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Build your custom metal fabrication sales pipeline

Refine the process, from prospecting to quoting and preproduction

Illustration of sales pipeline

How does a cold call turn into a fabricated part? To find out, define and refine the revenue pipeline, from prospecting, sales, and estimating through preproduction. Getty Images

A typical custom fabricator deals with a host of problems, and it might pursue various improvement programs to rectify them. A shop might map processes to the nth degree. Standard work for the press brake might incorporate an iPad with photos and animations about proper tool selection and organization, in-process measurement techniques, and more.

But what about sales and quoting? They’re the revenue pipeline that make a custom metal fabricator sustainable. At many shops, the president/CEO acts as the primary salesperson; others might hire in-house salespeople or rely on manufacturer’s reps; and quoting occurs in estimating and engineering—but what are the steps involved? What happens between that first cold call to a prospect until the first job from that prospect (now customer) hits the shop floor? What’s the process, and can it be improved?

Attitude and Communication

Sales and production sometimes fight a fierce battle of perspective. Production asks, Why do salespeople give us work we can’t produce? Sales asks, How can production ignore what customers are demanding?

“I’m stealing the following insight from a client of ours,” said Anthony Colarusso, president of Littleton, Colo.-based SALT Marketing, which works with various custom fabricators on lead generation and prospecting. “The best environment is when production says, ‘If you can sell it, we’ll figure out how to make it,’ and when sales says, ‘If you can make it, we’ll figure out how to sell it.’”

Colarusso added that this sentiment can’t be taken to extremes, of course. A sheet metal shop isn’t about to just “figure out” how to roll 6-in.-thick plate. Guardrails need to be established to define a fabricator’s core competencies, its sandbox.

Even so, sales and production collaborating in the right way can help the sandbox grow. How do sales and production work together, exactly? A first step can involve refining what happens between sales and production: the quoting process.

Do We Quote It?

A request for quote (RFQ) lands on an estimator’s desk. He looks at the drawing, then sends a message back to the salesperson saying the shop can’t make the part. How do sales and estimating approach this, and what does a no-quote say about the shop’s operations, both on the floor and in the office?

According to Jason Ray, CEO and co-founder of Boston-based Paperless Parts, how a no-quote is communicated to the customer matters. The worst thing a fabricator can do is respond slowly, with no communication between the time the RFQ was submitted and the no-quote notification was delivered. “That just leaves a bad taste in the buyer’s mouth,” Ray said, adding that such a slow response could damage a shop’s reputation. At the very least, a quick no-quote response—within hours or even minutes—at least says that the shop values the buyer’s time.

“Sending a quick no-quote to a customer should be seen as a communications tool to describe a shop’s capability,” Ray said. “If the part is, say, too large for the equipment in the shop, you need to communicate that quickly.”

Theoretically, if a fabricator had a perfect sales and quoting process, it would never need to send a no-quote. Perfection is an ideal, not reality, so a fabricator won’t eliminate no-quotes entirely, but as Ray explained, a shop can work to minimize them. The first step, as with any process improvement, is to analyze the current state: What kinds of no-quotes are sent out? This varies with the fabricator, of course, but Ray described a few common categories.

sheet metal manufacturing

Prospectors don’t perform in-depth part drawing analyses, but they do know what sets a fabricator apart, like its ability to take a project from prototyping through low-volume production (manual press brake), medium volumes (robotized press brake, automated folder), to high-volume production (stamping). Getty Images

The Binary No-quote. These occur when the fabricator simply does not have the equipment to perform the job. This reveals a communication problem. If the RFQ came through a shop’s sales function (be it in-house sales or an outside rep), that means the fabricator hasn’t clearly communicated its capabilities.

Salespeople can learn from engineering and tour the fabricator’s plants, but they also can use software, especially if they’re lucky enough to receive a solid model. Sales (or even the customer in some cases) can upload a part or insert information into software, which then performs a quick manufacturability check. It might not be a deep-dive analysis, but it at least catches obvious problems that need to be addressed.

“A big challenge in job shop and custom manufacturing in general is that the entire supply chain is not reading off the same sheet of music,” Ray said, adding that software combined with traditional communication (phone calls and emails) helps get everyone on the same page.

What if a no-quote is for an RFQ submitted over the fabricator’s website? Sales hasn’t had any contact with the company, but it’s a reputable operation, perhaps even local. Even so, the parts in the RFQ just aren’t what the fabricator does. It might be tempting to reply with a quick no-quote email and let it be, assuming those odd RFQs are just unavoidable in the internet age.

