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Back to e-Newsletter Archives:
 Effective
Engineering e-Newsletter – 11/07/2002
This is the first in a series of bi-weekly
e-Newsletters from Effective
Engineering Consulting Services (www.effectiveeng.com).
If you would like to receive Effective Engineering e-Newsletters as they
are published, please send an email to e-newsletter@effectiveeng.com,
and we will add you to our distribution list.
eN-021107:
Ineffective Engineering Costs You Time, Money, and Customers!
By
Tom Dennis – President, Effective Engineering [ tdennis@effectiveeng.com
]
In today’s
fast-paced and cost-control driven business environment, Wall Street, investors,
and customers place strict financial and timing demands on companies.
They demand to know what company plans are and when they expect to
deliver on those plans. Wall Street
rewards companies who deliver on their commitments, and severely punishes
companies who miss them.
For small private companies, delivery on commitments can be even more critical.
Meet your commitments, and the company can survive, and hopefully grow
and prosper. Miss your commitments,
and the company may need to shutter the doors and lay everyone off.
The primary role of a product development engineering organization in meeting
company commitments is delivering high-quality products on an agreed upon
schedule and within budget. The
consequences of timely product delivery and solid product quality are more
critical than ever. Effective
engineering enables engineering organizations to meet their commitments.
Ineffective engineering leads to missed delivery commitments, and failure
to deliver costs companies time, money, and customers – most companies can’t afford the
loss of any of these three.
The discussion here will concentrate on the business impact of missing
engineering commitments. [Subsequent
e-newsletters will go into more detail]. A
look at the graph at www.effectiveeng.com/the_problem.htm
(also shown here) summarizes the overall business impact of engineering missing
its commitments.
When a project is late, it obviously causes the corresponding product to be late
coming to market, embarrassing management who made availability commitments,
upsetting customers who were depending on this delivery to meet their plans and
commitments, and upsetting financial analysts who made projections of company
performance based on this commitment. But beyond the obvious time delay,
late delivery also directly impacts a company's top line  (revenues)
and bottom line (profits), in three ways:
► If a product is late, the revenue that
would have been made from the time a product should have been delivered is lost
forever - it can never be recovered, and thus directly impacts a company's top
line, and consequently its bottom line.
► Further, since late delivery impacts customer' plans and commitments,
they will make other arrangements and some ongoing sales will be further lost
forever, again impacting both the top and bottom lines.
► Finally, because engineering resources will need to continue to be used
from the time the project should have been completed until it is actually
completed, development expenses will significantly increase, directly impacting
the company's bottom line.
When product quality is poor, it has similar but somewhat different impacts:
► During product development, poor quality results in late delivery and
added product costs due to the time it takes to find and fix the problems that
are found. This increases development and production costs as described
above, directly impacting the company's bottom line.
► Once the product reaches the field, poor quality leaves a very bad
impression with customers. Some will refuse to accept the product,
reducing sales and impacting both the top and bottom lines.
► Other customers may be dependent on the
product and still buy. They will
undoubtedly have problems that will require significant ongoing customer support
and sustaining engineering efforts well above that which would be required if
the product quality was good. This
will therefore increase engineering and support expenses, directly impacting the
company’s bottom line.
A common response when a project gets in trouble is to throw more people at it.
This may help, but often is exactly the wrong thing to do, as new people
must now be brought up to speed, taking away time from those already involved in
the project. The consequence is often even more delay.
Even without the delay, adding more people to a project than were planned
increases development expenses, directly impacting the bottom line.
All of these – late delivery, poor quality, and added people – are the
result of ineffective engineering. As
has been made clear here, ineffective engineering costs companies time, money and
, and customers! The effects are severe, both
qualitatively (in terms of company confidence, reputation, and survival), and
quantitatively (in terms of revenues and net income).
The stakes could not be higher. Ineffective
engineering cannot be tolerated!
Copyright © 2002
Effective Engineering Consulting Services, All Rights Reserved
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