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?