Blunder 1 – Patriarchal thinking that leads to a false sense of security

The patriarchal approach holds that there are clear vertical lines of authority in a company – information flows to the top where decisions are made and directives flow downwards. This “smartest guy in the room” approach has unintended negative consequences. It tells those in the middle or bottom that they are not responsible for their own decisions and undermines personal responsibility and accountability. It disempowers people and undermines their ability to fully contribute, leading to complacency. People become reactive and see no reason to change.

A more distributive authority model actively engages employees in planning and decision making. Meaningful involvement promotes a sense of buy-in and personal responsibility. People not only accept change, they often drive it.

Blunder 2 – ‘Siloed’ approach to organization

Traditional management programs promote a mechanistic approach that views organizations as collections of spare parts that can be managed independently. Safety is the responsibility of the safety manager, quality is located at the back of the building and separate departments are often antagonistic towards each other. No single unit can see how the whole system operates, so no-one is meaningfully engaged in finding system wide solutions.

Blunder 3 – No clear vision of the future

Exemplary organizations are exceptionally clear about their purpose. Purpose is defined by clear visions of the ideal condition they want to achieve in the future, as well as the principles that guide movement towards the vision.

Too often vision statements are just pictures on a wall, with no connection to the day-to-day operations of the organization. Positive, forward looking visions and guiding principles are a driving force behind a common goal.

Blunder 4  – Confusion over cause and effect

A problem cannot be solved if you do not know what it is. Lacking a sound understanding of the true sources of their problems, organizations resort to treating symptoms.

If an order ships late, management blames production. Production blames purchasing for not getting parts in time, purchasing says engineering didn’t get them the parts list, engineering says sales didn’t give them all the information they needed, sales says they knew information was lacking but management said to enter the order anyway because this month’s numbers were weak, we’ll make up any delays in production…

Blunder 5 – Lack of information

Organizations cannot transform themselves unless employees are willing to actively support and participate in the effort. People will resist change unless they clearly understand the need, purpose, strategies and expected outcomes of the effort and believe it will succeed and benefit the organization and themselves. A tremendous amount of clear and easily understood information is needed to generate this type of understanding.

Blunder 6 – Insufficient mechanisms for learning

People ultimately learn by doing and by judging results. When employees are given few opportunities to test new ideas, and when few rewards are provided for those who do so, not much learning will occur.

In underperforming companies, employee innovation is often frowned upon and not accepted. On the other hand, top performers consistently acknowledge and visibly reward employees  who propose new ideas, apply them and learn from the results.

Blunder 7 – Failure to institutionalize a new culture

The ultimate success of any new initiative is found when thinking, perspectives and behavior that reflect the new initiative are incorporated into the everyday operating procedures and culture of an organization. As long as an organization’s policies and procedures remain at odds with the new initiative, the risks are high that old thinking and behavior patterns will eventually rise up and overwhelm efforts to adopt the new initiative.

If one or more of these blunders exist, spending millions on new technologies or installing new management systems will not by themselves drive any new initiatives. On the contrary, confusion may reign over the purpose and goals of the initiative, new policies and tools are likely to be poorly understood and implemented, employee commitment will be marginal and thus initial progress is likely to stall or the effort may simply crumble. The presence of any one of the blunders may undermine the ability of an organization to adopt a new initiative, but sound leadership will create a dialogue that  promotes and supports change.

1.  Focusing on a single variable such as throughput or price at the expense of other potentially important variables. Reith says “concentrating on throughput alone can be a recipe for an inefficient facility. It is only one factor to consider in optimizing performance. Other factors include energy efficiency, process flexibility … and product specifications.”

2.  Failing to get the input of operators and other people who will be involved in operating and maintaining the machinery. Plant level personnel are often all too familiar with problems with existing equipment and procedures. “The participation of operations personnel in the project team is critical for a number of reasons. For one thing, operations can offer ground-level insights that can improve the unit’s design. For another, the company will be more likely to earn the all-important buy-in of operations personnel in the new project”, according to Reith.

