will lead to the ‘future state’. Promontory Point Partners has conducted this type of assessment for many clients and successfully re-defined the quote process by eliminating waste and integrating the right functional departments. In most cases, Promontory Point significantly cut down the time it takes to produce an accurate quote.
Developing quote transparency through cross functional synchronization will help the entire organization and improve bottom-line results. Material price erosion, increasing customer sophistication, shorter product life-cycles and unexpected events are impacting the way companies quote. What worked in the past might not be relevant in today’s business environment and it starts with quoting. Some companies rely on fragmented processes and spreadsheets to produce quotes, which mask the true manufacturing costs and profit margins. Leveraging the methods built into a structured planning process will help facilitate quote accuracy by getting the right stakeholder involved and justifying results to business leaders.
Contact Jeff Vogelsang @ (312) 925-9972 firstname.lastname@example.org for more information on how to conduct an accurate assessment of your portfolios quote process.