Re-published – originally written on 2006.
As a joinery business coach, I have seen many different types of quoting systems. Everything from a very complicated excel spreadsheet with crazy formulas in it .. to judging by the weight of the paper! It always amazes me to see these widely varied processes .. but in all honesty, back in the days I was operating my kitchen business, I was guilty of not spending the amount of time I should have to calculate an accurate price. I was “too busy”! I was also guilty of thinking that if we had work on the books to fill the days (and we always had more work than we could do) then we must be doing OK as a business. After all Plenty of Work = Plenty of Profit right?
I don’t think there can be a more important process in a business such as a kitchen cabinet business than to ensure your quoting system is producing prices that will turn a profit. Winning a job can be a BAD thing if your quote is wrong and after you have submitted a price there is usually no changing it.
Many design (CAD) packages will generate a price or a quote for you and there is an ongoing debate out there regarding whether to draw first or simply produce a quote through some simple method because it is quicker. Is it quicker to simply look at the job specs and produce a quote .. and if you win the job then draw it up? Or should you draw the job in your drawing (CAD) package and use the quote generator in your system to come up with a price?
The debate is, unfortunately, really about time .. not accuracy. Most people will think it takes too much time to draw a job you may not even win so they get a price done as soon as possible so I can do other .. “more important” .. things. But what happens if you win the job? You will need to draw it so your CNC machine can cut it right? So now you have spent twice the amount of time to get this job to your factory simply by taking both the time to generate the quote and then to draw it. And what if you forgot to price your job with the stone tops the customer asked for .. or if you are using the old pencil and paper method .. what if you add it up wrong?
Alternatively, if you use a drawing package to generate your quotes, your system will detail what you are quoting on down to that last filler and special interior cabinet and show these details on a report. When you submit this quote to your client these details will be shown and if you have missed something, you can only be held accountable by what is listed on the quote since this is what your client has accepted. More importantly, however, the report will be a way for you to confirm you have priced everything your client has asked for. Not only that, you have pretty pictures to show. Small increases in material prices will occur as well and by using a drawing package, you usually assign a price to the materials in sq/m and can very easily change the price of specific materials when this happens .. as well as increasing labour costs when needed.
So .. do I think a drawing package is the best way to price a job? .. “Usually is my answer. It all depends on the drawing package and the accuracy of it. But I do think a job should be drawn as soon as possible in the process (this is known and “upstream manufacturing process improvements”). It is a fact that the farther “upstream” all the details of a job can be worked out and finalized, the smoother and more profitably the job will run.
My main point is to ensure your quotes are accurate and to take the time to analyze how much time you are actually doing on things, prioritize these tasks, ensure you are taking the time to do the important tasks correctly even though you may hate doing these things, and delegate important tasks you don’t have time to do (or don’t want to do) properly.
I also believe most quoting package are going to produce a much more accurate price since they are based on pricing exactly what will be produced. If drawing a job to produce a price takes 30% longer than just calculating a price, but ensures you are making the 20-25% net profit you want, the increased financial returns to the company will outweigh the small amount of extra time spent to draw the job by far.
If you happen to have an integrated management system, like an ERP (or hybrid thereof) then the main objective is to ensure your Quote turns into a job then and work order, then into Labour assignments and material Purchase orders directly from the Quote you produced. You could also export a report from your CAD drawing package into your Quoting system and have it generate your PO’s and Work orders that way.
So, there are a few different ways to make this work. The main thing is to make it work for you. This is my specialty … to help you find solutions to your problems .. permanently.
Bruce Poling of The Joinery Coach is a Cabinet/Joinery Industry specialist that can help you get this process right and grow your business into a Thriving sustainable venture.