Odd RFQs might be unavoidable, but as Ray explained, they still can be minimized. The shop can’t publicize parts from customers that have nondisclosure agreements, of course, but it could fabricate sample parts and post them online to help describe what the shop’s core capabilities are. Some shop websites offer reference material, definitions of key terms, and perhaps links to other manufacturing resources. If time permits, it might even be worth it to reach out to the prospect who submitted the RFQ over the website for feedback.

Of course, the website is a marketing tool, not a gatekeeper, so it should always emphasize what a shop can accomplish, not its limitations. But as Ray explained, the site’s design and content should at least help draw a target audience.

The Guardrail No-quote. The binary no-quote is clear-cut: The shop just can’t produce the work no matter what. But then there’s the gray area—work outside the sweet spot that’s not impossible but still challenging. And if the shop’s busy, such work could be incredibly disruptive.

“When times are good, shops have very narrow guardrails on the type of jobs they want to work on,” Ray said. “When the shop floor is very busy, there is a low margin for error. As the floor gets emptier, shops widen the guardrails a bit more.”

Job flow in a fab shop is like cars on a highway. A challenging job causes someone to tap on the brakes, creating a slight slowdown that can snowball into a complete traffic jam in a busy shop. The shop ends up delivering the challenging job late and, even worse, forces other jobs behind schedule. Conversely, an emptier shop can afford a few operational hiccups and still deliver challenging jobs on time.

Various improvement techniques—lean manufacturing, theory of constraints, quick-response manufacturing—aim to keep even the most challenging jobs flowing. Some in the industry have advocated for a preproduction department—basically a shop within a shop—that develops optimal setups and procedures for a job before it’s released to production (see “A new look at the job shop organization chart.”)

A challenging job might go through a basic manufacturability test during quoting, but once the job is won, it might go on to a preproduction department to iron out any final issues. Once a job hits the floor, most manufacturability issues (theoretically) should already be addressed. Sure, a last-minute design change from the customer might cause some disruption, but nothing too dramatic if processes in sales, quoting, and preproduction are refined to handle those changes.

This in turn can make those “quoting guardrails” more stable during periods of varying demand and workloads, with less of a need to narrow them during busy times. A job might be challenging, but robust processes before production make it less likely the job would cause disruption.

Quoting Prioritization

Of course, all this assumes estimators have time to submit a quote. Ray described a situation in which a fabricator answers only a small percentage of the RFQs received.

“Say you have a great sales team doing great work and generating all these opportunities, and yet estimators respond to only 5% of the RFQs they receive. They’re wading through an ocean of unprioritized quotes, trying to get out as many as they can.”

He added that this situation points to two problems. First, “the sales team isn’t getting any feedback as to what the right kinds of RFQs are.” Second, estimators aren’t prioritizing strategically for maximum throughput. “They really just prioritize by customer. They want to return a quote to good customers first, to keep them happy,” Ray explained. They then tackle RFQs from OEMs they recognize. “They see, ‘Oh, this looks like a big name; I’d better get this one out.’” If that quote is complicated, though, it can be a serious constraint. “Meanwhile, they have eight other quotes that they could have finished in 15 minutes, which could have brought in new work from new customers.

“It’s a compounding problem,” Ray continued. “The more successful your salespeople are at generating RFQs, the larger the ocean of RFQs estimators need to wade through. And if salespeople aren’t in the communication loop, you end up in a tough spot. Sales gets mad at estimating, because they couldn’t get a quote in time; and estimating is mad at sales, because they keep giving them work that isn’t a good fit for the shop.”

As described previously, keeping sales on the same sheet of music—basic knowledge of a shop’s capabilities, even quick manufacturability checks with software—helps prevent those RFQs that aren’t a good fit. But that’s just half the equation; the other half has to do with quoting prioritization.

“It comes down to a core principle,” Ray said. “In manufacturing, geometry drives everything. Ideally, shops should prioritize RFQs based on overall value and overall complexity.”

Defining “overall complexity” is relatively straightforward. The more cutting, bending, welding, outside processing, and other manufacturing steps there are, the more complex the job. Simple jobs today can be quoted extremely quickly, especially with quoting software. “I could spend two or three days quoting a complex job but miss opportunities to quote several simple jobs quickly,” Ray said.

Defining “overall value” is a bit more complex. Value can incorporate a job’s duration and potential revenue, but that’s just one element. “You could also define overall value by looking at a job as an opportunity to win a new customer, build a relationship, and demonstrate your shop’s capabilities,” Ray said.

Establishing overall value might also incorporate past bid-win-rates with a particular customer. “Knowing win rates is so critical,” Ray said. If the win rate is low or zero, why? Is the problem with the quote, or is the customer just fishing for pricing and feedback?

