It was true 50 years ago, and it's true today. One of the biggest hurdles lying in the way of job shops and contract manufacturers is finding out where and why they're competitive.
Some suppliers seem to have it figured out better than others, but more often than not, it's from years and years of trial and error, not necessarily getting in the weeds crunching data. And even those job shops out there who crunch the numbers and really grind down to the nuts and bolts of where and why they're competitive often do it with cumbersome spreadsheets and many late nights hunched over the computer screen ...
But the reality for most suppliers and contract manufacturers is different, especially those small to medium-sized shops that just don't have the time or manpower to invest in deep data analyzation. When you boil it down, analyzing how well your quotes performed against your competition's quotes most likely isn't at the very top of your list -- and if it is, it usually takes a really long time to comb through all the data, time you most often just don't have.
That's why we developed ShopIQ: to help you efficiently and quickly find out exactly how you stack up to your competition, where you're making (or losing) the most money on your manufacturing services, and how to expand (or compress) your business in all the right places, at all the right times.
In a nutshell, ShopIQ helps you see exactly where you're most competitive against your peers by region, manufacturing process, certification, material, and shop size -- all without a major time (or money) investment ...
Here's How to Quote With Increased Clarity and Confidence
Step 1: Building Your Baseline Data
The very first thing you're going to want to do before you do anything else with ShopIQ is build your baseline data. This will build the foundation upon which you'll measure all your other data. This is an essential step that we'll constantly build upon further in this tutorial ...
So, to build your baseline data, follow these three steps:
1.) Select the past 360 days of data from the drop-down menu shown below. This will collect a large chunk of your historical quoting data from the MFG.com marketplace, and serve as a good barometer for your most recent and relevant quoting activities.
2.) Once you select the date range for the data you want, click the blue "Search" button located to the right of the "Search" bar shown below.
3.) Now, once you've hit "Search," your data will refresh to reflect the new date range you've selected (which should be the past 360 days). Clicking the green "View Analysis" button will take you to ShopIQ's in-depth analysis. Now, we can move onto the next step ...
Step 2: Understanding What All Your Data Means
Ok. Now we're cookin' with grease. Once we're properly in ShopIQ, it's time to check out all the data we've just told the system to collect. There's a good bit to cover, so let's take it one step at a time.
"Your Quotes vs. Your Competitors'" & "Your Quotes vs. Awarded Price"
The first two data sets you'll see are "Your Quotes vs. Competitors" and "Your Quotes vs. Awarded Value."
These two data sets will essentially tell you if you're quoting over/under. Obviously, you want these numbers to be high percentages and, most importantly, in the green. [In another post, we'll get much more granular and talk about why these numbers being in the red isn't necessarily bad and why, but for our purposes here, the greener these numbers are, the better.]
These numbers give you a bird's eye view of your average quoting history on MFG.com, helping you get a quick look at how your current quoting strategy is working for your shop. However, we really need to dig a little deeper to see what's actually affecting these numbers ...
Your Shop's "Price by Region"
Next, let's talk about "Price by Region." In the example shown below, the supplier is obviously doing something right: He's even coming in 98% cheaper than China! [We'll talk more about what exactly he's doing right in a future post. But for now, this is a good example of how price by region can formulate your quoting strategy moving forward, even if all fields are in the green.].
The powerful thing about the "Price by Region" chart is that it gives you the ability to see in exactly which regions you're most competitive compared to your immediate competition on MFG.com. Sometimes you'll even be most competitive in a region you're not expecting ... and this chart can also show you where your shop might have new opportunities based on region, or in what regions you should (possibly ... maybe ...) reduce your quoting presence.
Your Shop's Average Quote Price Compared to "Supplier Distribution by Region"
Supplier Distribution by Region is especially helpful for small to medium sized job shops and contract manufacturers because it shows you the exact percentage of suppliers who quoted on ALL the same RFQs you did by region. Why does this help? Well, it helps because it allows you unprecedented clarity into the MFG.com marketplace as it pertains to your shop.
In other words: whereas "Price by Region" shows you exactly where your pricing comes in against your competition's by region, "Supplier Distribution by Region" shows you exactly who you're bidding against by region on a regular basis.
For example, "Price by Region" shows that this supplier is most competitive against Chinese manufacturers when it comes to price. However, according to "Supplier Distribution by Region,"this particular supplier quotes against Chinese contract manufacturers only about 1% of the time.
