Manufacturing

The RFQ-Free Future: How Machine Learning, Data and IIoT are Pulling Back the Curtain on Cost and Pricing

John Coyne / Nov. 18, 2016

Think of all the items you buy over the course of a day, week, month or year — apples, socks, batteries, cough syrup, dish soap, plane tickets, eggs. If you’re like most Americans, you’ve purchased (not made, grown or raised) the vast majority of everything you own, eat and use to the tune of $53,495 on average per household. What if every time you needed something, you had to send off for quotes to see who would be able to provide it at the price you wanted to pay?

Dull, straightforward, run-of-the mill pricing abounds in contemporary American life. From the gallon of gas you burn during your morning commute to the ham sandwich you eat on your lunchbreak to the cable TV you utilize at night, the price of what you’re consuming — and what it costs those providing it to you — is anything but a mystery.

So why in the world can’t anyone say how much a particular CNC machined part will cost to make and buy without weeks of negotiations and dozens of RFQs?

Muddy Prices

Price and cost, two things we all experience as remarkably matter-of-fact in most realms of life, are downright muddy for U.S. manufacturers and suppliers. While there have been legitimate reasons for that muddiness — just operating within a B2B environment as opposed to a B2C one complicates matters, for instance — the majority of the trouble stems from a desire on both sides to have the upperhand.

Lost in the mix is the reality that there is a real cost involved in CNC machining a batch of parts. There is a real price someone will pay for those parts. Price and cost aren’t strange bedfellows forced to work together through the magic of the RFQ. They’re kissing cousins: hyper-connected and more intimately involved than anyone seems ready to admit.

Thanks to advances in technology, it’s getting easier and easier to access an ever-increasing cache of numbers and information. How much parts cost to CNC machine and how much companies have historically paid for those parts is now something that can be known.

The RFQ no longer deserves its hallowed place at the U.S. manufacturing table. Not just because it isn’t fair, which — let’s be honest — it usually isn’t. Not just because it’s too slow, which it also is — an increasing liability in today’s super-fast global marketplace — and not just because it’s too temperamental to be accurate. The RFQ needs to be abandoned, because in the light of new tech’s ever-brightening light, we finally have something that works better for everyone involved.

Making the Vast Unseen Visible

The RFQ process has long allowed pricing and cost in manufacturing to remain a closely guarded secret, but those days are coming to a close. Advances in data analysis, machine learning and AI are making it possible to analyze enormous and disparate stocks of data quickly and efficiently. Other advances, like the lowering costs of sensor technology and the Industrial Internet of Things, are resulting in exponential increases in data itself.

As Mark van Rijmenam (a.k.a. Mr. Big Data) of Datafloq puts it, “90% of all data ever created, was created in the past two years. From now on, the amount of data in the world will double every two years. By 2020, we will have 50 times the amount of data as that we had in 2011.” Sobering? It honestly doesn’t have to be.

From public-facing and far-reaching resources and storehouses of data — Think: the U.S. Census, historical and annual manufacturing surveys, the Federal Reserve of St. Louis, the thousands of individual domestic machine shops and their burgeoning connectivity, OEM and SMB quarterly earnings reports and the like — it’s now possible for skilled and creative data scientists to plumb the depths and realities of cost and price. The madcap and murky negotiations can finally cease. By the light of big data, analytics, artificial intelligence and IoT, leveraging the RFQ for an advantage no longer provides one, and the sooner we admit it, the sooner we can leverage what does.

Just as the Wizard of Oz was revealed by Toto to be nobody special, the RFQ process has been revealed by a growing and analyzable mountain of data to be overly complicated and past its prime. It’s why we killed the RFQ. CNC machined parts can now be priced as reliably and fairly as a gallon of 2% milk. So go ahead: Click your heels three times. Data-driven pricing is the future of manufacturing, and with MakeTime, that future is Now.  

Find out how MakeTime can get you reliably and fairly priced CNC machined parts here.