Bottom-Line Profitability for Job Shops Found with Cost Estimating Software

Few job shop cost estimating solutions come fully loaded with a library of over 2,000 work centers and materials. Too often there is an attitude among some job shop owners that these technologies are simply too good to be true.

Many of the world’s job shops need to identify part cost reduction opportunities throughout the product development lifecycle, leading to millions of dollars in cost savings. According to Thomas Charkiewicz, President of MTI Systems, “Few cost estimating software solutions have been around since 1982, yet more than 1,000 job shops and contract manufacturers worldwide have been utilizing Costimator JS for the speed, accuracy, and consistency it brings to their quoting process. Calculating the cycle time and cost of manufacturing for a part or assembly in a job shop, based on the capabilities of equipment and shop rates is a matter of bottom-line automation and productivity.”

In fact there are few steps needed to accurately and effective test the efficacy of any cost estimating software.

Step 1: Enter the Part Information

Step 2: Select the Quantities to be quoted

Step 3: Add the required Material(s

Step 4: Pick the Equipment needed to manufacture the part

Step 5: Add the Details for each operation

The result is an estimate complete with time and cost for each operation.

Teri Lerew of AeroFab, Inc. acknowledged, “We have become master machine shop estimators. It was quite easy even for an individual whom had absolutely no hands on experience in machining. The set up and installation time was inconsequential and now we are reaping the benefits with increased profits!” Lerew acknowledged MTI Systems’ job shop software solution for these bottom-line improvements.

Similarly, Chris Lobdell of Northeast Manufacturing noted, "Contract bidding and the art of fast and accurate cost estimating are more crucial to a company's profitability now than ever before. We rely heavily on our system to produce accurate bids for competing effectively."

Job shop cost estimation has concrete and real measurable impacts:

Increase RFQ "Win" percentage by as much as 100%
Eliminate jobs that cost money to produce
Reduce estimating time by up to 200%
Increase shop floor productivity by up to 30%

Cost Estimating Survey Reveals Lost Business Opportunities

MTI Systems’ Charkiewicz commissioned a cost estimating survey of more than 10,000 job shops nationwide regarding the effect that cost estimating has on business. The respondents were unambiguous with 64% stating they believed their company lost jobs because of overestimating costs to make a part during the quoting process.

Nearly all, 93%, believed their company lost money on a job because the actual cost of manufacturing the part was more than it had been estimated. Similarly 93% added a "Fudge Factor" to their quotes because they were unsure of data accuracy.

Rather surprisingly, 79% admitted they did not responded to an RFQ because they did not have time to quote by the stated deadline.

71% confessed that customers asked for justification of pricing by demanding a detailed cost breakout when submitting a quote.

These data only make clear that without accurate effective technology tools in cost estimating, job shops lose business, win unprofitable jobs, and suffer financially and needlessly. Ultimately it is only with effective cost estimation solutions that job shops can look at other areas of automation efficiency.

Thomas R. Cutler is the President & CEO of Fort Lauderdale, Florida-based, TR Cutler, Inc, (www.trcutlerinc.com). Cutler is the founder of the Manufacturing Media Consortium of three thousand five hundred journalists and editors writing about trends in manufacturing. Cutler is a member of the Society of Professional Journalists, Online News Association, American Society of Business Publication Editors, Committee of Concerned Journalists, as well as author of more than 300 feature articles annually regarding the manufacturing sector. Cutler is also the developer of lean technology C.E.O (Continuous Experiential Optimization). Cutler can be contacted at trcutler@trcutlerinc.com. See More Details.