On Mar 31, 2006, at 10:14 AM, Tom C wrote:
From: Godfrey DiGiorgi <[EMAIL PROTECTED]>
Someone said they thought it would cost $0.50 per body to support
the TTL metering. That may not seem like much to you, but I've seen
weeks of debate in an engineering/marketing meeting to get $0.01 more
cost out of a component intended for production. It is particularly the
case that this kind of trade-off goes on for the low-end products
because profit margins on low-end products are very very low.
But it's particularly this kind of stupidity that lowers profit margins.
Likely thousands or tens of thousands of dollars in productive time
wasted to save pennies that will never be recouped.
I disagree. $0.01 in production cost on an item that will be manufactured
in the tens of thousands runs into thousands of dollars of manufacturing
cost, and with retail markup from manufacturing cost being on the order of
5x to 10x cost, it save substantially on product cost to the purchaser.
From the other direction, what drives profit margins down on low end
products is competition from other vendors, not time spent reducing cost
of manufacture.
My point was long the lines that if $10,000 is wasted to save $.01 on a
single unit, it will take a million sales of the unit to make that up.
These notions are part and parcel of volume manufacturing economics. The
people spending time in the engineering department and at meetings are
being paid on fixed salaries most of the time, their reason for being
hired in the first place is to do these sorts of things, so it is not
"tens of thousands of dollars in productive time wasted". They're doing
the job they were intended to do, that cost is part of the overall
investment in development of any product, not the running costs of
manufacture.
Godfrey
I understand what you're saying, and agree from a certain viewpoint, but
that cost is still a cost. It's just that the corporation doesn't recognize
it because it's somewhat intangible. As you say, it's viewed as money that's
already spent. Come upon hard times, and often the first place corporations
look to reduce cost is by reducing the workforce. If that workforce had
been more efficient and productive...
Tom C.
