The Job Shop "Quotes to Cash" Conversion Process reflects how a job shop actually works, and provides the proper perspective and foundation for cutting lead time (the time from first customer contact to delivery).  Continually working to shorten your lead time is the essence of lean manufacturing in a job shop, make-to-order environment.  It is the single, most powerful strategy you can follow to strengthen your competitive position, improve profits, and secure the future of your business...bar none!.

• Companies that can bid and ship an order more quickly will realize a competitive speed advantage and so increase sales.  For example, a company that can deliver in 2 weeks has a significant advantage over one that requires a 12 week lead time. 

• Faster service can command a premium price and produce more winning bids. Our research shows, for example, that getting your bid in front of the buyer before your competitors gives you a huge advantage in getting the order.

• Because custom manufacturers are “order driven,” additional sales (order backlog) creates momentum and greater efficiency.  When the backlog is down, work has a tendency to get stretched out as employees want to make the existing work last and management wants to maintain the skill base.  There is less pressure to produce when the backlog is low than when it is high.

• It’s a “law” of production that the longer an order remains on the shop floor, the more it costs to get it out the door.  Orders accumulate costs as they wend their way through a shop.   Thus, the less time an order stays on the floor, the less opportunity for costs to add up.

• Although some people believe that quality and production are opposites that cannot co-exist, this is not true.  A company does not have to sacrifice quality to meet output goals.  In fact, the opposite is more often the case.  A shop that is operating at a productive pace will generally be able to meet quality goals more consistently than one in which the pace is disjointed, lackadaisical, or chaotic.

• The greater the volume of orders through a company, the lower the fixed overhead that must be carried by each order.  This creates an opportunity for overall profit improvement and/or improved price competitiveness.  More volume comes about as a result of more sales which is a direct benefit of cutting lead time.

• Cash flow is improved.  Less working capital is required when the time from quote to cash is compressed (e.g., when the time from “money out” to “money in” is shortened, less working capital is required.)

• The more quickly customer demand can be satisfied, the more competitive and profitable your company will become.  Cutting lead time is a business development and profit improvement strategy that will increase sales, reduce costs, improve margins, accelerate cash flow, and increase effective production capacity all at the same time.  

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