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February 2007

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From:
Craig Cullum <[log in to unmask]>
Reply To:
TechNet E-Mail Forum <[log in to unmask]>, Craig Cullum <[log in to unmask]>
Date:
Tue, 6 Feb 2007 13:34:28 -0600
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> -----Original Message----- From: TechNet [mailto:[log in to unmask]] On
Behalf Of Ryan Grant
> Subject: Re: [TN] Costing of Components
> 
> <SNIP> The one extreme was an automotive 
> airbag manufacture that brought in a new CEO and VP who 
> adopted the Toyota manufacturing system.  When accounting 
> would hand the VP their weekly report, he would immediately 
> drop it into the trash can.  (It took months before the 
> accountants decided to quit wasting their time with compiling 
> those accounting reports).  His 'new' accounting system was 
> very simple, stop tracking any of that stuff!  If you want to 
> build your product, you MUST buy the raw material and you 
> MUST pay operating expenses.  At the end of the day, only 
> thing that matters is how much money was spent, how much 
> money was made from sales, and whether anything is left over. 
>  This is because the selling price is determined by 
> competition and NOT the cost of building the product.  If you 
> want to make money, the cost of building must be less than 
> the cost of selling, and TRACKING a component in an MRP 
> system does not reduce it's cost.  It doesn't matter if you 
> expense it or not.  You still paid for it, you can't build 
> without it, and you'll order more when you run out...

Wow! Common sense does exist.
Man, that was refreshing to read!

Craig Cullum, Engineering Technologist, AMTELCO
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Please visit us at www.amtelco.com 

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