The company was unable to win contracts, operating with a win rate of under 20%. This low percentage was a consequence of the deep lack of the understanding behind the pricing structures and justification for costs.
Initially in order to combat this low win rate, the strategy was implemented to increase the understanding surrounding the pricing structure.
By providing and understanding of the relationship between pricing and customer benefit and in how cost structure was created, an individual well versed in the structure of the business was tasked with full responsibility of creating a system with supporting procedures.
The system needed to track complex processes and factor in items such as materials, labour rates, process timings, overheads, profit and projected investment. This then allowed the business to make more formative decisions on how to improve the tendering process. The data that was generated was then benchmarked against known prices that competitors had submitted for customer projects. This provided an understanding where processes were to be modified and engineering solutions embedded in order to become more cost competitive.
As the system and process developed, it generated more questions than answers. This then sent us on a journey to collect more detail and information both internally and externally.
- Understanding cost structure (assumptions and no gaps in knowledge)
- What can you sell it for? (effective sales department)
- Once project is won, what are you making for it? (manufacturing department)
This system implemented supported the senior management team in making better decisions on how the business should be run in order to win new business and where improvements or investments were to be made. This resulted in the company going on to went on to win more new business with the win rate of over 60%.Back to Case Studies