So many times over the years we have experienced the frustration of losing a major order because of price and thought: “Well, let the other guy have it, he’s going to lose his shirt building it at that price.” It was easier to rationalize and walk away from the potential business.
That has happened to all of us, right?
Then this happens: you can’t get that lost contract out of your head. You can’t stop thinking about it. You keep coming up with ideas for what could have done to get the price down. Maybe you could have put more upon a panel. Maybe you could have punched them instead of routing them. You are now thinking of things you could have done to work smarter, wiser, and more economically to have won that large order. An order the company could really use right now.
But you didn’t, and obviously, your competition did–in the end, they won the proverbial gold ring while all you have is a bag of “would of, should of, could of.” And a feeling of disappointment.
You can sit around and mope or you can learn from this experience and approach the next major opportunity with an open mind.
The ideas you came up with after you lost the order were solid value engineering ideas. These would have not only helped you get to a more competitive price but given you a chance to win that order by working smarter in the end.
And who knows if some of those ideas could have been applied to other projects that were in the shop already, thus increasing the net profits on these projects, as well?
Here are a few simple value engineering guidelines that can be applied to a project before you quote it:
- Approach every quoting opportunity as though it is already won it and are now faced with building it at the lowest cost possible.
- Get your salespeople to obtain target prices (when they can) and then set about doing your value engineering magic to meet or lower that price.
- Put together a value engineering team that reviews every significant RFQ and try to find the best and most economical way to build that project, regardless of the price. Squeeze as much of the cost out of the process as possible. This will help you win the project knowing that you have done all that you can to keep costs down.
And here is a bonus idea for you:
- Apply this kind of value engineering to all projects in your shop. If you can cut even five percent of the costs of the board, you are building savings that will fall right to the bottom line.
In the end, working, smart is the only solution towards company profitability and success…and if you want to sleep at night.
More to come. Stay tuned as we discuss more value engineering ideas in future editions of working smarter.