May 282012
 

Today we want to honor and say thank you to all the United States veterans, both living and dead, who gave so much of themselves.   Many made the ultimate sacrifice to protect the interests of the United States of America and to defend others around the world from evil and tyrrany.  We also honor those many men and women who labored so diligently under difficult conditions in US manufacturing facilities to supply our military and our allies during wars and conflicts.  One of the biggest reasons that we were able to defeat such powerful enemies in both World War I and II was simply that we could out-manufacture our enemies.  This is a sobering thought to consider the next time you consider outsourcing.

We share one picture today of a memorial to just one veteran that I run past in the center of Arlington, MA almost every day.  Thank you to Mr. Samuel Whittmore and all the other patriots who bled for the United States of America.

 

Click to Enlarge. Memorial to Samuel Whittemore

Click to Enlarge. Memorial to Samuel Whittemore

 

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Mar 272012
 

Welcome to the Product Profit and Risk blog!  

 

Genesis of Product Cost Management Hiller Associates

RISK!

First things first:  what is the purpose of the blog?  Well, hopefully, the title is fairly descriptive (although, maybe not catchy?).   Maybe we’ll have a renaming contest later if the name is not compelling…

At the end of the day, we believe most ventures in life, including business, have the goal of generating the most reward with the least risk.  In the case of product & manufacturing companies, we are going to define “reward” from the standpoint of the business as Profit.  (for now we are not going to worry about the canonical definition of profit as EBIT, EBITDA, Net Profit… or even Free Cash Flow).  On the other hand, there is risk in undertaking any venture for profit.  That’s even harder to define.  Is it the dollars you could lose, the hair you could lose, the family you could lose, and/or the reputation that you could lose (or the life you could lose, like the guy in the picture above)?

For product companies, anywhere from 50-90% of their Revenue goes to COGS (cost of goods sold).  COGS (~=Product Cost) is the largest expense on these companies’ income statements, and we believe the single most powerful driver of Profit… and reducing the risk of poor financial performance. 

We plan to talk about those things that directly affect Product Cost (ergo product profit), such as:

  • Raw Material Cost
  • Labor & Direct Overheads
  • Capital Part Tooling
  • Sourcing & Supply Chain
    Diamonds  in Product Cost Management Hiller Associates

    REWARD!

 If these are the problems, what are the solutions?  We’ll talk about that tomorrow.    Welcome, and thanks for joining us on the ride.

Your friendly moderator,

Eric Arno Hiller

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