Mastering the process for custom metal fabrication quotes

At some point, all custom fabricators must win new business to keep the shop running, and new business comes through the quote process. What is it about quoting that makes it both exhilarating and intimidating?

Let’s assume your fabricating company has a mix of repetitive and nonrepetitive (that is, project-focused) business. Half of your demand is predictable and half is not. Unless you recognize quoting as a “process,” you are bound to incur confusion, starts and stops, frustration, and other not-so-good descriptors. It can be a real test of wills for the people in your company.

Organize the Quoting Process

One way to develop a disciplined quoting process is through process mapping. Once you map the process, you’ll see that quoting requires information from across the company. Sales provides customer inputs; engineering provides design and technical information; production provides information about capability and capacity; supply chain and purchasing personnel provide materials availability and costing data; and finance provides information about working capital. No wonder the quoting process is both exhilarating and intimidating. You have so many cooks in the kitchen!

Before you start mapping, determine who needs to be involved. We just identified most of the relevant functions. Even if all these people are not directly involved, their perspectives do need to be represented. So in addition to top management, the quoting process improvement team could include an engineer, the sales manager, a customer service rep, the production manager, the supply chain manager, and the finance and accounting manager. Also be sure you include people from all levels in the organization, so that you involve some who actually do the quoting work.

Decide if you are going to map the quoting process in one fell swoop (maybe at a one-day, off-site retreat) or in short bursts (maybe two-hour sessions at the plant spread over several days).

The materials for the process mapping exercise are as basic as basic can be. Get a roll of brown shipping paper, several colors of Post-It® notes, Sharpie® markers, and a roll of masking tape. It sounds old-fashioned, but it works. Find a quiet space with a big flat wall. Get the chairs out of the area … this is a stand-up, high-intensity, hands-on way of analyzing and defining a process.

Hang the brown paper on the wall. Give yourself more space than you think you will need; believe me, you’ll need it. Put a few basic pieces of information on the brown paper. This includes the process name, scope, start and end, current or future state (depending on which you’re mapping), and date. Also define the initial “swim lanes”—where you’ll write the sequential tasks a person performs—and draw the lanes just as they would be in the lap pool. A good starting point is to include all the functions addressed above, plus the customer.

You are almost ready to start mapping, except for one missing item—the ground rules. These bring discipline to the process. You may have different ground rules that are unique to your environment, but some ground rules might include:

1. Start and end the mapping sessions on time.
   
2. Be respectful of one another.
   
3. Only one person should speak at a time.
   
4. Try to understand the other person’s perspective.
   
5. Don’t let electronics disrupt the flow of the working sessions.
   

Define the Current State of the Quoting Process

You have your team assembled. Now it’s time to start mapping. First, define the current state of the quoting process. In our hypothetical example, the scope will be the nonrepetitive, project-focused quotes, simply because customers have repeatedly said that slow turnaround of these kinds of quotes is a weakness.

You have asked your company’s lean process improvement manager to facilitate. She has a general understanding of the business and has proven lean implementation experience. She will keep the project team focused, minimize disruptions, and be an objective resource. Without a facilitator, the project team would likely have difficulty coming to a successful conclusion. Strong opinions and thin skins can get in the way of progress. The facilitator works through all those potential disruptions.

The current-state process mapping starts off slowly. A few Post-It notes get placed in the respective swim lanes, but they don’t tell the story yet. The facilitator asks lots of questions to clarify specific notes. Different team members begin to build on what each other is saying or writing. Now there is some momentum.

As the detail on the process map begins to fill in, it becomes clear where the handoffs are missing, the double data entry is occurring, and key pieces of information are not being identified. It also becomes clear where process breakdowns occur and how those breakdowns prolong the time it takes to complete a quote.

As the project team steps back from the current-state process map, people see weaknesses, breakdowns, redundancies, and timing pitfalls. Based on what they have learned from the current state analysis, the facilitator turns the team’s direction to the future-state development.

Define the Future State

The future-state process map shows what you could be doing. Don’t be encumbered by the way the work is done today. The facilitator helps the project team members understand that they need to stretch their thinking. As the team brainstorms, the customer service rep comes up with what sounds like an outlandish idea. The facilitator takes it in stride, treats the idea with respect, and places it on the list of brainstormed ideas.

Sure enough, the engineer on the team builds on that idea, which results in a very productive exploration of a new way to do the quoting process. Had the customer service rep not had that seemingly outlandish idea, the project team might never have gotten to the future state that had many saying, “Wow, I never would have thought of that!”

When mapping the future state, look for ways to combine or eliminate tasks, reorder or redistribute work, and use existing technology to address weaknesses and accelerate the process. The future-state quoting process should eliminate surprises, reduce risk, and meet customers’ needs.

The final step is to identify gaps between the current and future state. These gaps represent the work you need to do to achieve an improved quoting process. Know that it’s unlikely you will achieve everything, but don’t let that stop you from being aggressive and reaching far.

Best Practices in Custom Metal Fabrication Quote

To make quoting smooth and efficient, all parties must have a common understanding of timing. A documented plan that defines timing for everyone involved in quoting, along with a firm deadline and dates for reaching key milestones along the way, will help keep the process on track.

Decision-makers need to understand the timing of working capital requirements. For example, say you have to buy expensive materials early in the design and build process but cannot bill for the work until much later, when the product ships. Your company must be able to finance the long lead-time material, or you must arrange to get an earlier progress payment. Either way, having a clear understanding of timing is critical to success.

You may find that tooling can be an issue. If you can use soft tooling or repurpose existing tooling, you could avoid any major commitments to tooling costs. If, on the other hand, you do invest in hard tooling, you must understand who owns the tooling asset, you or the customer. If you own the tooling, how will you amortize it across some volume of product?

The quote process is the first opportunity for you to begin to manage risk. Some risks depend on a fabricator’s unique situation, but most are common risks across the board, like placing more work with an already large customer (having all your eggs in one basket) and the risk of exceeding capacity on an already constrained piece of equipment. The idea is for you to understand what risks are relevant to your business and go into the quote process with your eyes wide open.

Another quoting best practice is to assess how well you have collaborated with the customer. Do you understand each other’s strengths and weaknesses such that both parties take advantage of that knowledge, and both parties are stronger as a result?

In short, the quote process presents an opportunity to evaluate whether the potential business makes sense for your company. If it does, great. Go make it happen. If it does not make sense, tread carefully. It may be better to walk away from new business than to take on something your company cannot handle.

Regardless, the importance of effective quoting cannot be overstated. The quote process is the gateway that turns demand into orders, sales, and gainful employment of your workforce. Turn your quote process into a successful machine. Put it to work!

Jeff Sipes is principal of Back2Basics LLC, 317-439-7960, www.back2basics-lean.com. If you have improvement ideas you’d like to read about, email him at jwsipes@back2basics-lean.com or Senior Editor Tim Heston at timh@thefabricator.com.

One way to develop a disciplined quoting process is through process mapping. Getty Images