Assumptions can be dangerous in the world of quoting, so a quick call can do a world of good. If an estimator receives a 300-line-item RFQ, he can call to ask when the customer needs the quote. Is the customer in a bind? Or does the estimator have a few days because the buyer is waiting on several other quotes? This not only helps the estimator prioritize, it also gives a rough idea of the competitive situation.

All this information feeds into an RFQ evaluation that uses filters to establish a priority. What those filters are and the weight of each depends on a fabricator’s business goals. If it takes only minutes to quote, a simple job might take priority over a more complex one. But factors related to a quote’s “overall value” must fit into the equation too. Window-shopping customers and others with low win rates might have a lower priority over more active customers. A prospect that the sales department has been working on for years might take priority over a time-consuming RFQ from an unknown company.

Of course, the quoting process itself should be scrutinized as well. As Ray explained, software has helped make quoting extremely accurate for some jobs—especially those involving only cutting and bending—but there’s also only so much about the job that an estimator can predict with accuracy.

Say a shop receives a 50-item RFQ and then quotes the items assuming all the parts will fill an entire nest on a sheet. The quote takes into account a plethora of details, including common-line cutting to get maximum material utilization.

“Then the customer picks only five of those 50 items,” Ray said. “Now all that efficient nesting doesn’t mean anything anymore.

“I’m a big fan of looking at historical trends,” he continued. “If, say, an RFQ includes flat parts that are no bigger than 6 by 6 in., I know my material utilization is going to be about 85%, and I’ve looked at the history to come up with that average. I don’t need to nest it.

“Many successful shops tend to use averages when they quote, which allows them to quote very quickly. This allows them to win more work, which allows them to pick and choose which parts go on which sheet in the most efficient way possible. If you quote slowly and win fewer jobs at a time, you lose those economies of scale.”

In quoting, speed can reign supreme, especially for customers expecting immediate response. And from the fabricator’s perspective, lengthy quoting can lead to a lot of wasted effort if the bid is lost—hence the need for an established RFQ evaluation and prioritization process. Ray summed up quoting this way: “The goal of quoting is to win the job at a profitable rate without having to spend enormous amounts of time.”

The Sales Pipeline

Robust quoting supports a robust sales team, but what makes a sales team robust? According to SALT Marketing’s Colarusso, here’s where division of labor comes into play.

“A successful business will grow production capacity with sales,” he said. “That said, a lot of business managers say, ‘We need to increase sales capacity.’ But they don’t know what their sales capacity really is. One issue is that the area of sales does not benefit from specialization and the division of labor we see in other areas of the business. In accounting, you have bookkeepers, accounts receivable, and accounts payable. In the shop we divide the labor by task or manufacturing step. But for the sales function, especially commission-based sales, people build a list, prospect, set meetings, negotiate the price, work with engineering, close the sale, then support that customer.”

According to recent editions of the Financial Ratios & Operational Benchmarking Survey, published annually by the Fabricators & Manufacturers Association, the typical custom fabricator has between four and seven customers that make up at least 50% of the shop’s revenue. High revenue concentration introduces risk, and as Colarusso described, the way the sales function is structured might be a contributing factor.

He described a typical scenario in which an entrepreneur—someone who might have held some kind of management or sales function at another fabricator—launches his own shop. He first sustains the business through purely word-of-mouth sales, but eventually decides to expand the sales function and hire four salespeople. They could be employed by the shop or a manufacturer’s rep. Regardless, they’re all incentivized by commissions.

“These four people help build a successful business,” Colarusso said. “They might have a portfolio of, say, 10 customers that collectively bring $5 million in sales. But their time is a limited commodity, and they need to protect and maintain that existing business.”

Just as estimators often answer RFQs from existing customers first, salespeople spend most of their time maintaining existing accounts. And they’re incentivized to do so, Colarusso said, because of how success in sales is measured. “Shops usually don’t look at ‘cold’ activity—how many calls salespeople make or the number of quoting opportunities they create. It’s all about, ‘What did we close?’”

Colarusso added that this approach can work against the make-to-order model of most job shops. “If you’re in a make- or engineer-to-order environment, your sales pipeline is so important. You need to have a pipeline of customers placing custom orders. This means your sales capacity needs to exceed production capacity. A good sales pipeline allows you to price strongly and pick the customers you want to work with. The question is, how do you get to that point?”

