Once upon a time, I was down at Lewis' Restaurant in Norwood, Mass., waiting in line to order a Lewisburger, which was a fantastic hamburger with blue-cheese dressing and potato salad and ham. A voice came booming across the noisy restaurant, "Hi Bob." I replied, "Hello Maurice, what's new?" Maurice wandered over and said, "How come you are still using the wrong formula, the old formula, for Factory Cost?" I responded, "Old formula? I never heard of a new formula. You mean the formula of Parts Cost + 450% of Labor Cost is obsoleted?" Maurice said, "Oh, that's been obsolete for months. Didn't anybody tell you? The new Factory Cost is 2 x Parts Cost + 3 x Labor Cost." Well, I ordered my Lewisburger, and ate lunch and bantered with my friends. But on the way back to my office, the wheels began going around in my head. How could they change the formula for Factory Cost and not inform people? How could they accept that, after "a few months," people were still using the incorrect formula, but it was no big deal? And they wouldn't bother to tell a guy unless they happened to bump into him at a restaurant? So I went to see my boss, Richard Randlett, to ask him if he knew what was going on.
He said, yes, he had heard about the new formula, but he didn't know it was officially in effect. And, besides, he didn't want to bother us with unimportant details. We should keep on engineering our designs using good judgment, as usual, and not worry about this "New Factory Cost Formula," and other academic things like that. Not a big deal. Well, okay, I went back to work. But within an hour, I was back at Richard's office.
"Hey, Richard, you know that low-cost converter I am working on?" Yeah. "Well, I was going to use a double-sided pc board, but with the new formula in effect, it would be cheaper to use a single-sided board and a few jumpers. The parts cost will go down quite a bit, but the labor will only increase a little."
Richard sat there. He thought about it for a few seconds. Then he saw red! "No, don't make that change!!" I replied, "But, Richard, the new Factory Cost Formula says it's wise to add a few seconds of labor to save a lot on parts cost." But Richard pointed out that even though that was what the bean counters were telling us to do to save money, it would be wrong. He told me to keep on optimizing the costs, assuming that Labor Costs would be multiplied by 4.5 compared to the Parts Cost. Meanwhile, he would try to get this resolved, and get the formula changed back to a reasonable proportion. He'd get me an answer within a month.
Well, one month later, Richard was still trying to get the problem resolved. Two months later he was gone, and three months later, I resigned. So to this day, I don't know how this was ever worked out. But I did know that I could not do my job if nobody would tell me the rules, and if the rules kept changing to contradict themselves. One set of rules told me that it was wise to add jumpers instead of plated through holes. And a second set of rules told me that was foolish and costly, and I should do it the other way. And if no one could tell me which rules were valid - hey, that's a problem. I needed to solve that problem, but nobody could help me resolve it. So I voted with my feet and left that company, and I haven't worried about that kind of problem. Until recently.
Of late, I was collaborating on a small regulator chip where we wanted to trim the output to high accuracy. That would take about 10 Zener- zap trims. And those would tend to take up lots of die area - probably a 50% increase over the circuit area.
Conversely, if we put in laser trims, that would keep the die size small, but the cost for trimming each die would rise considerably. How much would it rise? We did not have the cost data. And when we got the cost data, it was kind of outdated, and we did not entirely believe it. But the time for trimming with 10 laser cuts would basically take an extra second, due to the need to get the laser aligned with the die. And the cost of testing on a tester with a laser is about double - about 4 cents/second - versus 2 cents/second on a tester without a laser.
That is true, even for the tests when you're not using the laser. This is because the whole machine must be paid for, even if you're not utilizing all of the tester. So, 3 seconds x 4 cents/second is noticeably different than 2 seconds x 2 cents/second. For an 8-cent difference, you can pay for a much bigger die area!! So that convinced us there was probably a cost advantage if we could avoid laser trimming.
But those considerations were overruled by a more important consideration: The need to fit the die in a small package. There were some small plastic packages that the larger (cheaper) die would not fit into. Still, we realized that in the future, we will be sharpening up our pencils more often. What is the right way to keep the costs low? What are the rules in our business? We're not sure, but we're trying to get some of these rules nailed down. Then when it is important, we will have the rules available - and believable. And that's not a trivial statement.What are the rules in your business? Do you know what they are? Do you believe them? Are they ever subjected to thoughtful scrutiny, or are they so old and dusty that you know darned well that nobody has thought about them for many years? Do people change them without understanding all of the ramifications and repercussions? Maybe it's time for a sanity check.
Comments invited! / RAP
Robert A. Pease / Engineer
Originally published in Electronic Design, February 28, 1991.
RAP Update: When I wrote this column in 1991, Teledyne Philbrick was still in business. Then in 1992 they went out of business. I can't imagine why ...