- Revenue: $40,000,000
- General Description: Manufacturer
- Geographic Location: Midwest
- Markets Served: Automotive, Appliance, Office Furniture
Founded in the 1960s, this 2nd / 3rd generation closely held family-owned business is a world-class manufacturer of stamped metal parts, value-added assemblies, and tooling. Utilizing an engineering-driven sales process, the company partners with its customers to develop innovative solutions in the areas of product and process designs.
The company experienced rapid growth but had not updated its cost standards in 2+ years, as plant square footage increased, new manufacturing equipment was added, and headcount doubled. The Sales organization believed it was quoting and winning new business with above-average margins, but the Operations team struggled to achieve budgeted financial performance.
After assessing the current estimating (quoting) process it was discovered that the company’s home-grown quote model was out of date, not capturing all the steps and costs in the manufacturing process.
JACO Advisory Group (JACO) worked with the company to develop a new quote model that accurately captured and calculated all the costs associated with each step of the manufacturing process. Manufacturing costs, cycle times, manpower requirements, purchased components, outside services, packaging, transportation, and tooling, costs were all clearly identified and easy to understand in one easy-to-use quote model.
Additionally, JACO worked with the company to document the cross-functional quote process with common sense work instructions and process flow diagrams.
Upon successful implementation of the new quote model, the company requoted several new projects that had been recently won, uncovering gaps in anticipated margins. Using the data from the new quote model, the company was able to have data driven discussions with its customers and update economics on several unprofitable new job awards.
Further, the company utilized the new quote model in their business planning process by rationalizing unprofitable work/customers. As a result, the company improved margins on existing and “won” work by $750,000 in the first year.