Sales and Prospecting

The challenge goes back to how the sales process is measured and structured. As Colarusso explained, salespeople are told to “go out there and close,” but the exact steps they take to make that happen aren’t clear. Some salespeople might be good at prospecting but perhaps have fewer, lower-maintenance accounts to support. But in most cases, prospecting takes a low priority to everything else.

To this end, Colarusso recommends dividing the labor into separate functions, including people dedicated not to sales, but to prospecting. Colarusso calls them “hunters.” They research the market, develop and qualify lists, make cold calls, find the decisionmakers, build the relationship, then deliver that relationship to sales, who then aims to turn that qualified prospect into a customer.

The key to prospecting, Colarusso explained, is keeping in touch. Traditionally a salesperson might prospect when time permits, perhaps following up with a holiday card once a year. Between that last point of contact and the holiday card, though, the prospect might have had a hot order due to a machine breakdown—and because sales didn’t stay in touch, the prospect didn’t think to call.

“It’s about timing,” Colarusso explained. “The prospect might not have an immediate need, but I know the company buys metal fab, and I know who the decisionmaker is. Now I need to build a relationship with that person and wait for the opportunity to be right. And if I’m consistent, and I keep in touch regularly, eventually something will happen; the prospect might have a hot order or problem part, or another supplier will go bankrupt. Or, say, a pandemic forced plants to shut down. If I’m consistent, I will have a shot at new business.”

Colarusso makes a distinction about how prospecting differs from sales and quoting: “We’re hunting the company, not the project.”

Hunters still need to know a fabricator’s core competencies and selling points. For instance, a fabricator might have soft tool fabrication, stamping, and a robust toolroom to support them both. This means a single supplier could carry a part or project from its low-volume beginnings through higher-volume production (with stamping), then back to lower-volume fabrication to support the aftermarket. And if a fabricator can work with material only 0.5 in. and thinner, a hunter shouldn’t be spending time with companies that need only thick plate fabrication.

That said, hunters aren’t digging deep into part drawings. They’re evaluating a customer’s potential to support the fabricator’s goals for growth. “If the hunters do their jobs correctly, they can identify a good potential customer very quickly,” Colarusso said.

The Flow of Sales

Consider a fabricator with a sales pipeline comprising four steps: prospecting (hunting), sales, estimating, and preproduction. Prospecting starts the flow with a steady stream of potential customers. Once the potential customer has a need, the project flows to sales, which carries that established relationship further by discussing specific projects. Sales receives basic information about the RFQ (such as when the prospect needs a response), then passes the RFQ on to estimating, which works with sales and prioritizes RFQs based on their complexity and value.

Won jobs pass on to preproduction, which comprises engineering and a group of sheet metal gurus who can carry a part through the most difficult aspects of fabrication. Once the new job hits production, there are few surprises that people on the floor can’t manage, so the product ships on-time to a happy customer.

The flow isn’t always linear. Preproduction, estimating, sales, and prospecting work together to broaden and adapt the guardrails defining a fabricator’s core competencies. Software might tell estimating that a certain part can’t be bent with the shops’ available press brake tools. Estimators walk to preproduction to ask what’s possible. The bending gurus in preproduction analyze the drawing and discover that, using a different approach, the part can indeed be bent repeatably and accurately. The guardrails widen, and the sales pipeline grows.

Various metrics measure the flow of sales, from that first cold call to the first order hitting production. How many cold calls do the hunters make? How many of those cold calls lead to relationships, and how many of those relationships turn into customers? What’s the win-to-bid ratio for these customers? Are they buying or just kicking the tires? What manufacturability issues arise?

All this data drives process improvement. Everyone aims to make the next person’s job in the process chain easier. A hunter knows that the better he prequalifies prospects, the better chance sales has to turn prospects into customers. Salespeople know that the better they prequalify projects for estimators (e.g., by running basic manufacturability tests), the easier it will be for estimating to answer the RFQ. The more quoting estimating does—through strategic prioritization and software—the greater the flow rate in the sales pipeline. Estimators work with preproduction to make their jobs easier while also widening the guardrails to keep the sales pipeline as robust as possible.

Sales strives to provide work that hits production’s sweet spot (well within the guardrails), while production works to produce what sales can sell. Ultimately, both sales and production adapt over time to create a sustainable business that follows the best opportunities the market has to offer.

About the Author
The Fabricator

Tim Heston

Senior Editor

2135 Point Blvd

Elgin, IL 60123

815-381-1314

Tim Heston, The Fabricator's senior editor, has covered the metal fabrication industry since 1998, starting his career at the American Welding Society's Welding Journal. Since then he has covered the full range of metal fabrication processes, from stamping, bending, and cutting to grinding and polishing. He joined The Fabricator's staff in October 2007.