The View from 30 Feet: A Multi-Tiered RFQ Process
by Lara Copeland, contributing editor
Business gurus often talk about the view from 30,000 feet – the big picture that provides a look at overall operations. Perhaps, however, the focus should be on the view from 30 feet – a close-up of specific processes and procedures that make an impact now.
Situated in a region steeped in manufacturing history, Team 1 Plastics, Albion, Michigan, is a plastic injection molding company for the automotive industry. This state-of-the-art business specializes in precision components, enclosures and housings, light assemblies and transparent plastic components. To increase its efficiency while continuing to supply its customers with high-quality, cost-effective components, Team 1 Plastics recently implemented a change in its Request for Quotation (RFQ) process.
Craig Carrel, Team 1 Plastics’ president, identified a challenge with the company’s previous RFQ process. “We were treating all RFQs the same and putting a tremendous amount of time in quoting by all parties involved,” Carrel said. Previously, if the company received an RFQ from an existing customer, Team 1 Plastics conducted a quick feasibility review. Then, virtually all (99 percent) of the requests would be delivered to the RFQ team. Comprised of several departments within Team 1 Plastics, the RFQ team gathered information from across the company to build the quotation. For example, the engineering department provided part weights and mold quotes, while the materials department presented information on material quotes. The RFQ team then forwarded its feedback to management, who developed a quote using the company’s activity-based costing (ABC) model. Because this process took a considerable amount of time and passed through the hands of so many departments, management decided to review and refocus its RFQ process.
Team 1 Plastics cited improvement of its RFQ process as a key initiative during its strategic planning process with Harbour Results, the company’s longtime strategic planning partner. After investigating the issue and brainstorming possible solutions internally, a new process was developed. A set of guidelines was created to classify each new RFQ into one of two categories: estimates or official quotations. If an estimated quote is in order, the company provides a rough estimate for the customer so it can be used in the pricing on the customer’s projects. Typically, these estimates do not go out to mold or material suppliers; instead, Team 1 uses its own experience to estimate the mold and material pricing. This practice saves the RFQ team considerable time. Then, if the customer is awarded the project and is looking to source parts, the RFQ is reclassified as an official quote and Team 1 Plastics follows a process similar to the previous method, but including multiple mold and material quotes from approved suppliers.
Transitioning from one RFQ process to another can be strenuous and time-consuming for a business, but Carrel did not identify any major complications in implementing the new strategy. When asked about putting the revised process into practice, Carrel said, “It has gone smoothly, and we recently met to evaluate the new process and refine the criteria used to evaluate whether a quote should be an estimate or official quote.” Employee feedback has been very positive; the change has helped the company accomplish its main objective of saving time while improving quote turnaround. This was done without sacrificing quote accuracy when it is important. Playing a role in this new RFQ process, Carrel says he strongly supports the change as well. He is pleased to see a reduction in the amount of time spent on quotes – especially estimates – and cites the initial classification of quotes as the key to success. The modification helps key teams – engineering, materials, sales and estimating – manage their limited resources while delivering pricing that meets customer expectations.
In addition to positive employee response, customers also have been encouraged by the new process. Providing a customer the proper level of accuracy based upon its RFQ – whether an estimate or full quotation is needed – helps Team 1 Plastics achieve a higher level of customer satisfaction. The company’s goal is to be number one in customer satisfaction, and Carrel added, “This new RFQ process has improved our quote response time and allowed us to meet very tight customer deadlines, which had been slipping before implementation because of all the time required to develop our quotes in the past.” With these new quote designations, the company will be monitoring quote hit rates for estimates and official quotations to better project new business potential and opportunities, expecting its hit rates on official quotes to improve. Moving forward, Carrel says the company plans on completing another six-month review with the RFQ team to solicit input, gauge success, obtain suggestions for continuous improvement and to make sure it continues to meet customer needs.