Functional Business Language Revealed

By: Thomas Cutler

Eric Hiller the founder and Chief Product Officer at aPriori contributed a series of guest posts on the subject of driving Spend Management upstream. The complete contribution may be read at http://www.spendmatters.com/index.cfm/2007/1/20/Whats-The-Language-of-Your-Business153

Hiller talks about the languages we speak in business, not English, German, Chinese, rather the "functional" languages that we speak. According to Hiller, "Depending on where you walk in the halls of a large manufacturing company, you will hear very different words. In Sourcing you hear "RFQ," "AVL," "delivery"; in Design you hear "release," "strain," "feature"; in Manufacturing you hear "routing," "overhead rate," "cycle time". In fact, sometimes the same word means very different things. For example, is "volume" a quantity of parts to produce (Sourcing and Manufacturing) or something displaced in a swimming pool (Design)... or something your girlfriend she wishes she had more of in her hair (cosmetology)? The point is that words are powerful and elusive objects, and the ability to communicate is one of the keys to business success. Most times, professionals can learn the language of another business function quickly, maybe in a few months. But, sometimes the translation from one "language" to another is much more difficult. Such is the case with Product Cost in discrete product and manufacturing companies. Ask your friendly design engineer to describe his favorite newly designed product, assembly, or part, and he will wax eloquent about its design, geometry, performance, material, etc. Now, ask him what it will cost to produce, and you likely will hear.... silence. And, its not just designers! The same experiment could be repeated with manufacturing, sourcing, marketing, etc. "

So, how do we perform this translation? We need a Rosetta Stone. Enter, the category of Enterprise Cost Management (ECM). ECM is a field of practice including all the techniques that companies use to assess, manage, control, and reduce costs, with the goal of maximizing profit. Today, we are only focusing on the "assess" or translation portion of ECM. The "Manage, Control, and Reduce cost" parts of ECM will have to wait for another post.

What is the benefit of making this translation: improved decision making. Once, the functional dialects are translated into the common language of cost, management can make decision that are more effective in meeting the companies overall goals, including growth, margins, etc.

Based in Concord, MA, aPriori is the technology leader providing innovative cost management solutions to the discrete manufacturing industry. aPriori's Cost Management Software Platform enables manufacturers to better understand product cost decisions early and throughout the product lifecycle. aPriori's Cost Management Platform empowers manufacturers to lower cost-of-goods sold (COGS), provides real-time visibility to "cost-critical" decision information, and builds critical cost knowledge to go on the business "offensive." aPriori's patent-protected cost management platform allows companies to assess, control, and reduce cost of goods sold by whole percentages.

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