RD Engineering in Earlham, Iowa

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• RD Engineering in Earlham, Iowa

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Redesigning the New Business Quoting System

• Ye Chen ye2436_at_gmail.com
• Yen-Yao yenyao_at_iastate.edu
• Mark Varner mark_at_iowacom.net

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Executive Summary

• A local Iowa manufacturer needs to capitalize on
  new business opportunities. Currently their new
  business quoting process lacks the necessary in
  house collaboration and external follow-up
  processes to be successful.
• Our business graduate team believes we can
  implement two fundamental process changes that
  will increase their monthly new business numbers
  by 37.

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Tonights presentation includes information on
1. Company Background2. The As-Is Process3.
The To-Be Process4. Implementation Plan5.
Payback and ROI
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Background

• RD is a family owned business with over 30 years
  of experience in the multi-cavity thermo plastic
  injection molding industry.RD creates assembly
  parts for larger manufacturing operations like
  John Deere and also builds complete product
  solutions requiring packaging, warehousing, and
  shipping.

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What Makes RD Unique?

• RD is distinct in their abilities to run short
  productions with fast turnarounds. These
  capabilities are demanded for todays just in
  time and lean supply chain requirements.

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RD Services Include

• Part Production
• Mold Making
• Packaging
• Warehousing
• Shipping

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Part Production
Small Intricate Parts
Medical Equipment
Small and Large Enclosures
Simple or Complex Parts
Clear Part Molder
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Mold Making
CNC Milling Centers Create Mold Cavities For
Production
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Packaging
Packaging from 3 Inches to 3 Feet
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Warehouse Shipping
10,000 square foot warehouse and close proximity
to Interstate 80and 35 for easy shipping around
the country.
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The As-Is Process

• To obtain new business at RD a quoting process
  occurs between the customer and the shop.
• New customers contact RDs sales department
  through the website or with a phone call. At this
  time the sales manager will collect the necessary
  information to create a quote.
• This information includes customer info,
  product requirements, mold specs, and
  manufacturing quantities.

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Estimate Created

• From here the engineering team estimates the time
  required to build the tool (cavity mold) then
  estimates the cost and quantity breakdowns for
  manufacturing the parts.
• When this information is complete a proposal is
  sent to the prospective customer for his
  approval.

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At This Point We Have a Problem

• Due to the expensive nature of creating cavity
  molds, the customer decision is often delayed and
  delayed and delayed.
• Too many opportunities for valuable business are
  being missed because follow-up is unorganized or
  non-existent.

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As-Is Process Map
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To-Be Process Redesign

• This problem will be solved by creating two
  information management systems to handle the
  information collection required for making quotes
  and the follow-up required for signing contracts.
  The two systems are called
• The Project Information System The Project
  Follow-Up System

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The To-Be Process Map
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Project Information System

• When a request for quote comes into the office,
  the system establishes a template for swift
  processing. The system also tracks key decision
  makers early in the quote process.
• A quote record is created and linked to quote
  information such as drawings, jpeg, or cad files.
  
• From here sales office, engineers office, and
  tool shop will have access to the files.
• When the project quote is complete, it is sent
  to the prospect.

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Project Follow-up System

• A calendar system will be used to manage certain
  milestones in the bid closing process. This
  system automates a continuous flow of contacts
  and follow-ups directed toward the key decision
  makers.
• This includes events and items such as
  follow-up phone calls, business letters, post
  cards, gifts, video emails, and personal visits.
• Each quote will be tracked until the customer
  accepts or rejects the proposal.

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Measuring Success
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Project Cost
Project Component Hours Cost Project
Information System 160 9600 Project Follow-up
System 140 8400 System Integration 80 4800
Long Term Management / Improvement 80 4800 Tota
ls 460 27,600
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Time Schedule
16 week production cycle Week 1-4 Build Project
Information System Week 5-8 Build Project
Follow-up System Week 9-12 System
Integration Week 13 and beyond Long term
customer support report development
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Pay Back and ROI

• This calculation assumes that RDs average
  project brings in 65,000 and can be completed
  in a 12 month period of time. Gross margin
  after production cost is 55, operating expense
  runs 45, therefore net profit is 10.
• Average project of 65,000 earns 6500. And
  using monthly projected contract number of 5.5
  per month the payback occurs at the 2.83 month
  mark.

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Return on Investment (ROI)

• Measuring annual return on investment is based on
  improving the monthly contract count from 4 to
  5.5. This 1.5 contract increase is combined with
  average 6500 profit from each project to give us
  ROI.
• The return on investment is 423.

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Thank you