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A Bad Case of Cost ‘Frusfusion’

I was thinking about my past experiences working on various cost-savings projects. I've worked in a product cost reduction group and a company expense cost reduction group. With that experience in mind, I'm looking at many companies that are going through the motions of cost cutting, saving a few hundred dollars here and there. At the same time, they are spending more money on projects and issues because of the way they tried to eliminate costs or save money.

I know that no matter what position we hold, we'll come across a cost cutting activity that just makes no sense. Sometimes to a point where you just drop your jaw and raise your hands and cannot find a single word to express your combination of confusion and frustration — what I call a case of frusfusion . Have you ever been frusfused?

Here is my experience, followed by an example I have seen elsewhere. In the days when I was involved in laying out PC boards (PCBs), I regularly asked our managers to OK the purchase of a couple of Altium Designer licenses for our engineering team. We had no layout tools. We still lived in the old days of drawing schematics by pencil. I always joked to management that we should buy some lanterns and candles to place in the lab for when we work late at night.

I would send off about 10 to 15 PCBs per year to have layouts and modifications done. I always spent about $10k or sometimes a bit more per year on having a third party do our layouts. Even though it was only about $6k for a couple of licenses, I could not convince management that spending $6k was cheaper than spending perhaps $10k to $15k per year on layout and Gerber file creation.

I could lay out the boards myself just the way I needed them and get them more quickly than sending out. Instead, I sent out the schematic, paid more money, and twiddled my thumbs for a week or two waiting on my boards. And hoping they were laid out correctly. I just never understood the justification on why not to buy.

I put up the fight for about four years. On the fourth year, someone must have opened his eyes — I was allowed to purchase one license for three people. Sharing the one license was a struggle, but the biggest struggle was having to take six months to learn the program instead of paying for the two-week training.

Another example is watching engineers passing the opportunity to buy $500 evaluation boards at the front end of a project because they don't want to spend the money and think they have a better way to do the design. But then, when it's two weeks before production is supposed to start, and the design is not working, and issues are arising one after another… Woops! Should have spent $500 nine months earlier instead of delaying production and spending thousands now, just to put a big bandage on a design.

I always say that trying to save $50 will cost you $500. However sometimes spending $500 will save you $10,000. Has anyone else had similar issues on cutting costs that cost you more?

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23 comments on “A Bad Case of Cost ‘Frusfusion’

  1. etnapowers
    November 12, 2013

    “I know that no matter what position we hold, we'll come across a cost cutting activity that just makes no sense. Sometimes to a point where you just drop your jaw and raise your hands and cannot find a single word to express your combination of confusion and frustration — what I call a case of frusfusion . Have you ever been frusfused?”

     

     

    Yes, it happened to me many times, during a cost cutting activity. It's really frustrating and confusing but sometimes it could be a great chance to discover an alternative mode to realize a device or a test or a qualification process that you might not consider if you don't have to face a cost cutting activity.

  2. Davidled
    November 12, 2013

    If Energy waste component would be removed, through design optimization process, It would be great in both cost and energy. The cost is saving as reducing components and design saves the energy such as parasitic current.

  3. samicksha
    November 13, 2013

    If Energy waste component would be removed, through design optimization process,

    Yes indeed it will be like new journey altogether and helpful though, have been or near to any such design..

  4. etnapowers
    November 13, 2013

    That's what I mean for a good chance which raises during a cost cutting redesign, sometimes a good thing can be generated by another unuseful or uneffective thing 

  5. Netcrawl
    November 13, 2013

    Design is a key factor in reducing waste energy and saving cost, it can be achieved through design optimization process and effective designing layout design. Design of components start on “scratch” drawing board and engineers' minds. Planning is crucial and key in every cost-cutting measures.  

  6. Netcrawl
    November 13, 2013

    Those bad things could be eliminated and controlled through effective planning and effective design process, collaboration among team members are also important, we need to introduce some good ideas and make some new suggestions about product innovation and finding potential flaws.

  7. etnapowers
    November 14, 2013

    @Netcrawl , You're exactly right, unfortunately many times this communication is missing, expecially in big companies and this creates, in some cases, a ineffective redesigning activity .

  8. etnapowers
    November 15, 2013

    @Netcrawl: I agree with you, the design is fundamental to reduce costs and I believe that a good planning of the roadmap to follow is a good strategy. When a design team creates a project and estimates how to perform a cost cutting activity on that product in the future, the roadmap is really promising in the direction of a high margin profit.

  9. Navelpluis
    November 22, 2013

    Nice story. This is certainly a kind of management that kills the company. Reading your story tells me you better should have start for yourself? Your analysis of these things is the same as mine: Saving money on a licence for PCB basic design is silly.

    But then, I learned from a Canadian friend: A good engineer designs something for $2 and a better one does it for $1. in the past our company developed alarm equipment together with a company based in Toronto: DSC, now TYCO

    This $ dollar rule always counts, and to give you my opinion: *This* is where the money is.

    Developing in the alarm industry for about 9 years gave me the knowledge of always beeing very very critical of all parts I use in my designs. But on the other hand we never save on measurement equipment and CAD tools, as long as it is useful for projects of course.

    The latter saves you time, costly time. Your customers will be helped more quickly and you are a happy worker with all the goodies around you to be able to solve your problems.

