Jul 102013
 

 

Hiller Associates has been invited to become an author on ENGINEERING.com.   The Canadian company, headquartered in Ontario, has become one of the most influential voices in engineering worldwide.  ENGINEERING.com reaches thousands of people, who work in the many disciplines of engineering, every day with the freshest and best content on a variety of subjects, including:

 

 

  • Designer Edge
  • Design Software
  • Electronics
  • 3D Printing
  • Education
  • Careers in engineering

Eric Hiller, managing partner of Hiller Associates said,

We are grateful to ENGINEERING.com for the opportunity to share our insights in Product Cost Management and other topics that sit at the nexus between finance and engineering with the readers of ENGINEERING.com.  ENGINEERING.com has a great readership of influential people who are driving the next generation of products around the world and who range from individual contributors to engineering executives.  We look forward to continuing to work with ENGINEERING.com.

Hiller Associates is writing for the ENGINEERING.com feature area called “Designer Edge,” which contains articles on techniques and tools for better design engineering.  HA kicked off it’s authorship with an article focusing on the challenges that engineers face when presented with supplier quotes that the engineers have to understand versus their own internal should-cost estimates.  CLICK on the the title of the article below to read the article at ENGINEERING.com.

engineering.com_logo_new_tagline

 

 

 

Comparing Quote Apples with Estimate Oranges

 

John Hayes, President of ENGINEERING.com, said,

We welcome Eric ‘s authoritative and often humorous voice on the important, yet rarely discussed, topic of product costing.

Hiller Associates will republish the ENGINEERING.com article in its entirety on our own Product Profit and Risk blog later this week.

 

 

  20 Responses to “Hiller Associates becomes an author on Engineering.com”

  1. Moderator Reposting from Linked in comment Here:

    http://www.linkedin.com/groupItem?view=&gid=1841351&type=member&item=256933535&commentID=149736382&report%2Esuccess=8ULbKyXO6NDvmoK7o030UNOYGZKrvdhBhypZ_w8EpQrrQI-BBjkmxwkEOwBjLE28YyDIxcyEO7_TA_giuRN#commentID_149736382

    David White • Especially where refractory repairs on furnaces are concerned! You can have three different people (companies) looking at your furnaces and depending upon their experience level, receive three totally different quotes on the scope of work. Then you will almost always get three different material recommendations. You are right most new engineers or maintenance managers are not educated in the refractories that are best suited for their particular type of furnace or alloy and most certainly newer guys in the business do not understand what to look for when repairing a furnace refractory lining.

  2. @ David,

    Yes, I suspect the problem hits almost any product. However, the more rare the product or service being quoted, the more difficult to evaluate the fairness of the quote.

  3. Eric Arno Hiller • Fair enough. To be honest, if someone is asking for a complex product to be made and does not have a good performance spec or a repair spec, they should not be surprised when people overbid, either honestly because the supplier doesn’t know what to quote, or dishonestly because the supplier is trying to take advantage of the customer. It seems grossly negligent not to have a good performance spec or a repair spec.

  4. Moderator Reposting from Linked in comment Here:

    http://www.linkedin.com/groupItem?view=&gid=1841351&type=member&item=256933535&commentID=149736382&report%2Esuccess=8ULbKyXO6NDvmoK7o030UNOYGZKrvdhBhypZ_w8EpQrrQI-BBjkmxwkEOwBjLE28YyDIxcyEO7_TA_giuRN#commentID_149736382

    George Spiller SAYS:

    The frustration is self imposed. Most suppliers that are trying to quote would agree that the specification that is given to define the work being quoted is non existant or inadequate
    at best. The frustration is related to the fact that the differing quotes highlights whose work contribution is missing

  5. Moderator Reposting from Linked in comment Here:

    http://www.linkedin.com/groupItem?view=&gid=1451897&type=member&item=256933916&commentID=149794827&report%2Esuccess=8ULbKyXO6NDvmoK7o030UNOYGZKrvdhBhypZ_w8EpQrrQI-BBjkmxwkEOwBjLE28YyDIxcyEO7_TA_giuRN#commentID_149794827

    Chuck Hodges SAYS:

    Good information–wish this was taught in engineering school, oh well.

    And it’s not even as simple as that, because one also needs to factor in payment terms, delivery time, delivery flexibility, cancellation charges, etc. Supplier quality, reputation, financial strength are also issues. And for bigger OEMS, aggregating volumes with fewer suppliers also can yield both discounts but also lower overhead to manage the supplier.

    It may be better to buy a part for $23 from a reputable vendor who offers NET 60 terms and return privileges than pay $22 from a shady vendor who wants COD and the order is NCNR. We see this mistake made all the time, especially in China but domestically as well. And we also see engineer-friendly vendors who provide excellent design-in support hoping to lock in business at a higher price at lesser terms.

    Of course there are supply chain experts who can negotiate to pay $21 from the best vendor at NET 90 day terms

  6. Moderator Reposting from Linked in comment Here:

    http://www.linkedin.com/groupItem?view=&gid=1451897&type=member&item=256933916&commentID=149794827&report%2Esuccess=8ULbKyXO6NDvmoK7o030UNOYGZKrvdhBhypZ_w8EpQrrQI-BBjkmxwkEOwBjLE28YyDIxcyEO7_TA_giuRN#commentID_149794827

    Chuck Hodges SAYS

    Side comment on TCO models. Where TCO theory vs practice usually breaks down is in pay me now, save later aspects. Basically most companies’ (and individuals’) real hurdle rate for Time Value of Money is a lot higher than the theoretical numbers.

  7. Moderator Reposting from Linked in comment Here:

    http://www.linkedin.com/groupItem?view=&gid=36972&type=member&item=256933878&commentID=149975381&report%2Esuccess=8ULbKyXO6NDvmoK7o030UNOYGZKrvdhBhypZ_w8EpQrrQI-BBjkmxwkEOwBjLE28YyDIxcyEO7_TA_giuRN#commentID_149975381

    Owen Fortune SAYS

    I find this argument to be a bit unrealistic.
    First, one can usually assume that at least some of your potenial suppliers are companies you have worked with before and that both sides “speak the same language”. If not, there is usually time to go back to companies whose quotes you have questions about, and get them to either conform their quote to a format that is useful to you, or drop them from this particular project.
    Secondly, confusing or misleading quotations are often a product of poorly written specifications by the buyer. There is nothing to stop either side from picking up the telephone and threshing the matter out.
    Formal procedures and rigid protocols are a poor substitute for just asking questions.

    • @ Owen

      Perhaps, you have a better and more sharing purchasing dept. that I have often dealt with. My experience is that suppliers will typically provide the following:

      100% will provide the Total Cost
      60-70% will break out shipping
      20-30% will provide raw material mass or cost
      10-20% will provide “major” cost bucket (e.g. Raw Material $20, Casting $10, Machining $25, Logistics $5)
      1-5% will provide cycles times
      1% will provide a detailed costs for each machine/process

      I agree that many people don’t specify well or ask questions. However, many suppliers will refuse to give a breakdown beyond Part Cost and Logistics.

      I think you draw a false dichotomy between (1) specifying well + following up with questions and (2) having a simple process that you everyone follows.

  8. […] Questions to Ask Before You Run off to Re-quote Hiller Associates becomes an author on Engineering.com Do you hear the voices? (Voices Series, Part 1) You want to be within 10% of the cost? (Internal […]

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