The quoting process in distribution: steps, turnaround, and where margin leaks

The quoting process in distribution is the path from a customer's request for prices to a priced quote and, if it is accepted, an order. It has seven steps: receive the request, match each line to an item, check stock, price each line, approve exceptions, send the quote, and follow up until it is won or lost. Most of the time goes on matching and pricing, and most of the lost margin hides in pricing done in a hurry.

The seven steps

1. Receive the request

   By email, PDF, phone, web form or a customer's purchase system.

2. Match each line to an item

   Customer part numbers, competitor numbers and free text, matched to your catalogue.

3. Check stock and lead time

   On hand, on order, at another branch, or a special order from the supplier.

4. Price each line

   From cost, the customer's level and contract, the quantity and the market.

5. Approve exceptions

   Lines below the margin floor or above a rep's discount limit go for approval.

6. Send the quote

   With terms, validity date, lead times and units of measure stated clearly.

7. Follow up and record the result

   Won, lost with the reason and price, or expired.

Matching takes more time than pricing

A typical request for quote is a forwarded email with a table, a PDF from the customer's purchasing system, or a list typed by an engineer. Half the lines may use the customer's own part numbers, a competitor's number, or a description such as "bearing for the conveyor, same as last time". Some lines are not products at all: freight, a note about delivery, a reference to a drawing.

Every line has to be matched to the right item, in the right unit of measure, before it can be priced. On a 40 line request that is often the slowest part of the job, and the most error-prone. Matching mistakes cost twice: once in the wrong price, and again in a return.

Where margin leaks in the quoting process

• Rushed pricing

  Busy reps quote list minus their usual discount on every line.

• Stale costs

  A supplier increase has landed, and the quote uses last month's cost.

• Forgotten rebates

  The customer's year-end rebate is not counted in the line margin.

• Unrecorded losses

  Lost quotes are deleted, so nobody learns which prices lost.

The first one is the largest. When a rep has 15 quotes waiting, every line gets the same habit discount, including lines where the customer would have paid list. Nobody notices, because a quote that wins at a lower price than needed looks like a success.

How to quote faster without giving margin away

• Keep a cross-reference of customer and competitor part numbers, and add to it every time a line is matched by hand.
• Price from rules, not memory: cost, the customer's segment and contract, and the quantity, with the reasons shown on the line.
• Set approval limits so only real exceptions wait for a manager. See the discount policy guide.
• Save the quote as a draft as soon as it is started, so a phone call does not lose the work.
• Record every outcome. The win rate guide covers why lost quotes matter as much as won ones.

What to measure

• Quote turnaround time, from request to sent, by rep and by request size.
• Win rate, by count and by value.
• Margin on won quotes against the margin target for the segment.
• Share of lines edited after the price was suggested, which shows how much reps trust the pricing.

From quote to order

When the customer accepts, their purchase order should match the quote line by line. Check prices, quantities and units of measure before converting the quote to a sales order, because a purchase order that quotes an old price or a different pack size is a common source of disputes later.

A pricing engine that reads the request, matches the lines and prices each one with its reasons turns a 40 line request into a quote in minutes, with the margin floor and approvals built in, and records the outcome so the next quote is priced better.