Product-Cost Management Speeds Response Times
For any contract manufacturer, accurate and timely project quoting represents a critical success factor. It can make the difference between winning and losing business, and making or losing money.
“Response time is critical,” says Bill Lerman, president of Steel Fabrication Inc. (SFI), with plants in Memphis, TN, and Conway, AR. “Most customers look for a quote that’s in budget with a supplier they can trust and count on, rather than the lowest possible quote. It’s not always about the best price; it’s about the best combination of price, value and reliability.”
SFI provides contract design, development, supply and value-added services for medium- to heavy-gauge components to a select group of original equipment manufacturers in the agricultural, automotive, construction, industrial, transportation and defense industries. The company employs more than 600 skilled professionals among its two plants. Combined, the facilities house more 1-million sq. ft. of state-of-the-art production space dedicated to steel fabrication. The company offers a full spectrum of operations, including press-brake bending and rollforming, coil processing, laser cutting, metal stamping, welding, machining, powder-coat painting and assembly.
Like most metalforming and fabricating companies, for decades SFI’s estimators used its own unique blend of cost calculators, spreadsheets and off-the-shelf cost-management tools to evaluate RFQs and generate quotes. In most cases, SFI’s cost estimators had to analyze a series of 2D drawings and then add in each different attribute, run rates, and part and labor costs. A big project with hundreds of different part numbers could take weeks or more to quote.
Among the medium- to heavy-gauge fabricated-steel products manufactured at Steel Fabrication Inc. are these oil pans for locomotive engines.
Also, in some cases SFI would receive 3D models from customers, which required that engineers take the time to transform the models into 2D prints. This could create a lot of unnecessary work and extend the quoting timeframe from days to weeks.
All of this manual and time-consuming effort often resulted in prolonged turnaround times when responding to customer quote requests. SFI experienced additional and unnecessary overhead costs, difficult tradeoffs on priorities and even “no-quoting” some jobs, all of which negatively impacted potential future business. In short, its estimating team felt it was always playing catch up. Every customer wanted its quotes yesterday because they were likely already behind on their own schedule.
To resolve its quoting challenges, in 2010 SFI agreed to pilot a new product-cost management software solution from Apriori, Concord, MA. SFI also hired a cost-management expert, Hashim Alsaffar, to improve the timeliness and accuracy of its quoting process.
“With Apriori, we can quickly and accurately cost out any part or product from a CAD model,” says Alsaffar. “It allows us to really accelerate our response time and accuracy on project quotes—a big competitive advantage.”
Staying in the “Sweet Spot”
Two years after joining SFI, Alsaffar remains confident that the firm’s new product-cost management software plays a key role in its ongoing success.
“With Apriori, we get ahead of the whole process,” says Alsaffar. “We can respond more quickly to customer requests for quotes, respond to more requests overall and, equally important, we can learn immediately whether or not a job really fits into our sweet spot. The software makes us a better value-added supplier to our customers, because it makes our team and our customers more knowledgeable about the requirements of each project. It also helps to reduce our customers’ overall time to market.”
The software can quickly analyze any part or product from a CAD model and break it down to the lowest possible level of cost detail. It also provides complete CAD independence, since it works with 3D-CAD models generated by any major modeling system on the market, including: Pro/Engineer, Catia v5, Siemens NX, Solidworks, SolidEdge and Inventor.
Alsaffar also appreciates that the software can be used for prototyping and rough quotes.
“Often, customers request a rough quote to see if we’re qualified to bid on a specific project, and Apriori performs that function quickly and easily. Later, we then can use the software to update the rough quote with additional information and details, such as materials, tolerances, etc. The estimators need not start over when a job changes, which keeps programming time to a minimum.”
3D Quoting the Way to Go
According to Alsaffar, some companies still hesitate to provide 3D models, for fear of giving away too much information. However, when they understand how much more quickly they can receive a quote back, they typically change their minds and issue the 3D models.
Another factor: It’s easy for SFI’s estimators to tell if a 2D drawing provided by purchasing has come from a 3D drawing. When they do, they just request it. Says Alsaffar:
“Engineering students coming out of school these days are all trained in 3D. They are comfortable using 3D tools. Purchasing will get there as well, once they understand the real benefits to their businesses. With Apriori in full use, things are much less hectic in our estimating department, and we are able to stay ahead of customers and their needs.”
Instead of two or three people working to deliver a single estimate, one person at SFI now handles an estimate, in a fraction of the time it used to take. This leads to greater consistency and accuracy in the estimating process, especially when incorporating changes to design and other specs that impact cost. MFArticle provided by Apriori Technologies Inc., Concord, MA: 978/371-2006; www.Apriori.com.
See also: Apriori
Related Enterprise Zones: Software
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