Overwhelming RFQ Backlog - Strategies on Being Selective & Bidding Quickly

Well, I find myself in the favorable position of having too much work to bid on, but not enough resources to get to it all. In light of all that is going on, I was expecting that the work would start to dry up but the opposite has occurred. The workload for bidding has increased. I'm talking hundreds of part numbers due in a couple weeks time with only 1-2 people working it. Sometimes, I feel that we "over-engineer" the quote and need to simplify our quoting process. It is a dilemma of accuracy, quantity, & time - pick two.

So...

How do you select the correct work to bid on when everything is within your manufacturing capability? Do you simply pass on opportunities because you understand your capacity to bid and realize you cannot realistically get to it?

How do you make your bidding process more efficient? Do you go out for quote on everything or throw the dart at the proverbial pricing target board?

Let the sarcastic and serious responses commence. All are appreciated as I am very thankful for what this forum has to offer.

Random thoughts- If you're going to skimp on quoting, quote high, as you'll certainly miss something. And that something is never in your favor. What can you make the most money on with the least trouble? Put your efforts there. It's incredibly difficult for people to say no, but if you don't, you'll bury yourself in problems.

You can always share the load with less-busy nearby shops ... just saying ...



Regards.

Mike

Finegrain said:

You can always share the load with less-busy nearby shops ... just saying ...



Regards.

Mike

Click to expand...

He said QUOTE volume, not actual orders. We're experiencing that right now... Twice the quotes coming in, half the parts going out. It's almost like purchasing agents working from home can't spend half the day chatting and just use all that extra time to spam everyone for pricing.

We are in the same boat. Was slow 6 months ago and now we are overwhelmed. The process we use is to bid only to our core customers, and core industries.

We make parts for all industries, but our core is aerospace, semiconductor, and defense. When we see a quote for agriculture, we no quote and let them know why. Our industries are not as cost sensitive so we can get away with throwing together quotes quickly, so we quote everything we can.

My boss has a great line that echos Conrad: I would rather lose a job because I was too high than too low.

start looking into the details of quoting, customers, parts, payment history start finding out who your best and worst customers are. STOP spending time on the low fruit and grow with the high hanging work. work smarter not harder. here's the first question how many quotes on average do you send out and how many of these do you end up winning? gotta start no quoting or quoting high more often to start weeding out the herd. there are ways to start winning more business with less work you have to start understanding the details behind the process and WHO your shop really is...

ducesrwld said:

start looking into the details of quoting, customers, parts, payment history start finding out who your best and worst customers are. STOP spending time on the low fruit and grow with the high hanging work. work smarter not harder. here's the first question how many quotes on average do you send out and how many of these do you end up winning? gotta start no quoting or quoting high more often to start weeding out the herd. there are ways to start winning more business with less work you have to start understanding the details behind the process and WHO your shop really is...

Click to expand...

and give 110% percent and put the puck in the net

From my experience, first you have to know your customers. Who is actually going to send you profitable work.
Who is going to be the least hassle? Nothing worse than dealing with a customer who is sending change orders and asking for those priced.
Who is going to pay you on time, this includes acceptance time. If you are having to borrow money to pay for the cost of the job your profit went out the door.
I have my A list customers.
If they send out a rfq thats a actual job someone is going to get.
They pay there bills with in 30 days of invoice.
They send regular work to the shop on a ongoing basis.
My B list is the above but pay 30-60 days.
The rest just go in the trash.
If I can't make money I sure don't want to just wear out my machines and I don't need the practice.

It's worked for me for 40+ years

Look at what has the highest potential profit margin and quote that stuff first then work your way down the list. Often times a $40 job will get quoted $150 as that’s the minimum amount a PO can be for us per part, I won’t take less cause it’s a waste of my time.

Whysosharp said:

Look at what has the highest potential profit margin and quote that stuff first then work your way down the list. Often times a $40 job will get quoted $150 as that’s the minimum amount a PO can be for us per part, I won’t take less cause it’s a waste of my time.

Click to expand...

How many times do you quote $40 jobs for $150 and get them, that is the question. The potential for profit doesn't matter if you rarely get those jobs.

Ideally you'd like to make your quoting process so fast (leadtime of the quote to customer), efficient (minimal time creating the quote) and accurate that it's not an issue. If your quoting process takes too long (internally), it can create a huge backlog if the demand for quotes increases. Examine your quoting process and see how efficient it is. The best way to make it efficient is a PROPERLY DESIGNED, CREATED, IMPLEMENTED AND TRAINED database system. Here's some "tests":

1. If you're re-quoting an old quote (that wasn't accepted by the customer), at worst it should take about 1 minute to pull up the old data and have it correlate to updated material and labor costs (unless maybe machinery/processes have changed). Push a button to email a PDF to the customer and you're done (if you have to do several steps that take even a couple minutes after the quote is all but sent, your system is old and outdated).

2. An updated previously accepted quote could maybe take another minute because there could be notes back form the shop about how set-up or processes could be different.

3. A completely new quote for a new customer but something that uses stock or easily acquired materials and/or processes, shouldn't take more than a few minutes to create. If the volumes, tooling, or other costs are huge, might need a shop and/or management review before "pushing the button" to send it to the customer.