3.  Not modifying procedures to take full advantage of a new machine’s capabilities and modern industry practices. “Even as they spend millions of dollars on state-of-the-art equipment and the latest bells and whistles, too many operators fail to focus on the nuts and bolts of running an efficient plant,” Reith said. “In our research, we have consistently found that the performance of a company’s existing plants is the single greatest predictor of the performance of its new facilities. A fourth-quartile performer won’t become a first-quartile performer by opening a new plant – unless it adopts industry best practices in its operations.”

4.  Failing to consider the capabilities of their current operators and the potential need for training and maintenance support. “Building new facilities is expensive, and unfortunately, sometimes employee training is one of the first items to be cut in trying to meet budget estimates,” Reith said. “This is a classic example of false economy. New facilities rarely meet ROI projections if operations personnel are not adequately trained on new equipment and procedures that drive performance.”

Purchasing new machinery or processing lines for your plant involves more than just comparing technical features and benefits and then beating up the vendor on price. You need to consider many variables, related both to the vendor and to your internal processes as well. With decades of experience in the machinery sector, Procurement Management Group can ensure that you are aware of all the issues so you can maximize the return on your equipment investment.

There is often confusion about the difference between a performance guarantee and an equipment warranty. A warranty is standard with all equipment purchases and covers workmanship, typically lasting for one or two years for most machinery suppliers (anything less than one year should not be accepted these days). If you buy a car and the door handle falls off, that is covered by the warranty. If you had it written into the contract that the car will go from 0 to 60 in under eight seconds, that is a performance guarantee. It describes how the machine will actually perform, and while it may have a time component attached (the performance levels must be reached within 60 days, or be continuous over six months, for example), it typically expires once the criteria are met.

While a warranty is a standard clause in an equipment contract, a performance guarantee is not and should be negotiated either as a separate contract or as an integral part of the equipment quotation/contract. In our car example above, mentioning the 0 to 60 time in a brochure is not enough, the performance expectations must be put into writing with specific remedies or penalties listed for not meeting the expectations. You definitely want to finalize the performance guarantee before you place the order to retain your negotiating position.

Should you ask for a performance guarantee on all machinery orders? Absolutely!  Quotations are generic and may not reflect your particular needs and conditions, a performance guarantee will be written to suit your specific requirements. Some suppliers are not keen on them and try to avoid them, but any reputable supplier will recognize that a well written guarantee works in their favour as well since it gives them a design target, it gives the customer a realistic expectation of what the equipment will do and it also sets a final approval point for the customer. Once the performance guarantee is fulfilled, the customer should have no excuse to delay their final payment.

Unlike a warranty, there is no standard form for a performance guarantee and they can be different for each project depending on the customer’s requirements for speed versus quality and other factors. Going back to our car example, if the 0 to 60 time is not crucial, there could be staged penalties for 8, 10 or 12 seconds, or it could be all or nothing for an 8 second time if that is the only reason for selecting a particular supplier.  Each side would add conditions to clarify the guarantee, such as requiring a trained driver operating the car on a specific road surface with a particular fuel, trials to be done within 30 days of shipment, etc to make sure that the trials are done to both sides satisfaction.

This assumes you are buying a complete machine from one supplier – what if you are assembling a line using a number of suppliers? In this case no one supplier would guarantee the 0 to 60 time of our example, but each sub-supplier could provide a guarantee on their portion of the project. The engine supplier could guarantee x horsepower at a specific rpm, the transmission supplier could guarantee that he can handle the speed and horsepower requirements, and so on down the line.

The amount of detail and the penalties for non-performance should be proportionate to the cost and risk of the project, as well as giving the supplier a reasonable opportunity to correct shortcomings.  Suppliers have been known to just walk away from projects if they decide that the cost of correcting a project that doesn’t meet the guarantee is greater than the rewards of compliance, which is certainly not in the buyer’s best interests. Also watch out for the supplier who requests a “bonus” for exceeding the guarantee. Since they are fully aware of the capabilities of their equipment, this tactic indicates bad faith bargaining or worse!

