Automate proposals in industrial sector

We want to make some reflections on how to automate proposals during the sales process and the benefits that we get, especially in the case of industrial companies. Many of the companies still have a very manual sales process with a lot of improvement margin. What we want is to automate the repetitive tasks of the proposal process with the following objectives:

• Reduce the resources needed for the preparation of bids, in terms of time and personnel. If we achieve this we will have more resources for other tasks related to the client, or just to be able to make more offers with the same resources.
• Reduce errors, especially in relation to cost estimation.
• Improve the presentation of the offer. We want to show our interest in obtaining the order.
• Prepare a cash-flow calculation of the project that is as close as possible to reality.
• Document the offer well, for future reviews or for similar cases.

In summary, what we are looking for is to professionalize the proposal process as a whole. This type of automation is also part of the process of digital transformation in which we are all immersed.

In the industrial sector the use of MS-Office tools is very usual, especially Excel and Word. We have our own spreadsheets, better or worse made, that we are re-using from one offer to another. Many of the large multinational companies that sell components have corporate programs to offer material references.

But when we talk about offers where there are also services, that is, hours of design, engineering, programming or commissioning, is when it is more important to professionalize the process. Usually, as the weight of services rises, risks also increase, and it is when automating some of the phases of the proposal process is more worthwhile.

Phases of the generation process of the bid

What phases of the proposal process can be automated? Which ones are worthwhile? In general, we can say that almost all of them can be automated, although the benefits of doing so are not the same in all phases.

The stages of the process can be simplified according to the following:

1. Reading and analysis of the documents of the offer, such as technical specifications, commercial conditions, guarantees and penalties, the required delivery period, etc.
2. “Bid / No bid” Decision. It is best to have some internal procedure that allows us to make a quick evaluation of the client/project attractiveness, the probability of success and the risks.
3. Phase of design and pre-engineering. Depending on the case (budgetary or firm offer) we will have to perform some design tasks to calculate the costs with the smallest possible error.

There are hardware manufacturers that have “configurators” for their clients that facilitate a lot some of the tasks (the control architectures configurators of Siemens or Rockwell Automation are good examples of this).

1. Estimation of material costs and man-hours. Main costs should be updated, even if we have similar prices from past projects. The estimation of hours, always a difficult task, should consider the actual data of used hours by profile of some similar recent project.
2. Preparation of technical documents, such as lists of materials and services, lists of recommended spare parts, data sheets of instruments and equipment, dimensional drawings, etc.
3. Calculation of sale prices and payment terms based on the cash flow of the project. The ideal payment milestones are those that give us a positive cash-flow throughout the life of the project. Often this is not possible because the client does not accept them, but we must try to get closer.
4. Creation of the project schedule and the delivery time. In the bid phase, it is normal to prepare a schedule of the main tasks without going into detail (engineering and / or software development, purchasing, manufacturing, testing and commissioning).
5. Preparation of the list of exceptions and deviations from the customer’s specifications. It is an important document, especially if it’s a firm offer.
6. Writing of the main document of the offer (sometimes separating the technical offer from the commercial one), and the letter to the client, and including other standard documents as well (list of references, technical catalogs of the products, organization chart of the project, etc.)
7. Internal approval phase (with our managers). Sometimes we will have to revise the offer by going back to one of the above points.
8. Offer revisions after the first meetings with the client.

There are phases that cannot be automated, such as reading and analysis of specifications (phase a) and the list of deviations (phase h). There are others that we can automate to a certain degree, such as the Bid / No bid decision (creating simple automated forms that help us to perform a project categorization and evaluation), and there are others that are very liable to be automated (phases c, d, e, f, g and i).

For the automation of phases d-e-f-g-I we have developed the tool “Bid Generator 1.0” which is available on this website. This first version is based only on Excel with numerous macros in Visual Basic.

The most efficient way to automate an offer in the industrial sector is to base its format or structure on a short main document, as a summary, and many Annexes, since it is relatively easy to generate the Annexes automatically (creation, format and PDF generation).

It is also simple, from pre-configured templates, the generation of the main document and the letter to the customer. This first version of “Bid Generator“ makes all these things, using only Excel. In future versions, we will add other macros to be able to work also with Word and PowerPoint.

In many companies, MS-Word is used to create the main document of the offer, and in many cases, ends up being a document with too much information that is not easy or comfortable to handle by the client. A good option is to create a simple Word template with the summary of the offer, the commercial terms and the list of attachments. The customer will appreciate it.

In any case, to automate proposals requires you invest some time in the first offers that are the ones you will use as models in other similar ones. The time savings in the proposal process will depend on several factors, such as complexity, project size, knowledge of the customer and its specifications, etc. As an example, we can mention that in an offer of an ESD System for a refinery (Emergency Shut-Down) we can save around 30% of the hours of the proposal process.

As we said at the beginning, let’s not forget that to automate proposals not only pursues the goal of saving time, but reducing errors and improving the presentation and quality of the offer. The better we perform more accurately the calculations of the costs, the less contingencies we have in the offer, and therefore we will reduce the sale price, increasing the chances of success.