What are the customer’s expectations ?

RFQs can come from existing customers for new products or products already in production, or they can also come from prospects. According to each case, the expectations are not the same.

Buymanager Quote Lead Time

Costing for prototypes

The lead time for submission of tenders is the most important point, as well as the lead time for making prototypes, of course. Indeed, when customers have invested large sums in the R&D phase, without comparison to the cost of prototypes, each day that elapses delays time-to-market.

Costing for series

In the case of quotes for manufacturing series, the price is obviously the predominant factor. For an existing customer, the probability of winning the deal is strong, making it advisable to mobilize purchasing resources and taking the time to establish a competitive offer, including labor costs.
However, in the case of a prospect, the decision to mobilize resources requires a prior qualification and accurate identification of customer expectations.

Costing a BOM

This case appears to apply to existing customers at the upstream stages of new product design when customer R&D teams need to evaluate the material cost of different technical solutions. This generally involves more budgetary approaches for which in-depth work on prices is not necessary. In this case, the lead time is important because it has a direct impact on the product development cycle.

Sourcing, Benchmark

Whether the customer is expanding its number of subcontractors or replacing existing ones, the competitiveness of the tender will be an important criterion in the customer’s selection process. The dilemma for the subcontractor is to choose between limiting the time spent and preparing a competitive offer.

Why adopting a differentiated approach?

The sales funnels

The opportunities detected by marketing and sales efforts must be sorted into:

  • Existing customers

  • Prospects

The conversion rate between these two categories of opportunities is often very different.
The conversion rate of prospect opportunities is often quite low and often 80% of the
workload spent on quotes represents 20% of the turnover.

The differentiated approach to quotes

This simply consists of employing processes adapted to different customer expectations, for example:

  • Costing in one day: material part accurate to within 25%

  • Costing in less than three days: material part accurate to within 10%

  • Costing in less than ten days: material part accurate to within 2 ~ 3%, includes labor

    costing

What are the advantages of quickly costing just the material part?

We can establish contact with the customer as quickly as possible to identify specific expectations to then optimize and complete the costing and thus convert more opportunities.