Comments on: Cost Of Materials Is A Product Manager’s New Friend http://www.theaccidentalpm.com/costs/cost-of-materials-is-a-product-managers-new-friend Home Of The Billion Dollar Product Manager Where You Too Can Learn To Be A Wildly Successful Product Manger Fri, 03 Feb 2012 05:14:43 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Dr. Jim Anderson http://www.theaccidentalpm.com/costs/cost-of-materials-is-a-product-managers-new-friend/comment-page-1#comment-728 Dr. Jim Anderson Thu, 23 Jul 2009 21:09:51 +0000 http://www.theaccidentalpm.com/?p=868#comment-728 Beth: good points all around. This is where the whole product manger role gets interesting. Often a company continues to do things the way that they have always done them - even when the product manager knows that they are wrong! In the case of trying to get some support to look into ways to lower fixed costs, the finance department is often a sleeping ally. Having a talk with them and letting them know what might be possible can awaken then and provide you with a powerful supporter that will enable you to spend more time looking at this critical component of your product's price...! Beth: good points all around. This is where the whole product manger role gets interesting. Often a company continues to do things the way that they have always done them – even when the product manager knows that they are wrong! In the case of trying to get some support to look into ways to lower fixed costs, the finance department is often a sleeping ally. Having a talk with them and letting them know what might be possible can awaken then and provide you with a powerful supporter that will enable you to spend more time looking at this critical component of your product’s price…!

]]> By: Beth Robinson http://www.theaccidentalpm.com/costs/cost-of-materials-is-a-product-managers-new-friend/comment-page-1#comment-724 Beth Robinson Fri, 17 Jul 2009 14:52:29 +0000 http://www.theaccidentalpm.com/?p=868#comment-724 How much control and incentive you have to trim costs as a product manager will depend on how your internal costing is structured. In the company where I work formulating adhesives the product manager can only ask for direct changes in the packaging and in the cost of the actual adhesive. We've done multiple reformulations for cost targets! Although there was the time that the R&D Manager insisted that the Product Manager figure out how much the pretty foil cartridge was costing compared to a plainer one before he devoted hours of research time to reducing the chemical cost.... Those raw material costs are also the only things that margin is calculated on - and margin/sales are what PMs are rewarded on. There's not a lot of incentive (as I understand it) to look at the bigger picture or support incentives to reduce fixed costs that help the profitability of the business as a whole. How much control and incentive you have to trim costs as a product manager will depend on how your internal costing is structured.

In the company where I work formulating adhesives the product manager can only ask for direct changes in the packaging and in the cost of the actual adhesive. We’ve done multiple reformulations for cost targets! Although there was the time that the R&D Manager insisted that the Product Manager figure out how much the pretty foil cartridge was costing compared to a plainer one before he devoted hours of research time to reducing the chemical cost….

Those raw material costs are also the only things that margin is calculated on – and margin/sales are what PMs are rewarded on. There’s not a lot of incentive (as I understand it) to look at the bigger picture or support incentives to reduce fixed costs that help the profitability of the business as a whole.

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