In last week’s post “Do you hear the voices? (Voices Series, Part 1) ” we talked about the different voices that speak throughout the product life cycle and how they relate to Product Cost Management. This week, we’ll talk about some voices give bad advice and expectations. As the diagram to the left shows (click to enlarge), there are at least two typical conversations happening in the product life cycle. The conversation at the top shows the voices that are beneficial to Product Cost Management and help lead to a profitable product. The conversation at the bottom has some of the same voices, but also replaces some of the voices with new, discordant voices, who more often than not, lead to an unprofitable product.
Hope is Not a Strategy
The Voice of Resignation (…or Eeyore)
This brings us to the Voice of Partners and the Market, i.e. your suppliers and factory who have to actually deliver your new product. The supplier or plant will determine the price at which they are willing to sell to you.
People often add pernicious voices to the conversation that are manic depressive opposites. The first is the Voice of Resignation. If you have kids, or if you ever were a kid, you may know this as the Voice of Eeyore. Eeyore is the lovable, but chronically dejected donkey in Winnie the Pooh. This voice says, “I don’t care what your ‘should-cost’ says. This is what the market will sell for, so I guess that I have to buy at that price.”
The Voice of the Bullying (…800 lbs and growing)
The manic brother of the Voice of Resignation is the Voice of Bullying. However, instead of Tigger as the opposite of Eeyore, we have another mascot for this voice — the 800 pound gorilla. After all, Tigger is more of an annoyance than a bully. The Voice of Bullying
says: “We’re the 800 pound gorilla customer, and we’ll use our weight to force some cost reductions with the supplier.” Is the price requested reasonable? The 800 pound gorilla doesn’t care, because he needs the price to be what he wants it to be for one of several reasons that are beyond explanation in this post. I plan to discuss the reasons more fully in a subsequent post, but for now we’ll just list them as the following:
- Cost was never targeted properly in the first place (a.k.a. the Voice of Hope was listened to over the Voice of Reason)
- Engineering let things get out of control (a.k.a. the Voice of Sound Cost Engineering was replaced with the Voice of Hope… or apathy)
- The Voice of the Ghost-of-Product-Costs-Past haunts purchasing (a.k.a. the demand for post-launch cost reductions)