Estimating has to be quick and accurate in today’s competitive manufacturing environment
For a shop to be successful, particularly in today’s highly competitive environment, estimating for quotes has to be as quick and accurate as possible. Certainly, having experienced estimators is a must, but even these individuals are being challenged as their competitors embrace advanced software that can find savings in previously unseen places, and drive more aggressive bids.
“It helps if the quote function is part of a larger enterprise resource planning (ERP) system, so the quote can migrate to a business solution,” says John Kubit, VP sales at MIE Solutions. “If you can analyze the CAD/CAM data, and then extract it to calculate for labour, it’s a huge time saver.”
Ideally, a system should be able to import an entire bill of materials, and then run the quote into a production environment. With everything pushed forward automatically, getting an accurate quote can be as simple as order entry.
“A good estimating system should be geared for a modern manufacturing environment,” says Kubit. “That means something that is paperless, mobile, and kiosk-based. A worker on the
floor should be able to use a tablet
with Bluetooth technology that can handle barcodes.”
This is a more dynamic view of estimating, and something that can ensure margins are tracked during a job. As it stands, many shops estimate up front, then pray they can get to the end of a job without any rude surprises. Going back to a customer with difficult news in the middle–or at the end–of a job is bad for business. So is staying quiet and absorbing losses.
“A lot of shops are relying on Excel spreadsheets and Access databases,” says Paul Ventura, VP marketing at Shoptech software. “The problem is that many estimators are on an island. They have their software, and people putting orders in, and maybe an accountant with QuickBooks, but nothing is integrated.”
If you are winning jobs on your quotes, and coming in on budget with secure margins, then it could be argued there is nothing to worry about. But the lack of visibility can be a problem. You might not know how many jobs you are losing, or how you might be affected by industry changes that are making estimating more effective. As well, you may be ignoring costs associated with audit and compliance – areas where advanced software can save time and money, while also helping you win jobs in highly-regulated industries.
“Our bread-and-butter customers are shops with 25 or 30 people,” says Ventura. “They don’t have $50,000 to throw around to audit for quality control, but they can get that capability from us for $10,000. This is an out of the box solution that can track all your processes.”
That is cheaper than hiring an ISO expert, or getting certification yourself, and might give you opportunities in supply chains that require fixed pricing and solid audit trails. Fortunately, material and energy prices are not fluctuating as much as they used to, but that leaves labour, which is a major cost centre, should a bid go wrong.
“Having activity-based costing is a must,” says Ventura. “If you estimated a job would take two hours, and it takes three, you also need to know: was it the operator, the materials, a machining issue, or something else?”
The challenge then becomes getting the right data off the shop floor. After all, any software system is only as good as the information entered into it. That means it has to be easy to use and not eat up a lot of time in training.
“A system should have a good visual interface,” says Kubit. “Ideally is should all be drag-and-drop, and easy to manipulate. From there you can capture all the costs in a work order, and all at one time–from bill of materials to running the job.”
With this kind of a system it is then possible to see where there are discrepancies, and where performance is an issue. It could be that some machines are running poorly with more down time than previously thought, or that workers are unwittingly doing things less efficiently than they could. And when confidence combines with speed, a solid estimating platform can then drive sales.
“In a lot of environments guys are on the road, and they go back to the office to do their calculations,” says Kubit. “In that time, a job could be lost. You need a tool that allows someone to price remotely.”
From there, it should be possible to quote across multiple sales and distribution channels, and to do that without being constrained by a location–or a business model–while allowing for some customization of reports, as well as user-defined formulas. After all, if everyone is using the same software the same way, there is no real advantage. SMT
Tim Wilson is a contributing editor. [email protected]