    I hope that a lot of stupid managers read this: At least a couple of engineers out there then can have a good engineering life 😉

  10. RedDerek
    November 22, 2013

    Years ago, back in the stoneage, ok, around early 90's, the EEs were not allowed to do any board layouts – it was the responsibility of the CAD department. This was rediculous since they were basically mechanical guys trying to electronic layouts. I had a small board about  3 x 5 that needed a layout for some instrumentation and power circuitry. It took about 3 months of iteration between the CAD person and me until I was satisfied with the layout. Speed of progress was best when I finally sat down next to him and said “draw this trace from here to here going this path”, next trace, etc.

    It was around a year later that the company finally got the idea to evaluate some electronic CAD software for the EEs to use and interface with the mechanical CAD folks.

    To sum it up, it was a huge waste to have to tell a mechanical person how to layout a board versus just doing it one's self and learning the software.

  11. dougwithau
    November 25, 2013

    I agree with your story. There have been many times a business chooice is penny wise and pound foolish. 

    Usually when you look at these choices they make sense from some point of view. The tool is a capital expense, not R&D or it goes into the wrong accounting collumn.

    Given that back in the day the tools cost a whole lot more, would you use an open source tool today? How about a web based tool? 

    Maybe another article on which and what is freely available. It is like using git hub, or Basecamp from 37Signals when the old school corporate main frame system is not worth the effort.

    Yes, correct again, it is very sad and ironic we have to do a corporate dodge and deception, to get work done for the corporation.

  12. ben.wai
    November 28, 2013

    Cost manager always think cutting head count is their biggest success.  Outsource or 3rd party service is considered as temperary cost and not appeared in organisation payroll. If you try to convence them, help your self first preparing answer to these question:  Will new software slim line your team?   Will yoour team output better than 3rd party sercive in obviously higher quality and shorter time.  They will always ask for your gurantee.  So, if it turns out not as expected, you will be beheaded not him!

  13. etnapowers
    November 28, 2013

    @ben.wai, another question: When you cut a part of your personnel, you're losing their potential, creativity, experience… are you sure to do this?

    This is really dangerous for your business, whatever it is. 

  14. Victor Lorenzo
    November 28, 2013

    @Netcrawl: “Design is a key factor in reducing waste energy and saving cost ” I agree with that and would add another concept here: “Design for Manufacturing”. A very effective cost reduction strategy is to design the product taking into account current manufacturing capabilities, tooling costs, handling programming and testing costs.

    We decided once not to use one specific cheaper OLED display and integrated another a couple dollars more expensive because of tooling cost for manufacturing, and that made us make more profit. The total devices count was very limited in that case.

  15. Victor Lorenzo
    November 28, 2013

    @Redderek: “around early 90's, the EEs were not allowed to do any board layouts – it was the responsibility of the CAD department “, well, that holds partially true and it was closely related to internal policies in companies. At that time (early 90's) I was part of a team of electronic engineers and we not only designed the schematics, we also designed the PCB with OrCAD in one (now very old) x286 IBM-PC running at 12MHz and etched/mounted our own prototypes.

    Currently, it gets extremely unlikely that one CAD designer could make a good (correct) high speed digital design without a strong EE formation/experience.

    But I totally agree with you in the results of the experience you shared in your comment.

  16. Victor Lorenzo
    November 28, 2013

    @dougwithau: “Given that back in the day the tools cost a whole lot more, would you use an open source tool today?

    There are many open source tools out there that outperform equivalent commercial tools, specially in the compilers, design, and creative areas. In some cases the tool is free and, in case you need it, you can only pay for specific and personalized support.

    Yes, I do use several open source free tools every day.

  17. RedDerek
    November 28, 2013

    @Victor – I remember that software and actually still use it. There is a user group on Yahoo – Old Dos OrCAD. The group still keeps this software going with Win7, Linux, and even Mac support. I have it up and running as well as file syncing between several machines.

  18. Victor Lorenzo
    November 28, 2013

    @RedDerek, Good to hear that, it was a very good tool, even compared to PCAD. I wonder if I still have my old floppy disks box. At that time (early 90's) I also started using the PSPICE simulator and made one very simple OrCAD 4 netslist export script, integrated in the OrCAD tools, for generating the circuit netlist for the simulator.

  19. RedDerek
    November 28, 2013

    @Victor – You do not ed the floppies anymore sinc you can download SDT version from the group's files. After 20+ years, it has essentially become open software. Best thing, there are no annual update fees – OrCAD had gotten it right by the SDT version. One issue that would be nice such as: jpg image import for the board layout. Otherwise, you can still export a netlist for PCB layout and spice (but I do my simulation using LTSpice).

  20. PCR
    November 30, 2013

    Very true Netcrawl, there may be a several option for the same design but the challenge is to identify the best cost effective design. 

  21. PCR
    November 30, 2013

    True Victor, There may be an initial cost increase in changing the system for the better version. But the outcome because o the change will be more in long run. 

  22. PCR
    November 30, 2013

    Yes etnapowers I also support your question, I also feels that that is suicide. 

  23. etnapowers
    December 5, 2013

    @Ranasinghe,

    thank you, I think that the practise of personnel cutting is wide diffused. Many times the managers think to this solution as the first one at their disposal.

    It's really a suicide as you said.

     

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