There are many other factors that go into a good guarantee, but you can see how performance guarantees can be an important tool for differentiating between suppliers and making sure that you get equipment that meets your requirements. With all the possible permutations and variables involved in a major project it can be challenging to negotiate a guarantee that protects your interests and is acceptable to your supplier. Contact us if you would like to get our assistance with negotiating your next project.

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After a search, we identified two possible suppliers. Both were in the USA, both demonstrated expertise with the particular process and although they hadn’t done any business in the client’s country, they both had done projects in neighboring countries and had support in the area. One vendor quoted around $400,000, the second was around $600,000. The more expensive vendor did include an additional processing step, but it didn’t fully justify the price difference and both vendors said their equipment would do the job. Should price alone determine the best vendor, or should other factors be considered as well?

Ideally, to prove each vendor’s capabilities the best option would be to run a trial on an existing machine with the client’s material. This wouldn’t be possible in this case, as the equipment would be custom designed for the application and it was unique enough that neither supplier had done a similar application in several years. It may have been possible to run a trial on a similar piece of equipment in an existing processing plant, but with concerns about contamination that would be very unlikely. Lab-scale equipment wasn’t available, in any event this process didn’t scale-up well so results would be unreliable.

What about quality? Is the more expensive vendor “better” than the other? While a visit to each vendor’s plant would be very important to confirm the vendor’s claims if the project had progressed to the next stage, the relative quality of the equipment could be difficult to quantify. Both vendors had been in business for many years, and had references and ISO certification. These days the “quality gap” has shrunk so that two established vendors in the same industry in the same country aren’t likely to be too far apart. Each vendor will lay claim to its superior  features, but these claims will often be contradictory and hard to differentiate without product trials.

An important part of the process would be getting a performance guarantee written into the contract. This is a big topic so I’ll talk about it in more detail in a future blog. Getting the vendor to put their claims in writing with prescribed corrective actions and penalties will often bring out the better vendor and should be part of every complex project contract.

So far, with the limited information that is available it looks like the lower price vendor is a viable option, but what about other ‘soft’ issues? The cheaper vendor was actually a smaller, family owned operation and it appeared that the process expertise was held by one or two key managers. While small companies can be leaders in technology, support is often an issue. Since this was a new process for the client with a long learning curve, ongoing support and training was going to be a key to the success of the project. This vendor had been difficult to contact during the quoting process, how likely would he be to support the client once the equipment had shipped?

The expensive vendor was an international company with a company owned service office in the area, while the cheaper vendor just had a sales agent. Although process knowledge was still located in the US with the more expensive vendor, they had far more international experience and technical support was available locally to assist with start-up, training, spare parts and service.

If the client had been in the US and had some process experience, the cheaper vendor might have been a viable alternative. For an overseas client who was likely going to require extensive assistance after installation, the cheaper vendor just didn’t have the resources to provide reliable long term support. The higher price vendor in this case would likely be the better choice, subject to confirmation of the vendor’s abilities, performance guarantees and contract negotiation, of course.

When buying machinery, you need to look at more than just price and technical details. According to a PMMI study, it is common for equipment to be operating at only 70% of capacity a year after start-up. It is crucial to consider training, maintenance and long term support in any equipment procurement project.

One of Allen’s side-stories that shows the incredible complexity of history is the late medieval conversion from wood to coal as a fuel source. After the plague, huge numbers of farms in England were abandoned, which gave sheep access to vast pasturelands. As the priority previously had been to feed people, the sheep had been undernourished, producing low quality wool. But with access to new pastures and improved nutrition the quality of English wool unexpectedly improved, now producing long, strong fibers which were used to make new draperies which became a major export product. It was this growing wool trade passing through London that led to its emergence as a major international port with a growing population. But as the population grew, wood and charcoal became increasingly scarce. As wood was the only source of energy for heat and cooking, this was creating a crisis.

