Visual Configure-Price-Quote Systems Reduce Cost of Poor-Quality Job Specs

Eliminate waste from the start of the manufacturing process

Published: Wednesday, January 30, 2019 - 12:03

The role of quality starts with product design and moves rapidly across the supply chain to the selling and buying experience, which includes the bidding process. When operating a formal continuous process improvement program, nearly all manufacturing engineers are tasked with some level of quality and agree that often the old methods for bidding on projects is deeply deficient. In this article we will look at one way to ensure the bidding process includes all stakeholders so that a company can manufacture what the customer wants, guarantee that the customer gets what they asked for, and that everyone is satisfied with the outcome.

A complex sales and quote process wastes time and money

During the current state of bidding and proposal submissions, procedures such as requests for quotes do not offer a modern buying experience for customers. In many companies the current bidding process creates bottlenecks in manufacturing because there is no integration between the sales and engineering functions. The status quo means sales people manage customer relationships, and the engineer generates quotes. Manufacturing and operations managers have no visibility into the quotes, and thus purchase orders require all hands on deck to help manufacturing produce something it wasn’t prepared to, while still making the customer’s deadlines. In this scenario, sales margins go out the window.

In a successful bidding process, all parties are involved to go over each part of the process. The sales team discusses what the customer requested, engineering discusses what is actually able to be manufactured, and operations discusses the availability of the floor and machines.

One way to accomplish this is to use a visual configure-price-quote (CPQ) solution. Gartner defines visual configuration tools as those that “enable sales representatives and end customers to see a visual representation of the products they want to order, with the options and features they have selected. These tools are usually deployed as part of an overall CPQ solution or digital commerce project. The best technologies enable the user to interact directly and in real time with the visual representation. Visual configuration tools can be used to sell a wide range of configurable products, anything from coffee mugs to excavators.”

A bidding process with a CPQ solution provides sales teams a platform to easily quote configurable products. The CPQ solution essentially walks the salesperson through a step-guided procedure to ensure the product the customer is requesting is actually manufacturable. It also provides the sales team with visibility into exactly what is being quoted, how many times each product is being quoted, and how many quotes are being won or lost. With these data, the team has the ability to see trends within the quoting process, allowing the company to make decisions on product development. For example, maybe two products are typically quoted together. This would be an area where a sales representative could make recommendations to the customer for a potential upsell.

In other words, sales reps and customers are on the same page because they see the same thing. This means less misunderstanding between the buyer and seller about what is being sold, which leads to fewer dissatisfied buyers.

Visual CPQ solutions immediately improve the quality of customer relationships. While a company’s products might be world class, if the quote process is painful, the company might be losing bids it would otherwise win. Visual CPQ solutions allow for enterprisewide communication in the bidding process. It is a neglected area of quality process improvement.

A configure-price-quote (CPQ) solution eliminates cost of poor-quality job specs

The cost of poor-quality job specifications and quotes is very high. No one is planning for returns, bottlenecks, or gaps in the process. When quotes are not being streamlined with a CPQ solution and instead are driven from antiquated operations, manufacturing sales professionals must depend on internal stakeholders to support the quote configuration. When those stakeholders are bogged down in production, sales executives are unable to get a quick, accurate quote promptly to a prospective customer.

More often than not, when engineers are bogged down in production or have piles of requests for quotes on their desks, sales people do not want to wait to send the initial quote. Sales people want to quote the customer and move on to the next sale to keep driving revenue. This creates the risk of inaccurate orders and returns.

For example, while visiting a manufacturer that specializes in aluminum fabrication, a sales representative was sitting in the meeting and received an email from a customer. The customer was quoted and purchased an aluminum cart for material handling purposes. The sales representative had quoted the project without an engineer and the purchase order was pushed through to production. When the customer received the product, the pallet didn’t have the accurate dimensions to fit the material being handled. The customer was upset, the sales representative was upset with the engineers, and the engineers were upset with the sales rep. No one was happy, and the manufacturer had to take a loss on the project. The manufacturer had a burning need to introduce a CPQ solution to its sales and engineering teams to ensure accuracy with quotes and design, as well as enable sales to quote engineered products without a technical expert in order to respond to the customers’ demands. 

CPQ solutions provide actionable insight for product scalability, SKU logic, and frequency of product configurations to create standardization in manufacturing. CPQs create bumper lanes for sales to ensure standardization is being enforced for leaner operations, from the quote to production. The traditional process, without CPQ solutions, is antiquated and expensive, and results in poor-quality experiences internally and externally.

Return on investment

The return on investment (ROI) for visual CPQ solutions typically focuses on increasing revenue while minimizing the costs. Enabling sales to quote with greater speed and ease alleviates the pressure and time constraints placed on engineers.

As an example, a midsized manufacturing operation might have 10 engineers at $100,000 spend per head to support 40 sales reps doing 4,000 quotes at an average selling price of $10,000. This means a $1 million spend to get quotes out the door. Visual CPQ manufacturers consistently see a 25-percent cost savings across engineering, which equates to $250,000 annually. This ensures a positive ROI from a CPQ tool, without even accounting for top-line growth.

There is no need to leave money on the table through inadequate and antiquated bidding processes. A CPQ solution can help your company guarantee that what its customer orders is what you can build. It can help you eliminate delays, meet your margins, and keep your customers happy.

About The Author

Zac Cooper

Zac Cooper is Atlatl Software’s Director of Sales. He is dedicated to helping industrial manufacturers simplify quoting with Visual CPQ and Augmented Reality. Cooper is seen on the YouTube series called “Open Mic: Manufacturing Industry Conversations.” He earned a bachelor’s degree from Bucknell University.