Quote Lead time for EMS

A differentiated approach to increase sales efficiency

In a first part, we will deal with the following subject in several points:

What is the current situation?

  1. Respecting quoting deadlines: the quest for the Holy Grail

  2. Costing process

  3. Preparing quotes: a thankless task

  4. Human resources management

Quote lead time

Respecting quoting deadlines: the quest for the Holy Grail

It’s no secret: being the first to deliver a quote to a customer is a crucial factor for success. Some EMS even claim it gives them an 80% chance of winning a deal. Quite often, objective lead times for delivering quotes can be up to two weeks. Too many times, we hear “X months ago we managed to get up-to-date with our quotes, but today we are lagging behind again”.

OK 20%
Late 80%

With regard to the objective lead time, the situation is quite varied, depending on the workload of course, but also on the objective lead times defined! One of the challenges is to master the process and to ensure the consistency of lead times. Some replies can be quick (less than a week) but often, it requires additional efforts and the mobilization of extra resources.

Costing Process

According to corporate structures we mostly encounter two forms of organisation:

Advantages Drawbacks
Project estimator approach

The quote is undertaken
entirely by a single person

  • Response time easier to
    control
  • Difficulties in finding
    resources linked with
    a broad area of
    competence

Family buying approach

The various positions to cost
are distributed among
several specialize buyers
according to product family
  • Greater expertise for
    each family of purchases
  • Lower workload
    required for each buyer
  • Coordination of several
    people to prepare a quote
  • Increased complexity of
    data manipulation
    (Distribution,
    Consolidation)

In most cases, the costing process is supported by a unique Excel template, usually quite elaborate, allowing the costing of materials to be performed on one hand and of and labor on the other. Some more complex templates allow several products to be grouped in the same file.

Preparing quotes: a thankless task

The people in charge of quotations put a lot of energy into performing the costing as quickly as possible (at the same time as other quotes, naturally), sending RFQs to suppliers, following up, compiling large amounts of data and synthesizing all the information needed for the offer.
And quite often, the conclusion is: “It’s too expensive”, “we’re running late” or even “we need to cost another quantity”.

Human resources management

For the manager in charge of this activity, the management of human resources is a delicate problem. Producing a good quote requires rigorous and organized resources, with sound technical skills and a good knowledge of the supplier market. Buyers are of course the most appropriate resources, but they generally prefer the negotiation activities with procurement markets and processing orders. Significant costing activities might lead to demotivation and a higher turnover rate.

Furthermore, there is also the cost issue of the resources employed in this activity. Of all the quotes prepared, the conversion rate can be as low as 15%. The result is a significant sales cost.

End of Part One: The Differentiated Approach to Increasing Commercial Efficiency

After this glance of the current situation of Quote Leat Time for the EMS, we will discuss about the expectations of the clients in a second part.