Conversely, "Supplier Distribution by Region" shows that this supplier quotes against other manufacturing companies and job shops in the Midwest 57% of the time. From this information, coupled with "Price by Region," it appears that this supplier should focus on adjusting his pricing to be more competitive against manufacturing shops located in the Midwest OR shift his quoting efforts to a new region ...
Your Shop's Average Price Compared to "Supplier Certification"
"Price by Supplier Certification" shows you exactly how your shop stacks up against all other shops based on certification. Not only does it allow you to see where your pricing comes in against competitors with the same or similar certifications, but it also helps you identify certifications that may be worth your time to look into.
For example, this particular manufacturing company does not currently have an AS9100 certification, yet this shop is most competitive against AS9100 certified manufacturers. It also shows that this shop quotes about 26% higher than other shops that also have an ISO certification (which this shop also has).
At the end of the day, there could be myriad reasons as to why this shop is more competitive against AS9100 certified shops (and obtaining an AS9100 certification may or may not be feasible or economical for this shop in the long run), and this information doesn't necessarily mean this shop doesn't win jobs when bidding against other certified (or non-certified shops). But ShopIQ will give this shop the data it needs to accurately make business decisions moving forward, such as whether to obtain an AS9100 certification, stop quoting against shops that don't have any certifications, or update their ISO certifications, for example.
Your Shop's Average Quote Price Compared to "Supplier Company Size"
If you're a small to medium sized job shop, quoting against bigger shops can be a daunting prospect. Can ... Using ShopIQ's "Price by Company Size" graph to analyze your quoting data, you're able to intelligently compare your shop's pricing against that of your competitor's pricing based on company size. This data shows you exactly where you fall in line when it comes to quoting against bigger shops.
In the graph above, this particular SMB job shop is most competitive against manufacturing firms that employ 50-100 people, and pretty competitive against contract manufacturers that employ 200-500 people.
But what's most intriguing is that this shop is pretty darn close to being competitive against manufacturers that employ 1,000 people or more (their pricing only comes in 17% higher...). That means this SMB contract manufacturer is doing something right and on the right path to catching up to their larger competitors. And with a little tweaking to their quoting strategy (or some new manufacturing equipment, perhaps) they could be even more competitive against large manufacturing firms.
Your Shop's "RFQ Statistics"
Understanding the intent of the engineers and sourcing professionals posting the RFQs on which you're quoting AND keeping track of the verticals and industry subsectors in which you're shop is quoting the most RFQs is vitally important to the continued success of your quoting strategy. And keeping track of all that information can be daunting. But ShopIQ's "RFQ Statistics" does the heavy lifting for you.
Why is this information beneficial? Because it tells you if, for example, you're mostly quoting prototypes or end-product production runs, manufacturers reps or product end-users, or RFQs in the industry verticals that best fit your shop's manufacturing capabilities. Of course, you most likely already keep this information somewhere and have a pretty darn good knowledge of the parts you typically make. But Einstein once said, "Why remember the things we can write down?"
With ShopIQ, you don't have to keep copious records and wily spreadsheets. All of your most important quoting information is right at your fingertips -- whenever you need it. AND, if you're not the one doing most of your quoting, you're able to make sure your shop is quoting on and taking all the right jobs.
What's more, this data can help you identify potential opportunities for growth and new business. Perhaps you typically only quote RFQs posted by end-users, but want to test the waters with manufacturers reps. Or perhaps you predominantly quote in the automotive industry, but want to move into the aerospace vertical. Or perhaps you typically manufacture prototypes, but want to expand your shop and start producing higher volume production runs. Here, at MFG.com, you can safely test and fine-tune those strategies before jumping head-first into the deep end. And with ShopIQ, you can tell if those strategies are working -- and why.
Getting Into the Nitty Gritty With Shop IQ
Whew! That was a lot of information, but hopefully it gave you a basic understanding of how ShopIQ can take your business to the next level. Not only can you see exactly where your shop is most competitive right now, but exactly where you should focus your quoting efforts to make your shop stronger and more successful than ever before. You can tell if you're focusing on quoting in the right regions, and if you're quoting on the right RFQ types (prototypes vs. end-products, for example).
But that's not all you can do ...
Check back soon for Part 2, where we get into the nitty gritty with ShopIQ and show you how to dig deeper into your quoting data. We'll look at your shop's manufacturing processes and material types to see if you're really making a profit machining carbon steel ...