At its heart, the manufacturing industry is about building, about putting automobiles, machinery, modular housing, and more together in the proper way and doing so as efficiently as possible.
The same dedication to repeatable, effective processes also applies to building sales proposals, which makes the meaning of CPQ (configure, price, quote) in the manufacturing industry essentially similar to the practice of manufacturing itself.
For example, automobile manufacturing. You design the car, assemble the body, powertrain, chassis, and interior, address the details (paint job, extras), and distribute to the dealerships and customers.
Same goes with a quote: you design (or have someone else design) the proposal templates, add the products and pricing (the powertrain, chassis, and ALL), address the details (specifics for the customer), and distribute it to the customer.
By creating and leveraging repeatable processes, you not only improve efficiency, you also create more opportunities for improving workflows, collecting actionable data, and staying ahead of the competition.
But back to where it all starts: improving efficiency, how to measure that, and where the similarities are between manufacturing and “quote building.”
Comparing efficiency in quoting to manufacturing
For the most part, manufacturing companies have very similar KPIs in how they measure and improve production efficiencies. Outside production, there are countless and variable other efficiency metrics (cost of raw materials, market penetration, distribution, etc.), but we’re going to focus on KPIs in the actual manufacturing process:
Cycle times: How long for one manufacturing cycle to complete, start to finish.
Equipment efficiency: A focus typically on the machinery: Is there enough equipment up and running? Is it functioning at peak capacity? Does it support existing cycle times? Is there too much downtime due to malfunctions and maintenance?
Rework rates: Nothing’s perfect. Rework rates (sometimes called “scrap rates”) capture how many “duds” come down the line in a given cycle.
Let’s compare those to your “quote assembly line.”
Cycle times: How long does it take each member of your team to create and send a quote? How long on average? More importantly, how long do quotes sit in the pipeline before they’re signed or deemed dead opportunities?
With the right CPQ system, you could reduce cycle times by more than 80%.)Equipment efficiency: What are you currently using? Excel? Word? Whatever was included with your CRM system?
One of the key pieces in a CPQ system — the very meaning of CPQ, in many ways — is its product and pricing configuration engine. Creating and managing configurations in a spreadsheet is wildly inefficient as it’s decentralized (different versions of products and pricing will inevitably be stored locally) and time-consuming (as reps must sort through rows and columns to find what they need, and then copy that info into their quotes).
With CPQ as part of your quoting equipment, you simply drag and drop product and pricing configurations into sales proposal templates, et voila! Additionally, these configurations are centrally controlled and administered, ensuring accuracy and availability.Rework rates: We’ll stretch this a little bit for sales quotes, because while there is sometimes some reworking required (adjusting pricing, adding/subtracting products or services, etc. — all of which you can track with a CPQ solution), the thing that matters most at this stage of your “quote assembly line” is closing.
Do you know your current closing rates? Did you know you can increase them by 20% or more by using a CPQ solution like IQX? Why “rework” a quote when you can simply close the deal?
Whether you’re in manufacturing, technology services, healthcare, or ANY business-to-business space, the fact of the matter is that you can “manufacture” more professional sales quotes with more efficiency by leveraging the power of configure, price, quote software.
