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Speaking of Precision

Speaking of Precision is a knowledge preservation and thought leadership blog covering the precision machining industry, its materials and services. With over 36 years of hands on experience in steelmaking, manufacturing, quality, and management, Miles Free (Milo) Director of Industry Research and Technology at PMPA helps answer "How?" "With what?" and occasionally "Really?"

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Engineering’s Contribution to the Profit Equation

Posted October 18, 2011 8:00 AM by Milo

One of the benefits of staying current on professional social media sites is the chance to find some new insights and people with great ideas. I found this gem on Medical Product Device Development Network on LinkedIn today, and just had to share.

Our thanks to Mike Shipulski for the thought leadership about our contribution as engineers to our firms' profitability. Here's what Mike had to say about the contributions of engineers:

"We all want to increase profits, but sometimes we get caught in the details and miss the big picture:

Profit = (Price - Cost) x Volume.

"It's a simple formula, but it provides a framework to focus on fundamentals. While all parts of the organization contribute to profit in their own way, engineering's work has a surprisingly broad impact on the equation.

"The market sets price, but engineering creates function, and improved function increases the price the market will pay. Design the product to do more, and do it better, and customers will pay more. What's missing for engineering is an objective measure of what is good to the customer."

To read the complete article, click HERE.

Tip of the hat to Mike Shipulski for sharing his thought leadership on LinkedIn.

Editor's Note: CR4 would like to thank Milo for his own thought leadership in sharing this blog entry, which originally appeared here.

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#1

Re: Engineering’s Contribution to the Profit Equation

10/18/2011 11:36 PM

" ...improved function increases the price the market will pay"

To a point.

Example 1 - for plain old word processing, I far prefer MS Word 98 to Word 2003 (don't even get me started on Word 2007).

Example 2 - I own a cell phone to talk to people. 90% of the features and functions on most cell phones are lost on me and I'd really rather not pay for them if I can help it.

Feature/function creep is a real problem to a lot of people, especially as one gets older. But, then, is this a problem of engineering? Or marketing?

Hooker

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#3
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Re: Engineering’s Contribution to the Profit Equation

10/19/2011 10:18 AM

Hooker, I couldn't agree more.

The ability to limit scope and optimize for that scope Is overlooked as an engineering deliverable.

I do think that it is more a problem of lazy marketers who think that adding extras makes it easier to sell. so the designs are optimized for ease of sale rather than for optimum utility by the user.

THanks for sharing your examples. You nailed it on Word 98.

I took a painting class once, and the instructor told me that the real secret to painting was to know when to stop adding more paint...

Milo

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#2

Re: Engineering’s Contribution to the Profit Equation

10/18/2011 11:40 PM

Thanks. I have forwarded this interesting article link to few of my colleagues & seniors.

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Re: Engineering’s Contribution to the Profit Equation

10/19/2011 10:18 AM

You're Welcome.

Milo

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#5

Re: Engineering’s Contribution to the Profit Equation

10/20/2011 3:09 AM

Spot on Hooker...
Added functionality may satisfy some markets. Most customers actually need simple and reliable, the problem is advertising and marketing is constantly trying to generate 'new' markets.
Del

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