FACTON partnered with TMG Consultants to survey manufacturers and gauge the impact of current practices in costing and quoting. The survey included more than 55 companies, with three groupings: the automotive industry (49.1 percent of respondents), mechanical and plant building industry (29.1 percent), and mixed industries (21.8 percent). The survey results are summarized below.
TOP PRIORITIES IN QUOTING PROCESS
The survey shows that for manufacturers, the top three priorities in costing are:
- Standardization of data and processes
- Minimizing or eliminating errors
- Streamlining the IT overhead of costing solutions (e. g., eliminating the proliferation of spreadsheets with multiple versions)
Those numbers should not be surprising: repeatability, and a structured representation of costing models, are important to more than 80 percent of participants. This coincides strongly with what FACTON has seen in the market, and is consistent with larger industry trends such as a focus on profitability.
THE PERFORMANCE GAP
Unfortunately, the same survey shows a large performance gap, with between one third and one half of respondents falling far short of their goals. This is especially troubling for those companies that know that standardization and repeatability in the quotation calculation or the analysis of cost drivers is essential to winning profitable business. The impact of this gap is strong. We looked at the effort it takes to submit an RFQ response.
The results were abysmal, especially for global manufacturers required to bid for large programs with multiple projects served out of various plants spread around the globe. Time spent for that can take up to 60 days – far longer than most RFQs allow. Even worse, the extended time period is driven by muda – futile or wasteful tasks that add no value to the process, such as searching for data or unstructured reporting. Only a little over one third of the process is spent on actually calculating costs.
HOW TO IMPROVE
Fortunately, the data also shows us ways manufacturers can improve this process, including embracing a structured representation of costs and implementing uniform standards for costing. This is where Enterprise Product Costing can help. The software solution closes the gap between PLM and ERP and holds all costing information throughout the entire lifecycle of a product. All costing information is in one single source of truth, which helps manufacturing companies improve their costing and quoting process to win more profitable business.
How can business success be increased with Enterprise Product Costing? Learn more in our webinar on demand: "The better you are at costing, the better you are at quoting".