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Cincom in-depth analysis and review
Getting results from quote-to-order strategies begins with defining financial measures of performance.
About Cincom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Executive Summary
Manufacturing companies are capable of much greater financial gains than they are getting today from their quote-to-order, order-to-cash, sales and productconfiguration strategies. These process areas centre on how manufacturers create, set and keep expectations in their quotes for custom-configured products. Globally companies are adopting quote-to-order to streamline how they sell customised products. Reasons for pursuing these strategies include increasing factory use, developing related products to extend a product series life and often to up-sell and cross-sell their existing customer bases with products tailored to their specific needs. Examples of how quote-to-order, orderto-cash, sales and product configuration impact manufacturing, sourcing and product-management strategies abound throughout the spectrum of complex manufacturing companies globally pursuing these strategies. Getting results from these strategies has to start with defining financial measures of performance before changing these processes ever begins. Too often companies arent measuring the financial impact of these strategies and leaving much of the cost savings and incremental revenue unattained because extra steps on these strategies are not taken. These strategies have to start with a series of financial metrics if they are ever going to accurately reflect the cost savings and revenue contributions they contribute.
manufacturers is not in getting these process areas defined, working and even providing a median level of returns its in measuring the right financial metrics to show the value of these strategies over the long run. Figure 1 shows a series of the financial metrics that quote-to-order directly impacts for manufacturers. Taken together, the strategies of quote-to-order, orderto-cash, sales and product configuration deliver a series of financial contributions that span manufacturing, sales, production, engineering and finance.
Figure 1: Quote-to-orders financial impact is significant. Source: Configuration Is the Heart of Customer Fulfillment for Complex Product Manufacturers, AMR Research Louis Columbus, March 31, 2003
Proving the value of any customer-facing strategy that includes the generation of quotes, proposals and responses to RFPs starts with a clear idea of what metrics will be used for measuring performance. AMR Research and other research firms have for example seen a correlation between the accuracy of metrics used and the results achieved. Here are the places to start looking in your company for ways to trim quoting times and costs, order cycle times and wasted resources in sales, engineering, production and service. To build a long-lasting strategy in quote-toorder, look first at the areas in the table below:
Table 1:
Number of customer complaints 98% reduction in cost of simple requests Revenue lost to churn Number of calls on order status 60% when cross-selling is used with quote-to-order Median level of 500 per week to 70 10% reduction at a minimum Decrease order rework from 15% to 2%
Siemens Energy and Automation Siemens is a multinational conglomerate with offices and operations in 190 countries and over 100,000 employees. The Siemens Energy and Automation Division produces Above NEMA class motors and relies on Engineer-to-Order (ETO) for 100% of its production. The division set the goal of streamlining their quote-to-order process by enabling sales representatives to generate certified specifications and quotes for highly configured Above NEMA motors. Included in the quoting process was the requirement of generating certified motor performance data and CAD drawings, required by Siemens customers. After implementing the Socrates suite of applications and launching the revised quote-to-order system and processes to the Siemens sales force, the following results were accomplished: Certified performance-data generation required in quotes and proposal time dropped to less than one hour from between four and six weeks. 100% of configured motors are buildable, leading to a significant drop in rejected and inaccurate orders. The time it takes to create a quote has dropped from between two hours to four days (depending on complexity) to less than an hour. Bills of material for products tailored specifically to customers requirements are now directly loadable into Siemens ERP system. Engineering knowledge of products is now captured so it can be quickly applied to customers unique requirements as defined in quotes and proposals.
Table 2
Elevators High-tech peripherals Components PCs and servers Auto maufacturing Industrial distributor (channel assembly) Furniture Network and LAN equipment Averages
14% 23%
7% 12%
11% 27%
27% 52%
12% 37%
33%
19%
59%
41%
24%
Fix quoting processes first by attacking wasted steps and inaccuracies. Go after the most broken processes and manually fix them first. Dont just automatically think that ripping and replacing processes will make a difference get a strategy together based on solid measures of performance and move forward from that point. Get away from having a multitude of quoting systems as disconnected islands. At one point, one of the worlds most well-known computer systems companies had 11 different quoting systems, some delivering Available-to-Promise (ATP), some quoting systems providing delivery timeframes and some delivering nothing in the way of commitment and delivery dates. One of the best possible actions you can take is to consolidate quote-to-order systems to ensure customers get a common set of expectations delivered to them using reliable processes to accomplish that task. Fine-tune pricing and quoting systems together if you can. Just revamping quoting systems alone can yield major cost reductions and increase efficiency of your sales, operations, manufacturing and services organisations. Adding in pricing can bring a level of fine-tuning around margin enforcement and analysis that is spelling the difference between competitive strength in one market versus another. Bottom line: Theres room for improvement in how quote-to-order processes are managed inside any company. Improving these processes starts with defining a series of measures of performance first so that improvements made can be tracked over time. Only through finding this cause-effect relationship will investments in software pay off.
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