Not Every RFQ Needs Your Attention
This shop discovered the most profitable thing it could do with certain RFQs is to prevent them from ever reaching the quoting team.
Here is a truth every job shop knows that many others seem to forget: Quoting isn’t free. Preparing quotes is costly because it consumes the attention of knowledgeable staff members who could otherwise be giving attention to paying jobs. Yet as shop owner Jeremy Hamilton says, “Responding to every RFQ is the standard machine shop habit.”
The president of Advance CNC Machining in Grove City, Ohio, Mr. Hamilton recently began to question this habit. He became concerned about the price his shop was paying to prepare quotes. Ultimately, he learned that one of the most effective things he could do to protect the productivity of his shop’s team was to teach his salespeople to filter and scrutinize certain requests for quote.
To find the RFQs to intercept, he says, “We looked for patterns.” What were the characteristics of RFQs that led to business? Advance is a high-end, higher-cost shop equipped with horizontal and five-axis machining centers. A study of the shop’s quoting history revealed that, for RFQs that are a good fit for the shop—complex parts of at least moderate quantity—the shop has a success rate of 40 to 50 percent in converted RFQs to orders.
By comparison, a different class of RFQs led to a success rate of only 4 percent. Mr. Hamilton now works to ensure these RFQs never reach his quoting team, coaching those who sell for Advance how to identify and filter them. RFQs fitting this category include cases in which the job clearly is not a good fit for the shop or the RFQ was issued by a middleman. If either situation is true, the right response likely is not to quote.
A few simple questions help salespeople identify which RFQs pass. Is the order at least 100 pieces (or 50 for a very complex part)? Is the job worth at least $40 per piece? Is the source prepared to issue the order?
The last question aims to identify middlemen. This is another way of asking about price, because low price is frequently the main thing a middlemen is seeking. Advance generally cannot win on price alone and shouldn’t try, Mr. Hamilton says. In part, this is because “there is always a shop that will misquote.”
Other tactics he offers for identifying middlemen: Look up the company online to see if it makes a product with a need for the quoted part. Notice whether the company name has been redacted on the print. Also, ask for the job’s target price. This question tends to reveal whether the aim is simply to find the lowest price possible.
Saying no to prospective business is counterintuitive, but filtering RFQs in this way has reduced RFQ processing by 20 percent with no drop in the number of orders. In fact, “I think it helps us win orders,” Mr. Hamilton says. “We can now respond to the good opportunities more quickly.”