What makes estimating effective in metal fabrication?

Estimating usually costs the customer nothing, and yet the person at a custom fabricator who performs it can be central to the company’s success—or failure. Even if everyone in the shop works as if they’re part of one well-oiled machine, the company still can lose money if the estimator gets it wrong.

Estimating has traditionally been a numbers-crunching job. But at some custom fabricators, estimating now entails more than just knowing which operations cost what.

The Right Person

What will it really cost to make this stamping tool or weld that assembly? Estimating requires a close relationship with engineering and purchasing, supervisors and department leads on the shop floor, as well as experts on industry-specific specifications and regulations.

“Our work is in highly regulated industries,” said Teresa Beach-Shelow of Machesney Park, Ill.-based Superior Joining Technologies, a job shop that specializes in high-end, complicated work for sectors such as aerospace and defense. It isn’t unusual for a job to require laser welding, and most work must follow certain specifications spelled out by the Defense Department, FAA, and other organizations.

“It takes a very high-level, talented person to work for us in a quoting position. Our quoting person has to coordinate with the experts in our company on laser welding, nondestructive testing, advanced cutting, as well as industry-specific specifications and certifications,” she said, adding that the quoting person also needs to work very quickly. “We want to turn around a quote within 48 hours. Fast-turnaround quoting is a big deal for us.”

Estimators need to have a sense of what it takes to get a job done at the machine. As explained by David Berdass, vice president of sales and marketing at Circle Pines, Minn.-based Bermo Inc., this is one reason some of the company’s best estimators started their career on the shop floor.

Still, estimating requires broad knowledge about all the fabricator’s processes. One reality, particularly at a 200-employee company like Bermo, is that few have experience in multiple departments. In fact, most spend a few years in one or at most just a handful of areas.

At Bermo, Berdass said that the best estimators often come from either the toolroom or welding—two complex processes for estimating. Experience in those complex processes can make learning the estimating role much easier than, say, someone who comes from laser cutting, which for estimators is somewhat straightforward.

Berdass thought of plenty of exceptions, though. If, say, an operator or supervisor in laser cutting has excellent communication skills, that person may well be a great candidate for estimating. The position is all about communicating, collaborating, and making judgment calls.

“There’s a lot of human decision-making involved with estimating,” Berdass said. “As long as I’ve been in the business, estimating has been free of charge. And as far as I know, it will always be free of charge, so where do you want to best spend the resources? Will there be a payback for the free service you’re offering?” To have an idea, he said, requires knowing the company strategy and communicating with managers, owners, and other stakeholders.

The Structure

Say you have an estimator that you hired from the shop floor’s toolroom. He has years of experience; he’s a great communicator and gets along with everyone, including the owners, engineers, salespeople, and those on the shop floor. It seems like you found the perfect person for the job. But according to sources at some fabricators, that person still may have hurdles to overcome. It has to do with bureaucracy.

The very nature of the estimating job requires that individual to talk to different sources at all levels of the company. Regardless of how well an estimator communicates, he still can be inefficient if he has to acquire approval for too many decisions. A bid may take minutes or hours to put together, but days waiting for someone’s approval. It’s a bit like part flow on the shop floor. There’s little actual processing time, but the papers spend a lot of time as “work-in-process inventory,” piled high in inboxes.

Managers at Miller Welding & Machine Co. (MWM), a 300-employee custom fabricator in Brookville, Pa., recently scrutinized this problem after a major customer—one that was impressed with the shop’s reliable delivery and high quality—commented on MWM’s long quoting cycle.

“The customer said that they wanted us to have the work, but if we couldn’t get quotes back to them soon enough, they would need to start looking for other suppliers,” said Rich Steel, MWM’s lean development manager.

“So we put a team together and did some process mapping.” They found that, depending on the job, it took from a few days to several weeks for quotes to wind their way through five departments.

True, some of these quotes were extremely complicated, but after scrutinizing the process, managers found that many quotes underwent too many hand-offs: to order entry, then to engineering, customer service, process development, and more. “All those hand-offs really accumulated to drive that long quoting lead time,” Steel said.

To streamline this situation, MWM first trained customer service personnel to quote and approve simple items, giving more people the knowledge and authority they needed to process the quote. “We also worked to reduce the number of hand-offs,” Steel said, adding that the company now returns quotes (again, many of which are long and complicated) within days instead of weeks.

