Sales Channels: Configurators and Quote Hit Rate

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SEF Reference Guide G18  |  Manufacturing OpEx Maturity Assessment

What it is

The assessment scores one sales channel, whichever best fits the operation. If customers buy from a catalog or build a product from standard options, score SO-1A. If most products need custom design before they can be built, score SO-1B. Some plants run both; score the one that carries most of the revenue, and use this guide to improve both.

For standard products, the questions are how easy it is to specify the right product, how fast the customer learns when it will arrive, and whether finished goods inventory is under control. The main tool is a configurator: software that offers only valid options and blocks combinations you cannot build. Combined with pricing and quote output, it is usually called CPQ (configure, price, quote).

For engineer to order (ETO) products, the sale is a quotation, and every quote costs engineering time. The questions are which requests to quote, how well quoting runs, and how many quotes you win. The core measure is hit rate: quotes won divided by quotes submitted.

Why it matters

• Delivery: Orders specified wrong from the start cause rework, change orders, and late shipments. A rules-based configurator stops invalid orders at the source.
• Cost: Every quote on a job you were never going to win burns engineering hours. A clear bid or no-bid decision puts that time where it pays.
• Cash: Finished goods that sit, and stock that becomes obsolete, tie up cash and end as write-offs. Measuring both is the first step to shrinking them.
• Growth: Customers buy from suppliers who answer quickly and correctly. Quote turnaround time and quote accuracy directly affect hit rate.
• Quality: A reviewed quote catches technical and pricing errors before they become a contract.

Key terms

Term	Meaning
Configurator	Software that lets customers or sales staff specify a product from standard options, usually online, with valid combinations enforced by rules.
Configure to Order	A sales channel where customers build a product from standard, pre-engineered options. No custom design is needed.
Engineer to Order (ETO)	A product that needs some custom design before it can be manufactured, such as a large transformer, a custom machine, or a special-purpose motor.
Hit Rate	Quotes won divided by quotes submitted, over a period. Also called win rate or quote conversion rate. Track it by count and by value.
Make to Stock (MTS)	Products built to a forecast and shipped from finished goods inventory.
Assemble to Order (ATO)	Standard components stocked ahead, final assembly started when the order arrives.
CPQ	Configure, price, quote. Software that combines configuration rules, pricing, and quote document generation.
Bid or no-bid decision	A documented go or no-go check before quoting, based on fit, capacity, margin, and chance of winning.
Quote turnaround time	Days from receiving a request to sending the quote.
Quote on-time	Share of quotes sent by the date promised to the customer.
Quote on-quality	Share of quotes issued with no errors that force a revision (technical, pricing, or terms).
Finished goods inventory (FGI)	Completed product waiting to ship. Often measured in days of supply or turns.
Obsolescence write-off	Inventory value written off because it can no longer be sold at its carrying cost.

How to do it

Part A: Standard products (SO-1A)

1. Publish the catalog. One current catalog, print and online, with part numbers, options, and specifications. Retire old versions.
2. Build configuration rules. Work with engineering to list every option and the rules between them (“Option X requires Y,” “A cannot go with B”). Start with the product family that has the most order errors.
3. Put the configurator where customers and sales work. Online if possible. Every configured item should produce a valid part number or bill of material with no manual translation.
4. Show delivery times. Display standard lead time by product or option. Better: link to available-to-promise so the customer sees a real date.
5. Measure finished goods. Report FGI value and days of supply by product family every month.
6. Measure obsolescence. Report write-offs every quarter (or month) as a value and as a percent of inventory. Review slow movers before they become write-offs.
7. Act on trends. Set targets, review monthly, and fix causes such as forecast bias, large minimum runs, and too many low-volume options.

Part B: Engineer to order (SO-1B)

1. Write bid or no-bid criteria. Score each request on technical fit, capacity, expected margin, customer relationship, and competition. Record the decision.
2. Log every quote. Request date, customer, value, due date, sent date, result, and reason won or lost.
3. Calculate hit rate monthly. By count and by value, by product line and by salesperson or region. A falling hit rate is an early warning.
4. Standardize the quote process. Define steps and owners: request review, technical design, costing, pricing approval, document issue. Use templates, standard modules, and a cost database so engineers do not start from zero.
5. Measure quote on-time and on-quality. On-time: sent by the promised date. On-quality: no revision needed because of an internal error.
6. Hold a monthly quote review. Look at hit rate, turnaround, and lost reasons. Pick one cause to work on with structured problem solving.
7. Move repeat designs toward configure to order. When the same custom features keep appearing, turn them into standard modules. That moves work from SO-1B toward SO-1A economics.

