Create Better Quotes With An ERP

Job Costing, Shop Floor

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Create better quotes with an ERP

Creating accurate quotes and estimates for your manufacturing business is essential. If you give a customer quote that is too low you risk having to go back to your customer and tell them you need to up the price, which can lead to losing that customer’s trust—and business. Or you could be put in the hard spot of having to honor a quote that is too low, which will cost you money, and have a negative impact on your bottom line.

But creating quotes that are too high aren’t good either. You run the risk of scaring off potential customers and ultimately losing out on deals—which will also have a major impact on your bottom line.

Accurate quotes and estimates are crucial to your business to win deals, create trust with your customers, and earn a profit.

If you are running a repeat manufacturing business, producing the same or similar products day-in an day-out, creating accurate quotes is easy. But if you are running a custom manufacturing business, and need to create a quote for a truly custom product that you haven’t built before is a lot more difficult. How can you estimate materials, labour and other costs and inputs with any sort of accuracy to create a quote that is fair—but will still lets your business turn a profit?

That’s where an ERP comes in. ERPs let you harness data that you wouldn’t have access to otherwise, to create a more accurate picture of job and labor costs, as well as material and time estimates, which will allow you to create a quote that is precise and error-free—meaning you’ll win more jobs, build better relationships with your customers, and ultimately increase your bottom line.

Why using an ERP leads to better quotes and estimates

One of the major challenges to creating better and more accurate quotes that custom manufacturers face is knowing the actual cost of the product they are manufacturing. Because each item a custom manufacturer makes is custom built, and there isn’t a previous spec to base a job off of, it isn’t easy to know what a job will cost—meaning it is difficult to know what to charge a customer for a job. And if you don’t charge your customer the right price, you risk losing business and will see profits plunge.

Using an ERP is one of the most effective ways custom manufacturers can determine their true job costs. Because custom manufacturing is a complicated process that involves many departments, components, tasks, and long-lead items, an integrated ERP system can help you get a better grasp on all of the elements that make up job’s true cost.

Accurate tracking of the involved costs

The use of a robust and integrated ERP solution will stop the guesswork that goes into job costing and quoting, and lets you use accurate and real-time data and metrics to determine real job costs. An ERP tracks all of the costs of a manufactured item or a process including material, labor, equipment, outsourced operations, as well as other resources that are directly required to manufacture an item.

ERPs will allow you to build up a base of historical data, outlining the true costs of building your products, which will allow you to build accurate quotes and estimates. You’ll have a good understanding of your true job costs which means, even though you don’t build the same product over and over again, you’ll be able to estimate all the time and resources that go into building a product and will be able to give your customers a fair and accurate quote.

Optimizing lead time and giving better estimates

Because ERP software has the ability to track how much time it took to complete previous manufacturing jobs, you can create more accurate estimates for future jobs. And because  ERPs are fully integrated across your business, meaning they can give you a 360° view of your organization, you will have a more accurate and complete picture of what goes into every job, making estimates more precise.

ERPs also have robust inventory tracking features that let you track materials and costs. Once you have accurate data on how much raw materials you have in stock and how much must be ordered, you’ll be able to quote more accurately. An ERP system records the cost of the materials when they’re ordered, so over time, you’ll be able to recognize pricing trends, which enables you to provide the best prices to your customers without sacrificing profit.

ERPs can also track machine capacity and the current load, so you’ll more easily understand the true capacity of your shop, and how much you are capable of producing. Once you have this data recorded, you’ll also be able to offer your clients more accurate lead-times, as you’ll have a better sense of when you will have the capacity to build their job—which also contributes to building trust and loyalty with your customers.

Automate the quoting process and save time

Automating the quoting process not only make the process faster in general for you, but your customers will be able to benefit from a more accurate and faster quote. One of the biggest benefits an ERP brings to your organization is automating cumbersome business processes.

Automation saves you time because staff no longer needs to complete quotes by hand, eliminating the tedious data-entry that comes with creating a quote. Although each quote is slightly different, ERP systems offer templates that help you automate the quoting process to save time and that can automatically pull data from the system to improve accuracy by eliminating human error. You can produce a quote, based on your prices and cost, as well as your Bill of Material, with a click or two of a mouse, streamlining your quoting process.

An ERP system can also helps you track past and current quotes, meaning you’ll have accurate records and reports that you can refer back to, to help you to accurately predict future sales and cash flow. By reviewing quote history by parts, product or customer, it is easy to see trends in quoting, and adjust sales strategies in consequence.

Closing thoughts

Using an ERP makes quoting and estimating, once a head-ache inducing task for custom manufacturers, easier, faster and more accurate. Win more business, build customer trust and loyalty, and increase profits with an ERP. Find out what a good ERP can do for you today.

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