As the price of wood soared, England’s vast coal fields became an economically attractive source of fuel, but major technological issues had to be overcome. The houses of the time were nothing more than four walls, an open wood burning hearth in the center and a roof with a hole in it which only grudgingly released the smoke from the fire. There was usually a thick cloud of smoke hanging at the ceiling so people lived on ground level, while cuts of meat were hung from the ceiling and actually cured in the smoke above. To simply replace wood with coal would have been fatal due to the toxic by-products of burning coal. Coal is also difficult to burn and requires a special firebox. Dealing with these issues was remarkably complex, as the firebox, chimney system and the entire house had to be re-designed, and it could only be done by experimenting with new designs on actual houses. A change in one component of the system could radically affect another so all parts had to be modified together. This type of innovation could not be carried out by one man or one company. It was only in London where a rapidly growing new housing market combined with large numbers of craftsmen who were able to learn from each other (not always amicably, I’m sure) that effective coal burning technology could be developed. (This greatly over-simplifies actual events.)

A number of factors had to come together for this “Medieval Manhattan Project” to occur. First was a major, unifying central cause to drive the process (the big pull), the requirement to develop a new technology to exploit a cheaper fuel source. The second was a need for expertise and experimentation beyond the capabilities of one person or company. A third was for the craftsmen to be able to learn from each other easily, including failures as well as successes. And finally benefits commensurate with the size of the project, in this case inexpensive and safe fuel technology for the masses, and rewards for the builders and craftsmen who developed the improved systems for the safe and effective use of coal as residential fuel.

Fast forward a few hundred years to a meeting of the Waterloo Manufacturing Innovation Network  (MIN). The region around Waterloo, Ontario is a hotbed of technology, home to companies such as Research In Motion (RIM) and Comdev, a leader in aerospace technology. MIN was established to assist the growth of the local manufacturing sector. A topic of discussion in the meeting was developing Innovation Clusters to promote business growth through collaboration. This sounds a lot like the environment our medieval chimney builders developed hundreds of years ago. While many centers of this type have developed over the years including California’s Silicon Valley computing hotbed, Detroit’s automotive center in the first half of the twentieth century and probably dozens of others, the difference is that where the earlier centers evolved on their own, governments are now trying to nurture them to create economic growth. The results have been disappointing, and a comparison with our medieval example could show why.

While some groups like academics take to collaboration easily (RIM’s Perimeter Institute is a great example), businesses that don’t have a direct buyer/supplier relationship need a common cause to work together, otherwise they cannot overcome the barrier of distrust and self-interest. In Silicon Valley hardware and software companies came together to make products for the information age, and in Detroit specialists in engine design, sheet metal and electrical components came together to fill a need for personal transportation in a new industrial age. Anything more than limited collaboration between companies without a common interest other than geography isn’t likely to occur.

In a time where information is power and competition is fierce, it is difficult for groups to learn from each other for fear of losing their secrets. While academics will work with companies to develop new ideas or technologies, both are acting in their own self-interest. Academics want funding and to publish, companies want to develop new ideas for their own use. While this is a mutually beneficial and positive relationship, it doesn’t enhance the larger community’s learning in the short term.

In a ‘winner takes all’ environment mutual gain can be an issue as well. In our medieval example if we take away any one component such as personal profit for the inventors and builders, a cheap energy source or safe warm houses for the masses, then development stops. The gains of collaboration need to be commensurate with the risks inherent in sharing your ideas with others.

Contrary to Hollywood’s hero mythology people and companies can achieve far more by collaborating than by working in isolation. Understanding what actually drives and motivates groups to work together can go a long way to developing an improved approach to creating dynamic Innovation Clusters.

The phrase comes out of the housing industry where buying a turn-key house means that you place your order and later  ‘turn the key’ on a house that is ready for occupation. You can easily see how this can lead to confusion if the buyer and seller have different expectations – the seller provides a house that is complete and functional, but the buyer could be expecting curtains on the windows, carpets on the floor, etc. A great example of the benefits of signing and reading a contract!

