The subject company, C011¹, is a 10+ year old, private family-owned business located in Hudson County in the State of New Jersey. As a provider of specialty event planning merchandise, their product line is continually expanding to satisfy the needs of their customers and keep pace with innovative technologies. The Sales Department is challenged to submit quotations quickly and accurately, often without adequate historical data. Most of the items are manufactured in India and shipped to the US, incurring costs throughout the supply chain. Profitability is not tracked well.


By listening to the stakeholders, it was determined that the overall process for quotations was not meeting internal expectations. Turnaround time and accuracy were serious issues.


The process for responding to the Request for Quotation (RFQ) was:


1. Request for Quote ------------------------------------------------------------------

2. Determine Scope of Work (SOW) --------------------------------------------
3. Identify New Items -----------------------------------------------------------------
4. Create Rough Bill of Materials (BOMs)--------------------------------------
5. Estimate Labor Hours -------------------------------------------------------------
6. Create rendering of installation -----------------------------------------------
7. Estimate Transportation Costs ------------------------------------------------
8. Estimate Installation Costs ------------------------------------------------------

9. Gather all information, deliver to Administration -----------------------

10. Create Financials for Quotation ---------------------------------------------

11. Create complete Quotation for Customer (Costs & Renderings) -

12. Deliver to Customer --------------------------------------------------------------


1. Customer

2. Sales Dept., Creative Dept., Project Manager

3. Supply Chain Manager/Project Manager

4. Project Manager

5. Project Manager

6. Creative Dept.

7. Supply Chain Manager

8. Project Manager

9. Project Manager

10. Administration

11. Creative Dept.

12. Sales Dept.

Since the customer expected a completely assembled and installed product, multiple departments were required to determine the Scope of Work (SOW). The departments would interpret the customer’s request and propose solutions for meeting their expectations. The Creative Dept. would create renderings of the installed product for customer review and approval. The Project Manager (PM) was responsible for establishing the costs for the product as depicted in the rendering, and the Selling Price, utilizing burdened labor rates as needed.


A time study was done on the RFQ for a typical customer’s order.


The kick-off meeting, where the SOW was established, was poorly organized and run. The meeting took more than three hours, mostly due to a lack of preparation. The answers to standard questions were not readily available. When the wasted time was tabulated, it exceeded 1 man-day.


The Creative Dept. spent the next several days interpreting the customer’s needs and developing a rendering of the merchandise to be supplied. After internal review, the pictures were sent to the customer for review and approval. Any additional changes were done during this reiterative process.


Due to financial limitations, C011 had not implemented an inventory tracking system. Material costs were not readily available, nor was on-hand quantity. The financial reporting software being used was not capable of providing this information either.


Since merchandise was being manufactured in India, the 10-1/2 hour time difference was a factor in obtaining costs. The turnaround for a price request was at best 2 full days. If a request was made on Monday, Tuesday the supplier would work on the cost and Wednesday the cost would be available.


Once costs were received, separate BOMs were created for each assembly. When all assemblies were determined, transportation costs were estimated by the Supply Chain Manager, based upon size and weight. All information was given to Administration for consolidation. A complete quote sheet was then created using a word processor. The quote sheet, together with the renderings, were packaged and given to Sales for delivery to the customer.


The two main concerns, turnaround time and quotation accuracy, needed improvement.

The meetings were a source of lost time. Waiting for overseas pricing extended the time to deliver a quote. Not having standards and readily available historical data resulted in work duplication. Customers wanted faster turnaround with pricing and management wanted better control on expenses and profits.


In general, meetings are a common source of lost productivity. To make them more efficient, a policy was implemented that required the meeting organizer to provide a detailed agenda with the meeting invitation. Included with the agenda was a checklist identifying the necessary information (customer name, location, buy/lease, dimensions, etc.) and budget. Each meeting began by assigning a person of the team to record the minutes of the meeting, which had to be distributed to the team by the end of the day. The savings were estimated to be about $1,000 per meeting.


To expedite supplier quotations, another checklist was created that addressed the information that the supplier typically needed. Since the turnaround for accurate data was measured in days rather than hours, this shortened the timeline without adding any cost.


The passing of papers from one department to another creates an environment for errors. Retyping from one format to another is a waste of time. The fewest hands that are needed to complete a task, the more money saved.


One of the shortcomings of the current system was the inability of the Sales Dept. to provide quick estimates to the customer for standard items. Since there was no database available, even minor quotations had to undergo the same lengthy process.


To address this, and since the PM needed access to material costs for future reuse, it was decided to develop an Excel based inventory/quotation system that would:

  • Reside in the cloud for shared data entry

  • Assign SKU numbers based upon categories

  • Calculate “Landed Costs” (cost from supplier to C011’s door)

  • Estimate Transportation Costs (Customs and Duty) based upon size and weight

  • Allow for variable profit margins

  • Allow for changing labor rates

  • Create a Quote form using dropdown boxes

  • Be given to the Sales Dept. for rough estimates


The development of the working and tested workbook took approximately 1 man-week to conceive. Individual worksheets were created for:

  • Quote template – Selection of SKU, quantity, Selling Price (ea. and total)

  • Configuration – labor rates, overhead, profit margins, category definitions, etc.

  • Revision History – Documented changes and upgrades

  • Category Worksheets – SKU numbers, descriptions, lead times, etc.


The PM would create the SKU number for each item on the Category Worksheet and enter the SKU and quantity on the Quote form. As suppliers provided costs to the Supply Chain Manager or PM, they were entered on the Category Worksheet, automatically calculating the Selling Price based upon the predetermined formulas for profit, etc.

By using a spreadsheet rather than having Administration hand calculate the prices and enter them into the Quote form, a significant improvement in accuracy was achieved.

The information entered on the Category Worksheets provided historical costing information and descriptions, establishing trustworthy historical data.


If the total on the Quote form was beyond the customer’s budget, quantities could be easily altered, profit margins changed, or substitutions easily made to achieve desired results.


After placing the changes in place, the time to required for quotations dropped dramatically. Customers requesting standard items would receive the Quote form and renderings in a few days. Custom solutions were done within two weeks, including implementing customer changes.


The solution has also provided a foundation for future improvements by documenting costs, decisions and options. When the financial situation permits, there is data to enter into an inventory or ERP system. Until then, it is useable.

© Executive Confidantes, 2020