How fabricators accelerate growth through better quoting

What keeps the lights on, sparks flying, and people working? The obvious answer is sales, of course. Sales is after all a company’s lifeblood, and quoting is at the heart of it all.

Unfortunately, what isn’t so obvious to many fabricators, job shops, and metal service centers is that if they are still using spreadsheets, the quoting module of their enterprise resource planning (ERP) software, or a semiautomated quoting system, they are waging a losing battle. These companies are handicapped by the very quoting processes and tools they relied on to grow their businesses.

Companies can double or even triple the number of quotes they’re sending out and do it faster without adding resources. They just need the right software tool.

Speed Kills (the Competition)

With all due respect, there isn’t much difference among all the shops vying for one order. They all provide quality laser-cut parts and offer bending and painting services. They all strive to provide the personal attention that each thinks sets itself apart as they focus on the “relationship” instead of just providing parts. So what sets one fabricator apart from the pack? It’s responsiveness. In today’s digital world, everything is accelerated, even expectations.

“Buyers have come to expect immediate RFQ turnaround,” said Dewey Josephson, operations manager for Modern Tool, Coon Rapids, Minn. “In many cases, if the quote isn’t in their hands within 24 hours, they’ve moved on. Simply put, first in usually wins.”

Modern Tool was once a typical job shop in the way it provided responses to RFQs: It used a combination of spreadsheets, estimator experience, and a semiautomated quoting system. The shop typically took three days or more to complete a quote. Furthermore, jobs requiring nesting could take up to a week waiting for a nest to be built for run-time and material calculations.

Realizing the shortfalls of its old estimating process, the company began searching for a dedicated and robust quoting system. They came across a web-based quoting product and decided to put it to a test.

Modern Tool COO Dale Pahan said everyone noticed an immediate impact when they used the software to process an RFQ for a complex job, which consisted of more than 100 parts, welding, painting, subassemblies, sawing, and the need to coordinate outside purchases.

“Honestly, we probably would have passed on the opportunity to bid as it would have taken several days to quote,” Pahan said. But he decided to use the software and see what it could do. Four hours later the buyer had the quote. The company later won that job.

Automation and Standardization

In addition to speed, automated web-based quoting removes guesswork, the possibility of human error, and subjective interpretation. Standardizing the quoting process across the company eliminates bottlenecks and keeps the line moving. Now any estimator can work on a quote. This is important in meeting deadlines when the estimator who started the process is absent or otherwise occupied.

AWI Manufacturing Inc., Winsted, Minn., manufactures a full line of stainless steel products for the food and dairy industry, including floor drains, trench drains, enclosures, components, hex hangers, tanks, and other custom products. It offers custom fabrication services—laser cutting, laser tube cutting, forming/rolling, welding, engineering, assembly, and finishing (grinding and polishing)—to other industries as well.

While shop floor capabilities were cutting edge, AWI’s process for generating quotes was stuck in the past. It relied on Microsoft Excel as its quoting platform, according to Stacey Hertzog, AWI’s vice president of technical operations and quality.

“It was taking a minimum of several hours to get a quote out,” Hertzog said. “What’s more, entering the numbers manually always presented an opportunity for human error—never a good thing when it comes to putting out bids.”

In a business where margins are tight, accuracy and speed go hand-in-hand. The only thing worse than losing a job is winning one that costs the company money.

AWI found the answer to its quoting shortcomings in a dedicated web-based quoting software tool, which had the added benefit of not requiring estimators to have to manually input multiple sets of information.

“A process that took half a day or more is slashed to 30 minutes or less,” Hertzog said.

AWI is in the process of integrating its new quoting software with its ERP system. Hertzog said the company is anticipating even bigger savings when the systems are fully integrated.

Looking at the Return on Investment

Metal fabricators need to realize that quoting speed and accuracy are only a part of the equation. Getting more quotes out can pay huge dividends. Even factoring in a conservative success rate can increase sales significantly.

For example, if a shop typically puts out five quotes a day using a spreadsheet, with the average quote being $800, that’s $4,000 per day or $20,000 a week in potential work. At a 25 percent success rate, that’s $260,000 in business over a year’s time. Now, if a shop is able to put out twice as many quotes with web-based quoting, that shop has the potential to double its success rate.

Shops are always trying to increase throughput but are usually doing so downstream and missing the true bottleneck. Most organizations pay hundreds of thousands of dollars to add operations to attract new customers. However, they are missing out on a huge growth opportunity within their front-line estimating department.

Using the previous example, if a shop is able to increase its production of quotes from five to 15, because the task now takes hours or minutes rather than days, its win rate rises dramatically as it is beating the competition to the punch and blocking their ability to turn a quote. Now, rather than a 25 percent success rate, the shop might be able to improve on that number.

Every company should be asking itself these questions:

• How many quotes are being sent out?

• What’s the average dollar amount?

• What is the success rate?

That’s when shops can find out how much gold dust is falling through the saloon floor cracks.

How Today’s Quoting Is Done

In the past the quoting process was largely based on some tribal knowledge peppered with a lot of manual measurements, calculations, phone calls, and even a little guesswork. The approach became slightly more “automated” and somewhat standardized through the use of spreadsheet applications. Still, it lacked the sophistication needed to have a real and lasting impact.

When ERP and materials resource planning (MRP) came along, many took a crack at adapting these systems for quoting. But estimating and quoting is neither the intent nor strength of such systems. Most of today’s commercial ERP/MRP quoting systems remain heavily dependent on the user to provide very basic information such as perimeter length, surface area, and number of holes. To get that information, the estimator is expected to load part geometry into a CAD/CAM system and wait for potential cutting paths and nesting strategies to be generated. Those results are then manually entered back into the quoting software. Such a process is slow, hardly automated, and extremely inefficient.

To catch more fish, a fisherman needs more lines in the water. If a shop wants more sales, it needs to get more quotes out and get them out faster.

What’s handicapping most fabricators isn’t the number of estimators they employ, but rather the quoting tools themselves. For a growing number of fabricators, web-based software is turbocharging the quoting process and ultimately the bottom line.

Robert Farrell Jr. is owner, FarrellMarCom Services LLC, 513-284-2618, farrellmarcom@gmail.com, farrellmarcom.com.

Brad Stropes is chief operating officer, SecturaSOFT, 513-813-8111, info@secturasoft.com, secturasoft.com.