Similarly, equipment suppliers installing a turn-key line have to draw a line somewhere, otherwise they can fall into a bottomless pit of expenses. Utilities are often a point of contention. Suppliers will specify that the buyer has to bring electrical and other connections within 50 feet or so of their equipment connection, which sounds straight-forward. However, the details often get overlooked – are multiple feeds required, who is supplying and sizing the disconnects? If a step-down or isolation transformer is required, who is buying and installing it? If connections are required to existing equipment, who is supplying them?

Even with a turn-key project, the buyer should expect to spend a considerable amount of time at the beginning of the project providing location details, particularly if the equipment is being imported from another country. Floor layouts showing columns and other obstacles, utility locations and many other details will need to be provided during the design phase. The buyer is ultimately responsible for meeting local laws, getting the right permits and complying with other regulations so make sure you check into this before the equipment arrives to avoid problems and delays during installation.

Shipping and installation details are often overlooked. Who is getting the shipping containers through customs and to the buyer’s plant? Who is responsible for receiving the equipment and unloading the trucks? Is the supplier sending their own crew, or hiring local workers? Are living expenses included? Depending on the supplier’s experience in a particular country, any of these items could be excluded. In some cases it may be to the buyers benefit to take care of things themselves, as an inexperienced supplier will overestimate costs leading to needless expense, or an expensive crew could be wasting time (charged to the buyer) standing around waiting for a shipment to arrive.

Both buyers and suppliers use the phrase turn-key in the hopes of getting a ‘simpler’ project, but an educated buyer will realize that they still have to do their due diligence and look into all the details of the project if they want a successful project without delays and added costs.

The biggest factor will be a continuation of the highly competitive marketplace that has been the reality for most manufacturers in North America in the last five years or so. With little growth in the overall marketplace, companies will have to steal market share away from their competitors to achieve any growth, which will lead to increased pressure on prices and razor-thin profits.

Companies will continue to consolidate in an attempt to increase their buying power, retain fewer, more productive lines as well as reduce pricing pressure by eliminating some competitors. Multinationals will continue to close unproductive plants in Canada and consolidate production in larger US plants, which will have excess capacity due to the continued slow-down in the US.

In the new equipment market there will likely be far fewer new production lines sold as there will be fewer opportunities for growth. Instead, the opportunities will lie in maximizing the effectiveness of existing lines by incremental improvements to increase linespeeds, reduce start-up and changeover waste, and reduce manpower with automation. In other words, get every last penny out of an existing production line! The fly in the ointment is that with tight margins it becomes increasingly difficult to find the funds to maintain an older line, much less add new equipment to it. Cash flow is king, so no matter how short the ROI is, if a manufacturer is concerned about making payroll next month he isn’t going to buy new equipment. If you add in concerns about the long-term viability of a particular product, surplus capacity and the difficulty in getting credit, manufacturers will be very slow to spend.

Equipment suppliers will be under pricing pressure as well. R&D and new product development is the lifeblood of a machinery supplier, and with reduced margins it will be increasingly difficult for small to mid-size suppliers to maintain competitive spending on R&D. They will likely be forced into ever smaller niches or get bought-out by larger competitors.

For both manufacturers and equipment suppliers, the only way out of the trench warfare of pricing battles is to try and find some sort of technological innovation which will provide an edge, however temporary. While this is becoming a common cliché, it is becoming increasingly difficult to implement. In straight commodity markets (such as tubing for a utility), it is almost impossible as the requirement for three quotes means that suppliers are limited by the specs. In other areas, it seems that great leaps in innovation are less common, as steady, incremental improvements seem to be the order of the day. This is best seen in the narrowing quality gap between “high quality” and “low quality” producers. Whether in appliances, cars, power tools or industrial machinery, there isn’t the same gap between top and bottom as there was ten or twenty years ago, making it increasingly difficult for manufacturers to differentiate themselves. Even in electronics it is becoming increasingly difficult to maintain a lead, as innovative market makers like RIM are quickly caught by their competitors.

Without a doubt, the coming decade will be a challenge as it is unlikely that things will return to the “normal” conditions that we enjoyed a few years ago. However, new opportunities will always present themselves, particularly with a global marketplace that is incredibly connected. The only trick is to find the opportunity!