Many fabricators have scrutinized their front-office operations. Some group different personnel together—estimators across from engineers and purchasers, for instance—in a “front-office” workcell. Other shops have taken a project management approach, dedicating a cross-trained team of estimators, purchasers, and engineers to bid on and process orders from specific industries that share certain attributes, such as materials requirements.

In most small shops, the CEO or other top manager serves both as the salesperson and as the estimator. In a November survey, The FABRICATOR found that 58 percent of respondents said that the person who sells at their company also plays an estimating role. It’s an efficient approach for the growing job shop.

When a shop grows larger, it often (though not always) hires a sales team. When this happens, a conflict of interest arises if a salesperson also plays the estimating role, particularly if most or all of his or her commission is based on sales volume.

Still, in Berdass’ experience, the more engineering and estimating questions a salesperson can answer while talking with the customer, the greater chance that person has at closing the sale. In these cases, Berdass said that he has found it very effective for the salesperson to be able to think like an estimator and engineer, and suggest design alternatives to save the customer money. Then, to eliminate the conflict of interest, the salesperson emails and calls the office so that estimators ultimately can provide the officially certified quote. In this arrangement, the more a salesperson knows about the company’s processes and basic sheet metal design, the more successful the estimator can be.

Some large operations have even done away with the traditional, commissions-based salesperson. This includes Cortec Precision Manufacturing in San Jose, Calif. Years ago the company answered bids for piece-part work just like everyone else. But about seven years ago, after suffering greatly from the economic downturn, the company restructured and repositioned itself.

Cortec no longer hires or contracts with salespeople to chase down piece-part work. Instead, cross-functional project management teams work with customers through a process the company calls Early Supplier Development Input. It’s all designed to help a customer speed its product to market. In one sense, the company has merged its sales, estimating, and engineering functions into one cohesive, customer-focused team.

“We’re now at the table with design engineering teams at various companies throughout the world,” said Joseph Villareal, Cortec’s global business and new product introduction development manager.

Cortec’s dedicated project management teams work with customers early in the design phase of a project. And because no one on the team earns a commission on specific orders, but instead receives bonuses and other incentives (like everyone else) based on overall company performance, no conflict of interest exists.

Technology

From the customer’s perspective, a responsive sales and estimating team sets a fabricator apart from the competition. What doesn’t necessarily set a fabricator apart is the actual numbers crunching behind the quote. Here, software—which is all about numbers crunching—may fill a need.

Some fabricators, including Bermo, have started to automate certain aspects of its quoting function. Berdass named the fabricator’s system after his grandfather, company founder Fred Berdass. It’s called F.R.E.D., or First-of-its-kind Rapid Estimate Delivery. Launched in 2015, the automated quoting system can process a single CAD file or batch-process multiple CAD files, all with a few mouse clicks. Estimators review the results and approve them with another mouse click. The system effectively automates the numbers crunching behind cut, bent, and (as of late last year) welded parts.

Bermo isn’t the only fabricator automating estimating with software. As reported by The FABRICATOR in 2015, Burlington, Ky.-based Skilcraft hired a software developer to write a proprietary quoting program for its estimating and engineering team. (See “Continuous improvement, from the first quote to the final shipment,” archived at thefabricator.com.) And in October 2016 RAPID Manufacturing, a custom fabricator and machine shop in Nashua, N.H., announced the launch of its quoting system, myRAPID. According to a company press release, “myRAPID now allows customers to quote multiple parts at the same time by simply dragging and dropping part files onto the quoting web page.” For some quotes, the system provides instant pricing, while others the company can turn around in 24 hours.

Berdass said he doesn’t expect his company’s software to remove the human element of estimating entirely. Instead, it will give estimators more time to work with engineers and salespeople, develop new ideas, and help save customers money.

For instance, instead of simply running the numbers for an RFQ on, say, a fabrication that uses 0.25-in.-thick material, he can communicate with engineers and help the salesperson suggest thinner material with stiffening ribs, where the cost savings on material far outweighs the additional processing costs to form the stiffening ribs. And with a few clicks, he can run the numbers on both alternatives. The customer now receives both options, and Bermo now stands out among the competition.

This, perhaps, is how a custom fabricator can make the “free” service of estimating pay for itself many times over.