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How Improving Quoting Will Grow Your Business
By Chintan Sutaria, CEO, CalcuQuote
ten asked, “How will improving the RFQ process help my business?” Our customers have proven that actively managing the RFQ process has a sig- nificant impact on every level of a company’s value.
A
Win More Business Hockey legend Wayne Gretzky
said famously, “You miss 100 percent of the shots you don’t take.” This is ab- solutely true for quoting. By placing more bids, you present your compa- ny’s value proposition to potential customers when they are close to making a purchasing decision. Of course, to win more business, you must do more than simply bid, but you cannot possibly win business by not bidding. Therefore, if you do not have the capacity to respond to RFQs quickly, as more requests come in you will not be able to deliver quotes fast enough to earn a customer’s business. Proactively engaging a cus-
tomer at the beginning of a sale will also help you win more business by
s the creators of a comprehen- sive quote management system for EMS companies, we are of-
proving to the customer that you have the expertise, and that you are attuned to the customer’s needs. No one likes to do more work than neces- sary when buying, so ask qualifying questions and make critical sugges- tions to the customer before pricing the assembly. It means a lot to a cus- tomer if you advise them on potential risks — end-of-life components, for example — and make suggestions be- fore they become a problem. Get all of your questions or concerns out of the way at once, and you will not need to pester the customer with ad- ditional inquiries later. Stay flexible with how you accept customer data, but providing a customer with for- matted documentation or templates will help to manage RFQs from their side effectively and could be the be- ginning of a strong, collaborative re- lationship.
Keep Happy Customers In EMS, more than most other
industries, customer retention is the name of the game. A customer’s re- turn to a contract manufacturer (CM) is an affirmation of the CM’s previous
work and the beginning of a long-term relationship with the client. The chal- lenge then becomes to ensure that the customer never needs to request a quote from another manufacturer. What you do not want to do is to give the customer any reason or justifica- tion to engage your competitors, such as failing to quote a project quickly. Instead, get the quote back to them as soon as possible. The other, often overlooked,
point of consideration is the quality of your work, not only in the assembly process, but also in your communica- tion with customers. An erroneous quote, or a quote that excludes key in- formation, will cause the customer to doubt your abilities. It is valuable to have a quality control step in the RFQ process that resolves any problems or concerns before sending the quote back to the customer. Rather than making the customer proofread your work — or worse, compare it to the work submitted by one of your com- petitors — ask clarifying questions to price the assembly accurately. A risk assessment process is also useful when evaluating what issues may arise with a project before delivering the quote.
Cut Costs Where do EMS providers spend
the most time in the RFQ process? The unfortunate answer is that in many cases, non-value added trans- actional activities are the most time- consuming and painstaking. Bill of materials (BOM) formatting can take hours, and materials pricing can take weeks in extreme cases. By es- tablishing a mature RFQ process, you can effectively reduce a lot of the waste and rework that grinds down your process efficiencies. The second most significant
way to reduce costs is to make good decisions with your time and pur- chases. In a low-volume quote with a hundred line item BOM, why waste time shopping around for the 0402 resistor that costs a fraction of a pen- ny? That time far outweighs the val- ue of the component. Instead, priori- tize the hard-to-find, expensive line items. This is more cost- and time-ef- fective, and the cost savings on the more expensive components will prove your thoroughness to the cus- tomer. Having said that, typically it is bad practice to have only one sup- plier price a BOM. Especially for ex- pensive components, request bids from several distributors to find who has items in stock for the best price. A disconnect between quoting
and purchasing can mean over- or under-stocking inventory. If you quote exact quantities during the RFQ process, do you buy with over- ages? Who pays for the excess? If you do not charge the customer in some way, the price of the excess cuts into your margin. Also, it is not advisable
to purchase exact quantities because inevitable line shortages will slow down production. You do not want to pay $25 rush shipping for a 0.002 cent part that is holding up your SMT line. By taking into account set-up
and run scrap during the quoting stage, you can be more accurate in the price you present to your cus- tomers, and purchase components accordingly. In fact, you could even use the BOM cost from the RFQ process to directly place purchase or- ders with your suppliers.
Keep the Right Business While no one likes to turn busi-
ness away, it is important to know your core competency and whether or not you can meet a customer’s de- mands. A CM that specializes in batches of hundreds of thousands is probably not the best candidate for a prototype job. Likewise, just because you built a prototype or small batch successfully does not give you the ca- pacity to build a run of 50,000. In fact, it is rare that a manufacturer can do both well. Focusing your sales and marketing efforts on work that suits your strengths will result in greater customer acquisition and satisfaction. Finally, your RFQ process
should not end when the quote has been delivered. A business develop- ment team should not only be con- tacting the customer to inquire about the bid, they should be tracking the key performance indicators (KPIs) that drive their business, including win/loss ratios by customer, salesper- son, and by quantities quoted. This will help you recognize patterns, good or bad. For instance, if you’re consistently winning prototype and very small-batch bids, but never the large volume projects, you should be able to identify whether your produc- tion capacity or pricing strategy is the limiting factor. While quantita- tive measurements are essential to improving the RFQ process, it is im- portant to always connect with your customer to discuss any qualitative reasons for their choosing another manufacturer. The answer is not al- ways easy to come by, but the inquiry you make will help identify underly- ing issues and the changes needed to grow your business. By establishing a uniform quot-
ing process, you will deliver bids faster, more accurately predict your assembly costs, and identify the strengths and weaknesses that dif- ferentiate you from your competi- tion. This is a powerful example of how creating front-office efficiency can improve your operations across
the board. Contact: CalcuQuote, 3215
San Sebastian Drive, Carrollton, TX 75006 % 909-278-8233 E-mail:
info@calcuquote.com Web:
www.calcuquote.com r
September, 2016
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