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Not according to Eric D. Beinhocker. In his book The Origin of Wealth he discusses a study by McKinsey & Company that looked into the real causes of the productivity gains in the US during the 1980’s and 1990’s. One of the major contributors to the productivity gains? Wal-mart! Their innovations in large store formats and highly efficient logistical systems enabled them to be initially 40% more productive than their competitors. This in turn forced their competitors to imitate Wal-mart’s organizational innovations to remain in business. Beinhocker writes “This particular innovation race in social technologies in the retail sector alone accounted for nearly a quarter of the growth in overall US productivity during the period”. The key point here is that it wasn’t technology that drove the gains, it was the innovations in how companies were organizing and managing themselves, what Beinhocker refers to as social technologies. While new technologies such as the PC allowed them to fully implement their ideas, technology wasn’t the driver, it was the tool. The real driver was the innovative approach by Wal-mart to redefine it’s way of doing business that made the difference. Beinhocker continues “Similar social technology innovation races in five other sectors made up virtually all the rest” of the productivity gains.

Canada has very few multi-national corporate head offices, still has a significant “branch plant” economy run by foreign owned corporations, and is also made up of many medium sized (by global standards) or smaller businesses. The level of social innovation seen in the US and other countries isn’t likely to be seen here, eliminating a major source of productivity gains.

Another factor that affects productivity in Canada is that we have a small home market which means that any company that wants to achieve any significant growth must do business outside the country, primarily in the US. Since Canadian manufacturers cannot compete with large American plants on price, they often specialize in the smaller orders that American companies aren’t interested in because they are set-up for long, continuous runs of one product. To be competitive in this short-run market, Canadian companies have become expert in fast change-overs and quick start-ups. While this can be a very successful way to run a business, it does mean that the productivity of a Canadian plant will be lower than an American plant just because of the waste inherent in the short-run mode of operation. A high speed line isn’t the answer in this situation as it just creates more waste during start-ups and change-overs.

Other factors that negatively affect productivity in Canada are our risk-averse banking system (which has come up smelling like a rose recently, but stifled manufacturing innovation for decades before), a strong union culture, as well as a general feeling that the government is somehow responsible for solving all problems, unlike the US where individual initiative is almost a religion and government is not to be trusted. (Even governments have this attitude – cities expect to be bailed out by the provinces, the provinces expect to be bailed out by the federal government, etc)

In answer to my original question, while technology can increase productivity by some percentage, significant gains are only possible through an innovative approach to managing and organizing the way companies do business. If you want to improve the productivity of your team, don’t just trade the players, change the rules of the game!

When most people think of automation, they think of robots in an automotive plant. In many ways, this is the perfect application for robots – a high volume, high value product; other than cosmetic changes, lines are dedicated to one product; products are large or heavy and hard to handle; plants have unsafe environments or activities such as painting or welding; the industry has high unit labour costs which are a large stimulus towards automation. They also can afford to have trained maintenance staff and programmers on staff to maintain or modify equipment if required.

Going just by the numbers of robots sold per year, automotive has been the largest automation market by far and the primary target for any automation machinery supplier who wants to achieve significant sales numbers. Spurred by a need for diversification, particularly with the decline in the automotive sector recently, automation suppliers have been trying to expand into other markets such as food and pharmaceutical, most often successfully but also with some failures to live up to expectations.

In non-automotive applications the environment is quite different. Automation works best in tightly controlled, highly repetitive environments. In packaged goods applications there are often dozens or even hundreds of SKU’s, with short runs and frequent changeovers which means extra tooling, programming or set-up. The products are often light and not difficult to handle, even after they are put into cases. Labour costs are low, often at minimum wage levels. Compared with automotive applications, an automation project is much more difficult to justify, as the low cost of labour and the versatility of a human worker are still very difficult to replace.

