It’s all Rocket Science, at least to someone it is.
As I sat down to write this, I was thinking back to my first days on my first job out of college. Time has made me look back with rose-colored glasses, making me see this as a great period. A time I incorrectly remembered being valued for what I had learned in college. I had forgotten how hard I had to fight to be accepted. I had to threaten to quit before my boss took me seriously (which I think lead him to quit, but that is another story for another day).
So where am I going with this? Well, each time I changed positions, I was greeted with “This is over your head”, “You’ll never understand this” or “This isn’t automotive”. In the last example, you can insert any industry you chose for “automotive”, be it medical, aerospace or any other. The fact is, we are all engineers, we are all very smart people but most importantly, all things are created EQUALLY.
What do I mean by all things are created equally? Everything must go through a process. If you can define the process, you can capture the costs. One of my favorite bosses of all times used to say, “We can calculate the cost of making a ham sandwich, if we can define how to make it.” He was correct. It doesn’t matter if it is machining a brake caliper or a hip implant. They are hunks of metal being machined. The feeds and speeds are the same. I’ve been quoted as saying, “The material doesn’t know where its’ going, the machine doesn’t know where the part is going, the machine operator might but it doesn’t matter to him, he is paid the same, so where is the cost difference?” You will be told that it is in the tolerances, the inspections, the quality of the parts, etc. Again topics (myths) for another day.
Wrapping this all up, don’t let people tell you that you can’t model something because you’re not from that industry. All the parts we are asked to model have the same basic five buckets of cost. They all have material (of some sort), labor, manufacturing, SG&A and Profit.
Gerald (Jerry) Collins
Owner and Founder of Society of Cost Engineers