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COST CUTTING JUSTIFICATION!

In any chemical industry and other industries, we cannot avoid from purchasing equipment or service which we need in order to perform our work in order to achieve our company objective/target. Whether we are working in a research institution or service company or chemical plant or etc...We need to purchase something as asset(s) or consumable(s) or service(s).

As engineers/executive/managers, we need to make wise and technical decision based on wise justification before deciding to purchase something. We need to consider the economical aspect and the Return on Investment (ROI) as well.

However, from my humble experience, we usually know what we want and how the product/service works. We are also capable to evaluate and justify the product/service which best suite our demand and requirement.

However, the problem arises when our superior/procurement department will question us and try to get the cheapest product/service without having better comprehension of what is exactly our requirement. Often, they'll overwrite our demand and honour us with cheaper product/service that they manage to get. Their concept and philosophy is most of the time COST CUTTING!!! They do not want to compromise on the quality and safety aspects!!!

The following is an excellent article that i read from Engineer Live regarding the COST of COST CUTTING by Steve Hayward from Delta International. I really recommend you reading it...

Buy cheap, pay dear. Driving down costs can be expensive

Steve Hayward this discusses the potential risks and detrimental effects involved in cutting costs.

There is a well known saying which states: “Buy cheap, pay dear”. An equally common expression is: “If you pay peanuts, you get monkeys”. The French say: “On a rien sans rien.” (You cannot get something for nothing) while the Spanish equivalent is “quien algo quiere, algo le cuesta”.

You start to realise that we all pretty much agree the world over that if you cut corners on price there is a very good chance you will pay for it later. So why have we become obsessed with driving costs down irrespective of whether this actually has a detrimental effect upon us and our objectives?

Read the rest from the link…

http://www.engineerlive.com/power-engineer/opinion/16349/buy-cheap-pay-dear-driving-down-costs-can-be-expensive.thtml

posted by zaki yamani @ 12:08 AM,

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The Author

zyz

I’m Zaki. I used to be a project, process and chemical engineer. Few years ago I successfully became a Chartered Engineer (IChemE) and Professional Engineer (BEM). I'm now employed as a chemical engineering educator/researcher/consultant. Hope you like reading my blog. I welcome any feedback from you. My email: zaki.yz[alias]gmail.com. TQ!


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