In an effort to improve our services to you we are asking that you please take a few minutes to complete the attached survey. This will help us provide services and benefits best suited to promote the discipline of Cost Engineering. Thank you in advance.
During the many years I’ve worked for Purchasing I have seen 2 main types of suppliers with respect to their cost transparency. It would be easy to say that these two types are the all-transparency, open-book companies, and the all-tight, sorry-but-we-don’t-share-that-info company, but there are different shades of grey in between. In general, all companies have a know-how that they must protect, so it is understandable that they might be eager to disclose how they manufacture their product and how much it costs them, with too much detail. Even with Non-Disclosure Agreements in place, some companies are worried that part of their know-how might be slipped into a competitor and therefore might lose the technical advantage they started with.
In times of crisis like COVID-19, reliable cost management processes are required. Suppliers who restarted production with changed capacities are forced to consider and recalculate additional cost factors and changed circumstances. Reduced production and purchase quantities usually lead to renegotiations with customers. Questions regarding cost transparency and negotiation management should be clarified in advance: Under what conditions is the production profitable? Which strategy should be employed in (re)negotiations? Many sales professionals worry that if they share their cost structure with customers, then the buyer will use it against them to negotiate the price down.
A couple of cases of cost engineers that have been laid off from their respective companies due to the current Covid crisis have reached us at SOCE. While we understand that is the type of decision that nobody wants to make, and knowing that cost engineering is typically part of the company SG&A, well, seems like a suitable decision at the time as the function is not critical and the production will not stop. However, cost engineering has the capability of identifying potential cost savings and support in pursuing new businesses, so perhaps the company might save that salary, but may not save much more if we cost engineers were kept doing our job. Our problem is, in many case, the difficulty to prove our contribution in a measurable way.
discussion about of 2 terms that come from the Lean lexicon: TAKT TIME, and ACTUAL TAKT TIME. Remember, “Lean” is the occidental word defining what it is basically the Toyota Production System, implemented in Japan in the 60’s, and that the rest of the world tried to embrace 20 years too late, and that trying to make it very, very short, it is based in the identification of the production wastes -jp. muda- and the processes to eliminate them
The Cost Modeling community has not only the ability to change the healthcare landscape, but the responsibility to the human race to make healthcare more affordable to all.