Effectively screening new projects: People & Companies

One benefit of a slow economy is the “weeding out” of weaker competitors, increasing business at stronger machine shops. While new business is welcome, increased RFQs require more time to review and may soak up valuable resources—particularly if the quote itself turns out to be a waste of time. Having a system in place to minimize wasted effort is essential and something I’m still tweaking.

With many U.S. companies seeking domestic manufacturing sources, an abundance of potential work is being thrown our way. Many prospects offer tantalizing stories of market potential that could make a shop owner or manager wealthy—at least after the prototypes are done. It goes something like this: “Once our customer approves the test parts, order yourself that new BMW because whoever has the wisdom to partner with us will generate millions.” Sounds wonderful, but once you sign that nondisclosure agreement and receive the drawings, it’s common to discover that your original assessment didn’t include days of drawing corrections, reengineering, phone calls, e-mails and personal visits.

All shops need employees spending time on revenue-generating tasks, but if you can’t promptly screen, quote and respond to RFQs, new business won’t be part of your desired growth pattern. One way to effectively filter valid opportunities from ones that will just waste your time is to require an up-front payment to cover prototyping costs, even if the customer doesn’t think the part is a prototype. If the project pans out and turns into a dream contract, fine, you can credit back some or all of those original prototyping fees. But, if it’s another one-time project that never gains lift-off status, then you’ve at least recaptured some or all of the engineering, development and quoting time.

To get tasks off their desks, many customers send the minimum amount of information they can get away with. If the caliber of drawings and designs are poor, engineering and quoting can easily become a major drain on resources. Carefully scrutinize a new client’s drawings and requirements before accepting their lofty explanations. Remember that providing unclear or unreasonable specifications is common even with larger, more sophisticated companies.