A Lean Approach to Inquiry-to-Cash: How CPQ Can Provide Maximum Benefit
In his new book “A Seat at the Table: IT Leadership in the Age of Agility” Mark Schwartz states:
“Lean thinking tells us that we can minimize cycle time by eliminating waste in our process, working on fewer things at a time, and reducing handoffs between teams, building in quality rather than catching and fixing errors. These methods are proven to be effective in manufacturing and product design.“
The same holds true for the Inquiry to Cash process of a company. There are many opportunities for reducing the 7 lean wastes with a well-implemented Configure, Price, Quote system:
Waiting: “I’ve got a back-log of approvals to get done.”
“Application engineering has a week-long lead time to get quotes out.”
We all know that the first to quote is often the winner of the work. Today more than ever customers expect rapid if not instantaneous turnaround time on pricing and sales quotations. Even with complex mixtures of products and services.
By enabling your sales force with a configurator, those complex projects can be quoted without consulting the engineering department, or waiting for approval on a discount. These product and business rules should be implemented within a configurator, ensuring that your outside sales force has as much power at their fingertips as possible. Resources that used to spend all their time writing quotes for less complex jobs can now be redeployed to the most complex and high margin projects within the company.
Defects: “I pulled the old price book, and sent the client the wrong price.”
We’ve all been there. An improper e-mail, a quote with incorrect information. These defects can be extremely frustrating and costly. Customers expect correct information the first time.
Documents generated from a configurator eliminate errors in outputs which are often the first interaction with a new customer. In my experience, this can be the difference between winning and losing a job.
Motion: “Let me track down that spec sheet / price list / old job”
With many key individuals retiring or changing positions, it is vital that product information be retained in one location. Valuable time is wasted each day by sales and engineering staff looking for old jobs or product data to support sales efforts.
Information within a configurator can be formatted to ask a series of system-level questions which eliminates the need to search for information.
Over-processing: “Let me go create a new part number and BOM for this order” “When the quote becomes an order I take it from the CRM and enter it into the ERP”
One of the core functions of a product configurator, or Configure, Price, Quote software system is the automation of intelligent part numbers. By building logic into the software, each selection works to build a unique part number. Additionally, this process prevents errors by only allowing correct combinations of components.
There is a huge amount of time that can be saved by integrating all of your sales enterprise software. The manual process of moving data between a CRM, ERP, and Excel sheet where quotes are created is a huge time spend.
Inventory: “Seems like we sold a lot of this widget last year. It would benefit us to stock more”
The automation of sales processes doesn’t stop with a product configurator. Configure, Price, Quote software (CPQ) can help gather data about inventory based on what has sold.
It’s recommended that CPQ solutions that have tight integrations with your company’s ERP systems are considered. This allows for guided selling based on what is available in the factory as the software keeps track of on-hand inventory.
Overproduction: “I have to get these quotes out. I have a ton of canned text to fill in”
One of the biggest time savers of a Configure, Price, Quote software system is the automated output document creation. By creating autofills of text that are currently copied and pasted into every quote or typed in can help with accuracy and save time.
If one of your team’s metrics is turnaround time on quotes, this can have a direct impact on your customer’s perception.
Transportation: “I need to email the sales manager for approval on the discount for this job”
The back and forth emailing that some companies experience through the quote process can lead to significant inefficiencies.
A Configure, Price, Quote software system can automate the approval process, using rules to require approvals and then allowing specified employees to approve quotes with one-click.
About the Author
Bill Barlas is the founder of Quick2Bid. Bill began implementing enterprise software for corporate companies years ago, and prides himself on being caring and communicative in order to drive business results.