Sometimes cheap is cheap

Sometimes cheap is cheap.  But sometimes cheap is just cheap.  The old adage, “you get what you pay for,” has its merits, even more so the engineer’s version, “you get less than or equal to what you pay for.”  But it’s also impossible, at any level, to ignore cost as a driver. Driving down costs is table stakes to be in business today; aggressively driving down costs is the only way to make money.  This applies to multinational corporations as well as small businesses.  And it’s not just the big ticket items, it’s also worrying about millicents.

In the manufacturing corner of the universe, finding lower cost–yes, cheaper–solutions is an never-ending struggle, fraught with risks to schedule, quality, customer satisfaction, safety and the like.  Yet ignoring cost is the surest way to go out of business too.  So we walk that thin line, searching for ways to lower costs without compromising other important factors.  And while it’s easy to find a lower cost supplier offering an inferior component or service, its really tough to find a supplier who will provide a quality product at a lower cost.  Likewise cutting corners on processes and quality systems can lower costs but with horrendous downsides.

We’ve got one of our operations guys in China right now, pulling what’s left of his hair out over a tool build gone south.  The really cheap solution has turned to cheap, in more ways than one.  We’re working to find ways to fix a flawed tool design and support the toolmaker in order to get a quality set of tools out for our client, but cheap is not cheap now. Not surprisingly, it actually costs more to fly a team halfway around the world, throwing away half-finished cores and cavities, and doing it over than it would have cost to have done it right (another adage) in a low cost but quality shop. This is not to say that making tools in China is a bad idea–in fact some of the best toolshops in the world today are in China.  And many have low cost structures without compromising on tool design, on steel quality, on skilled toolmakers.  But sometimes cheap is just cheap.

Do drive costs down.  Worry about the millicents. But don’t get (too) cheap.

Chuck

2 Comments

  • Balwantrai Mistry

    Chuck,

    Good article, however, how do you sell to the management that Cheap is not always cost cutting. I see this kind of situation where someone is coming back with low cost part and does not allow to get thru process of understanding and later gets into quality issue. Most of time, customer complaint are directed to another cause which true cause is not reveled.

  • Chuck

    Bal,

    Yeah that’s the tough part. It’s easy to get lured into cheap. The trick is to understand if the cheapness comes from efficiencies or a lower cost structure or scale, all good reasons in general, or from desperation or inexperience or cutting corners, all typically bad reasons which have a habit of backfiring on the buyer. As to management, the key is to get people thinking about total cost of ownership / cost of quality / ROI, not just COGS. And yeah I know this isn’t easy, especially in larger companies.

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