The most common justification for an automation project is to eliminate workers to reduce labour costs. This isn’t as straightforward as it seems. Often workers perform multiple jobs in a plant and eliminating one of those jobs doesn’t eliminate the worker, it just makes his job easier, something managers aren’t very keen to spend money on. Workers are still needed at the front or end of the line to fed raw materials or take away finished products. They might be needed to manually work on a non-standard product which can’t be handled by the automation system.  Or the plant may have committed to a non-firing policy to maintain worker loyalty or for union reasons.

Before you commit to an automation project for your plant make sure to take a close look at the way your plant operates, your product mix and where you plan to use your workers. Is the expense of automating an operation actually likely to produce the savings you expect, or are other factors going to nullify the planned savings? Do you have the in-house support necessary to support the equipment, or are you likely to need to call in the supplier for expensive programming or maintenance?

Also make sure your machinery supplier has experience in your industry. A company that has only worked in one field may be highly qualified, but are they able to design an affordable solution that works in your unique circumstances?

If you would like assistance in defining your requirements or in qualifying the right supplier, please give us a call!

I’ve received proposals for major pieces of equipment that don’t say anything about what they actually do, but are just a grocery list of parts; a proposal for a $100,000 control system that talks more about the cables that are or aren’t included than about the ‘black box’ that is the heart of the system; a two line proposal that says “see brochure” and a price, but then doesn’t tell you where to find the brochure. Proposals from companies that I’ve never heard of because an OEM sent a quote through their agent (or vice versa) which doesn’t refer to the original request. Proposals that don’t name the currency (more than one country uses the $ sign!) or the point of shipment. Creative pricing that shows a low base price but requires the additional purchase of costly “mandatory options” to make a complete project.

This is particularly surprising given that the trend in many companies is to have a team gather the initial proposals and then pass them on to upper management for a decision. This is done so that the final decision maker(s) saves time and doesn’t get inundated with calls from suppliers, as well as being able to make an unbiased decision without being influenced by a particularly persuasive salesman. To be successful in this situation the proposal has to be complete, informative and be able to stand on its own.

Having been on the vendor side I’ve seen many reasons (excuses?) for poor proposals. Quite often proposals are developed by committee for internal order entry purposes, rather than for the customer. The objective is to get the project through to manufacturing as quickly as possible, with little consideration given to helping the customer understand why he should buy the project in the first place. This will only get worse in the future as more companies try to computerize the quoting and order entry process to reduce time and costs.

Another issue is that companies often don’t see the equipment from the viewpoint of the customer. They spend a lot of time on the details of developing a machine and consider each component to be as important as the next, while the customer is looking for an overall solution for a problem. If you’re looking for a reliable car for your daily commute, you want evidence of proper engineering, not a twenty page list of parts.

Sometimes proposals are deliberately written to be vague. Either the company wants the salesman to go in to close the deal or upsell other options, or the company is not entirely sure of the final design, or they want some leeway to make changes if they are forced to discount the price. Also, the salesman may not have the time or enough information to write the quote, or he doesn’t want to spend time on a long-shot project.

To me, a proposal has three main functions. The first is to let a potential customer know what he is getting and what it does. It sounds simple, but it’s surprising how few companies actually do this in a way that tells the customer what he needs to know, much less getting into features and benefits. The second function is to tell a customer what he isn’t getting, such as limitations of the equipment, connections to adjacent machines supplied by others and other provisos that protect the seller as much as anything else. The third aspect is the legal and administrative details which are usually outlined on a page of fine print, such as currency, point of shipment, warranty information, etc. A proposal that covers all these bases will sell the project to the customer while protecting the supplier and preventing misunderstandings, disappointment and conflict later on.

A key point for the purchaser is to make sure all relevant information is written into the proposal, including any modifications that are discussed, promises made by the salesman, as well as any future action that may be discussed during negotiations such as getting a free software upgrade when the new version comes out next year. As the saying goes, a verbal contract is only as good as the paper it’s written on, so make sure everything is in writing.

If you are frustrated in your attempts to get clear, complete proposals for your application, give us a call. We’ll use our experience in the machinery business to make sure you get the machinery you need without any surprises.