Faster quoting in manufacturing: where quote turnaround time goes

On Monday morning, an enquiry comes in. A customer wants a machine that's slightly different from usual. Inside sales passes it to production engineering. On Friday, it's still sitting there. Nobody is being lazy. A drawing has to be made first, and the draughtsman is busy with a rush order. Once the drawing is done, the enquiry goes to the estimator, the person who works out the cost. Then it goes to the sales manager to approve the discount. The customer gets the quote two weeks later. Of those two weeks, maybe one day was real work.

If that sounds familiar, typing faster won't help much. Neither will a nicer quote template.

Follow one quote from enquiry to customer

The best first step is free. Take a few recent quotes and trace the path each one took. For every step, write down two things: how long someone actually worked on it, and how long it sat waiting.

Do this for a handful of quotes from different product lines. You'll spot a pattern quickly.

Waiting is often the biggest part

If your waiting time is longer than your work time, you know where to win time back. A quote waits in engineering's queue, because the same people are also finishing current orders. It waits for the customer to reply, because the enquiry was missing details. It waits for approval, because the sales manager is travelling.

That changes the question. It isn't about making the estimator calculate faster. It's about making a quote cross fewer desks. There are three ways to do that:

• Fewer quotes to engineering. Once the rules are written down, a standard version doesn't need an engineer.
• Better enquiries. A configurator is software where you build a product by picking options. It only lets you pick combinations that actually work. So fewer questions go back and forth.
• Clear approval limits. Decide how much discount a sales rep can give on their own. Anything above that goes through an approval workflow: a set route to someone who says yes or no.

Engineer-to-order quoting

Engineer-to-order (ETO) means a product is partly designed after the customer orders it. For ETO companies, the engineering queue is the obvious suspect, because almost every enquiry seems to need an engineer. But look closer. An order is often a configurable core plus a smaller part that needs real engineering. Think of a kitchen: the cabinets come in set sizes, and only the corner piece is made to fit. If the core can be quoted from rules, engineering only has to price the part that's truly new. The difference between ETO, CTO and the mixed forms most manufacturers actually have is explained in ETO, CTO, MTO and ATO explained.

What research shows

There is research on how much time configurators save. But it's old, and only a few companies took part. Here's an honest summary:

• Haug, Hvam and Mortensen studied 14 engineering-oriented companies in 2011. The estimated cut in quote lead time averaged 85.5%. The largest estimated cut was 99.9%. Lead time is the time from enquiry to quote sent. Note: these are estimates, not measurements.
• Hvam and Christensen described a supplier of cement plants in 2006. There, the lead time for budget quotes went from 2 to 5 weeks down to 1 to 3 days. That's one company.
• Hvam, Mortensen and Riis wrote a book in 2008 covering more than 40 configuration projects. It reports shorter lead times for products and quotes, and fewer specification errors. It gives no percentages.
• Trentin, Perin and Forza ran a larger study in 2010. It covered 238 mid-sized to large manufacturing plants in three industries and eight countries. Plants that used a configurator also tended to do better on time. It doesn't say how big that effect is.

There's also a caveat. In 2015, researchers noted that studies do show configurators bring time savings and better quality. But empirical research into what they mean for a company's wider business is very limited. Empirical means based on what is actually measured and observed.

So what's the takeaway? The studies all point the same way, but the numbers are uncertain. Be careful with any quoting software that promises a fixed percentage. Your own measurement from the first step tells you more about your company than any study.

What you can capture in rules

Not every quote is the same. For each product line, look at what you can capture in rules. A rule is an instruction a computer can follow, like "if this, then that".

• Options and what can't go together. What can the customer choose? Which choices don't fit with each other?
• Sizes within a range. For example, a width between two values, with rules for what changes along with it.
• How the price is built. Per piece, per metre, surcharges and discount limits. Those are your pricing rules.
• What production needs. A bill of materials (the list of parts and how many of each) or the key sizes. Then production engineering doesn't have to start from scratch.

If much of this knowledge lives in a spreadsheet, or in one estimator's head, read CPQ vs spreadsheets first.

What stays with engineering

A configurator doesn't replace engineering. It takes away the repeat work, so engineers have time for what's truly new:

• enquiries outside the set sizes or combinations
• new uses or unusual customer requirements
• products asked for so rarely that writing rules doesn't pay off

A good configurator shows when an enquiry falls outside the rules, and passes only those enquiries on.

A first step

Don't start with software. Start with the table above. Fill it in for five to ten recent quotes. See where the waiting happens. See which product line gets the most enquiries. That's where you write rules first.

Only then does it make sense to look at systems. CPQ stands for Configure, Price, Quote: building the product, working out the price and making the quote, all in one system. What it is and how it works is explained in What is CPQ?. Which system fits your product is something we work out together in CPQ consulting and selection. We have no preference for any vendor.

Want to know where the time in your quotes goes? Tell us how an enquiry moves through your company, and we'll look at it with you. Get in touch, or read more on CPQ Consulting & Selection.