Price leakage
You quoted per piece. You paid in machine hours.
Job work leaks margin when a per-piece rate is quoted from an estimated cycle time that the job never achieves. Price from recorded cycle times and setup hours per machine group, and the second order for the same component is quoted from fact.
In short
Job work leaks margin when a per-piece rate is quoted from an estimated cycle time that the job never achieves. Price from recorded cycle times and setup hours per machine group, and the second order for the same component is quoted from fact.
The cost
What the gap takes every month.
15 to 30%
Gap between estimated and actual cycle time
Common on first runs of an unfamiliar component.
Every repeat
Where the error compounds
Repeat orders are usually quoted from the same wrong estimate, not from what actually happened.
One ordinary week
How it actually happens.
A component is quoted at a cycle time of four minutes. On the machine it runs at six, with a longer setup than anyone allowed for.
The job is delivered and the customer is happy. It repeats monthly for two years at the original rate, because nobody compared the estimate against the recorded run.
When the job card records actual setup and cycle time, the repeat is priced from what the machine did, not from what somebody hoped.
The fix
Three steps, in this order.
01
Publish one approved price book
Rates by product, customer class, region, quantity slab and delivery basis, in one place everyone quotes from.
02
Make below-book rates an approval, not a habit
A quotation under the book cannot be issued until a named approver says yes, with the reason recorded.
03
Review deviations monthly
The pattern of approvals shows which products are mispriced and which customers always push.
Straight answers
What owners ask us here.
Will operators record cycle times honestly?
They will if recording is two taps at start and finish. The aim is a working average, not a stopwatch study.
Can we keep customer-specific rates?
Yes, as rate agreements with an end date, so a rate agreed two years ago is revisited rather than inherited forever.
What about rework and rejections?
Recorded against the job, so the true cost of a component includes what it took to make it right.
Questions people ask
Straight answers, no sales talk.
System of Marketing & Sales
Put enquiry to dispatch on one governed line.
Tell us how your plant sells today. We'll show you where the line breaks and what it takes to close it.