What each maturity level looks like

SO-1A Sales Channel: Standard Products

Level	Assessment wording	What it looks like on the floor	How to move up
1	There is no standard product catalog or configurator.	Every order is described in emails and drawings. Order entry interprets what the customer meant.	Publish a single, current catalog with part numbers.
2	Customers can access the product catalog or configurator in print or online.	Customers can find and specify products themselves. Delivery dates still require a call and a wait.	Add standard lead times, or live dates, to the catalog or configurator.
3	As Level 2, plus the catalog or configurator shows delivery times (by phone or online).	Customers get a delivery time at the point of order. Sales quotes dates from one source.	Start reporting finished goods inventory and obsolescence write-offs monthly.
4	As Level 3, plus finished goods inventory levels and obsolescence write-offs are measured.	FGI and write-offs appear in the monthly review, by product family.	Set targets and run improvement on the drivers until trends hold.
5	As Level 4, plus trends are good and stable or improving.	At least 12 months of data show FGI and write-offs stable or falling while delivery performance holds.	Keep reviewing, and prune low-volume options that drive inventory.

SO-1B Sales Channel: Engineer to Order

Level	Assessment wording	What it looks like on the floor	How to move up
1	Quotations are not handled in a standard way.	Each engineer or salesperson quotes their own way. Nobody knows how many quotes went out or were won.	Start a quote log and a simple bid or no-bid check.
2	A process exists for deciding what to quote, and quotation success is measured (hit rate).	Requests are screened. Hit rate is reported monthly.	Map and standardize the internal quote steps, with templates and owners.
3	As Level 2, plus standard internal processes are used to produce quotations.	Quotes follow the same steps and templates. Costing uses a shared database.	Add quote on-time and on-quality to the monthly report.
4	As Level 3, plus on-quality and on-time delivery of quotations is measured.	Quote timeliness and error rates are visible and reviewed with hit rate.	Work the top causes of late or wrong quotes and lost bids until trends hold.
5	As Level 4, plus trends are good and stable or improving.	At least 12 months of data show hit rate, on-time, and on-quality stable or improving.	Keep modularizing repeat designs and reviewing lost reasons.

Evidence to look for

Document

• Current catalog and configurator, with version dates and rules documentation.
• Published lead times or the source used to promise dates.
• For ETO: bid or no-bid criteria, quote log, quote process map, templates, and approval rules.

Observation

• Watch someone configure an order. Does the tool stop invalid combinations? Does it show a delivery time?
• Watch a quote being prepared. Are templates and standard modules used, or does the engineer start from scratch?
• Look at the finished goods area. Is there dusty or unlabeled stock?

Statement

(questions to ask, and who to ask)

• Customer service: “How does a customer find out when their order will ship?”
• Sales: “How do you decide whether to quote? What is our hit rate this quarter?”
• Application or quote engineer: “How long does a typical quote take, and what makes it late?”
• Finance or materials: “What did we write off for obsolescence last year, and why?”

Management report

• SO-1A: FGI value and days of supply, obsolescence write-offs, order entry errors traced to specification.
• SO-1B: Hit rate by count and value, quote turnaround time, quote on-time percentage, quote on-quality percentage, lost-reason Pareto.

Common pitfalls

• Configurator without rules. A pick list that lets customers order combinations engineering cannot build just moves the error downstream.
• Stale lead times. A delivery time on the website that has not been updated in a year does more harm than none.
• Hit rate by count only. Winning many small quotes and losing every large one looks fine by count. Track value too.
• Quote everything. Without a no-bid rule, engineering spends its time on quotes that were never winnable.
• No lost reasons. Without a reason for each loss, you cannot tell whether price, lead time, or technical fit is the problem.

Template

Quote log (ETO)

Quote no.	Request date	Customer	Product line	Bid decision	Value	Promised date	Sent date	On time (Y/N)	Revisions due to our error	Result (won / lost / open)	Reason

Monthly calculations:

• Hit rate by count = quotes won / quotes submitted in the period
• Hit rate by value = value won / value submitted
• Quote on-time = quotes sent by promised date / quotes sent
• Quote on-quality = quotes with no error-driven revision / quotes sent

Note: ETO quotes can stay open for months. Some teams divide by quotes decided (won plus lost) instead of quotes submitted, so open quotes do not drag the rate down. Either rule works if you pick one, write it down, and never change it mid-trend.

Standard products monthly check (SO-1A)

Measure	This month	Last month	Target	Trend
FGI value
FGI days of supply
Obsolescence write-off (value)
Write-off as % of inventory
Orders with specification errors

First 30 days

• Week 1: Decide which channel to score. Pull the last 6 to 12 months of data: quotes and results (ETO), or FGI and write-offs (standard).
• Week 2: ETO: start the quote log and draft bid or no-bid criteria. Standard: check that catalog and configurator are current and list the top order specification errors.
• Week 3: ETO: map the quote process and agree on templates. Standard: publish or correct delivery times.
• Week 4: Hold the first monthly review with sales, engineering, and operations. Set targets and pick one cause to attack.

Further reading

• B. Joseph Pine II, Mass Customization: The New Frontier in Business Competition (Harvard Business School Press, 1993).
• Lars Hvam, Niels Henrik Mortensen, and Jesper Riis, Product Customization (Springer, 2008). A practical method for designing product configuration systems.
• ASCM (Association for Supply Chain Management), ASCM Supply Chain Dictionary, for standard definitions of make to stock, assemble to order, and engineer to order: https://www.ascm.org/learning-development/certifications-credentials/dictionary/