In many industrial supply chains — automotive in particular — the lowest price wins the contract. That is why quoting is one of the most delicate moments in a company's life: what you write in the offer becomes, months later, the margin you will (or will not) take home. Yet quoting is often treated as an activity to get done quickly, not as a decision to be designed with care.
The cost of an inaccurate quotation is not a line item in the financial statements. It spreads across at least four different places, which is why it often goes unnoticed.
1. The margin that quietly disappears
When a quotation underestimates costs, risks or complexity, the problem does not surface immediately. It emerges during development, industrialisation, the start of production — when the real numbers no longer match the promises. By then the price has already been accepted by the customer, and the difference is absorbed by the company. It is a loss often blamed "on the project", rarely on the quotation it came from.
2. Deals lost to excess caution
The opposite mistake is just as expensive. When reliable information is missing, whoever quotes tends to protect themselves by adding a margin of caution, an "uncertainty buffer". It is a rational reaction, but it has a price: an offer higher than necessary can lose to a better-informed competitor, even if your product would have been more than competitive. Quoting badly does not only mean quoting too low: it also means quoting too high, out of fear.
3. The time the team never gets back
Anyone who has worked in a quoting office knows the scene: the right information exists, but it is scattered across PLM, ERP, Excel sheets, Word documents, PDFs, presentations, shared folders and personal archives. The team members become the "human bridge" hopping from one system to another to piece together a coherent picture. Every hour spent looking for the right version of a piece of data is an hour taken away from analysis, from negotiating with suppliers, from thinking about pricing strategy. And when response time is tight, the most expensive verifications are the first to be skipped.
4. The risk passed on to Program Management
There is a cost that anyone in Program Management knows well: inheriting a project whose quotation does not hold up. The Program Manager has to manage an offer already signed, with cost or process assumptions that no longer make sense, and must recover margin through negotiations, scope reductions or interventions on the process. An inaccurate quotation does not disappear when the offer is sent: it transfers, with all its weight, to whoever has to execute.
Why it happens
Rarely for lack of competence. More often because the necessary knowledge exists but is not accessible in a simple, timely way: lessons learned from past projects, data on processes and suppliers, customer requirements, regional specifics, already-designed components that could be reused. When information is trapped in different formats, the cost of "finding the truth" becomes the real cause of slow and risky quotations.
How to reduce the problem
There is no single solution, but a few principles work almost every time:
- Bring experience into the process. Lessons learned from past projects must be consultable while quoting, not archived at the end of a project and forgotten.
- Close the loop between quoting and execution. Systematically comparing quoted costs with actual costs makes it possible to correct assumptions at the source.
- Reduce design waste. Reusing components and solutions that have already been validated, instead of redesigning equivalent variants, lowers costs without sacrificing margin.
- Give the team a solid starting point. When information is collected and organised in advance, people can spend their time on judgement, negotiation and strategy. AI-based tools can help with this, if built on the real process and with people always in command of the final decision.
A question to ask yourself
Take the last quotation you sent. How much time did it take to gather the information, compared with the time spent deciding the price? And when the project reached production, were the real numbers close to the quoted ones? If either question makes you uncomfortable, the cost of an inaccurate quotation is probably already present in your company. It simply does not have a name in the financial statements yet.