If you have an efficient quoting process, it might be worthwhile to create a triage process. Have one person "evaluate" RFQ's to place a higher priority on existing customers (good ones that pay their bills on time!), "good" jobs, etc. and tell other customers (new with "bad" jobs) that you're just too busy.

Good luck
The Dude

Thank you all for the replies. I appreciate the comments about knowing your customers. As I've been thinking about it, it seems equally important to know your buyers as well. Some buyers have their "go-to" shops.

The Dude - We use our ERP system to handle individual or small RFQ packages, however, it is very detailed and time-consuming. On average, I would say it takes 10-20mins to create an estimate from scratch for new work. Let me know if this exceeds your "few minutes" time to complete a new quote.

General question: For material costs, do you use $/# for certain alloys/forms and calculate from there? Or do you go out for hard quotes? Maybe somewhere in the middle and perform a litmus test every once in awhile with vendors to get a pulse on $/#?

You should also track your batting average on winning the job from each customer. I have a recent new medical customer I do lathe work for. I am 13 for 13 with them and all jobs made good money. It is pretty obvious I am competing with no one on what they send me to quote. Customers like that need to be moved to the front of the line. If you are busy the drawings sent over from the guy who goes with you 5% of the time needs to go straight in the trash.

InvoluteSpline said:

The Dude - We use our ERP system to handle individual or small RFQ packages, however, it is very detailed and time-consuming. On average, I would say it takes 10-20mins to create an estimate from scratch for new work. Let me know if this exceeds your "few minutes" time to complete a new quote.

General question: For material costs, do you use $/# for certain alloys/forms and calculate from there? Or do you go out for hard quotes? Maybe somewhere in the middle and perform a litmus test every once in awhile with vendors to get a pulse on $/#?

Click to expand...

Hey IV,

I'm going to send you a PM to offer to talk if you'd like. I don't mind chatting about this kind of stuff because I can also possibly learn things. I do think your ERP system likely falls into the category of "overwhelming" which is high related to the fact that they want to make their systems both "standard" and "capable" which mean that, in order to work for everyone, it usually ends up that way (overwhelming). Everybody does quoting differently, just like manufacturing (give a part to 5 different companies and they'll all vary at least slightly in their process) and that's what can make it beneficial to have a custom system (possibly just for quoting that can import and export data from/to the ERP system).

For material costs, there's a variety of strategies. If you are someone who uses relatively few materials, try to keep it routinely updated so that you don't have to make repeated calls to suppliers. If every job you do uses a different material, make a quick way to get material costs (try to get suppliers to update a database). There's some strategies on the latter you can use.

The Dude

Whysosharp said:

Look at what has the highest potential profit margin and quote that stuff first then work your way down the list. Often times a $40 job will get quoted $150 as that’s the minimum amount a PO can be for us per part, I won’t take less cause it’s a waste of my time.

Click to expand...

Did you really mean per part, or per order? I can't imagine winning any work like that. I know it is entirely dependent on industry....

Most of our stuff sells in $1000 plus range per unit, but they are labor intensive.... But I've also worked places where we lost parts over a few cents each (high volume stuff).

I do most quoting on a seat-of-the-pants basis and it honestly is pretty damn close most of the time. Material is quoted from supplier but manufacturing is not much more than a gut feeling. Tight tolerance/weird specs/low qty, price goes up. WFO tolerance/large qty, price gets skinny. Something that requires alot of surfacing I will run through CAM to get a number but that's about it. Sometimes we hit over shop rate, sometimes under, but it seems to even out in the end.

Mike1974 said:

Did you really mean per part, or per order? I can't imagine winning any work like that. I know it is entirely dependent on industry

Click to expand...

Don't know which he meant but $40 for A JOB doesn't pay for answering the phone unless your machine shop does horseshoeing, or sharpens lawnmower blades. Depending on the machine and operator overhead it's not at all inconceivable that the minimum part would be $150. And unless I were going to make a hundred of those I'd probably let it go. Just depends on what sort of part you can do efficiently (meaning, make money at).

Yes getting rid of the "low hanging fruit" jobs is a good 1st step.

Am lucky that don't have to keep too varied an inventory for the jobs I do. One thing I do is if a retail cust comes in for a decent job is to show em what I have and say, "you will get it far quicker if you choose what I have on the shelf compared to choosing something I don't have on hand." Most retail cust in my game don't wanna wait more than a month, so my angle: waiting on stuff to come in and scheduling in with other jobs, materials have to come from interstate.... could go on. Kind of the truth as cant buy most of what I need locally.

Yes priorising good paying, regular customers over the less freq and ones that stretch it out.

Seem to have enough enquiry from serious cust, that if I miss a few, not the end of the world. If not sure of how much need to charge for a job, as others have already said, tack some more on.

Work out what u do well and make the most on, and prioritise quotes that fall within those parameters. Of course relying on a few large large cust for the lions share of ones workload is fraught with danger. If find yourself in that posn, then would look to expand your capabilities a bit.

Just my 2 cents

There's a pretty good article on quoting/estimating in the May 2020 issue of The Fabricator. I wouldn't call it perfect but it outlines the issues pretty well.

Link: Freeing the metal fabricator’s quoting constraint

My bottom line is that, if you have a reasonably "complex and custom" quoting process, make a custom system that will talk to any other financial/ERP systems you use. It's highly unlikely that the functionality in any purchased software will meet your needs.

The Dude