I’m an accountant, not a writer. So why did I start Perezonomics? Basically, it was because so much of tech journalism was devoid of a common-sense understanding of how the business world works. Specifically the manufacturing and operations side of business. I finally decided that instead of just complaining, I should jump into the arena and offer the perspective that I wished someone would provide.
I’ve been interested in cost and manufacturing accounting ever since my days at Harding University where I graduated in 1993. Calculating product costs and forecasting their impact on the income statement seemed so much more interesting than processing accounts payable or calculating 401K liabilities.
But I could probably say that my days working for NASA may have influenced my view that making things was super cool. While in school I was a co-op student at NASA’s Stennis Space Center where “manufacturing” meant assembling space shuttle engines and test equipment destined for the international space station.
I spent some time working with the Amway Corporation in the mid to late 90’s as an international specialist. Whenever Amway would open an independent subsidiary, it was my job to design, test, and implement the AS400-based inventory management system. It was a great gig that I loved. I found that designing a new software application is like working on an intricate painting. So many details work together to make a beautiful picture. I handled system implementations in Venezuela and India. The Indian subsidiary was Amway’s largest and most complex project to date.
International travel is great for a while but hard on the family longterm. But in order to do system implementations right, you need to be on the ground riding herd. So I ended up leaving after getting India successfully launched and went to work for the second-largest office furniture manufacturer in the country, Herman Miller.
At Herman Miller I developed my sense for the importance of overhead allocations and product-line income statements. I couldn’t believe that the costs for running a huge warehouse full of fabric was being spread evenly over all of our products when most of the fabric was for a small product line of “custom” products. I did what any good cost accountant would do and started allocating warehouse based on who was consuming the resources. That meant our small custom product line started getting 80% of the costs, and for the first time our sales group realized that they were losing money.
Office furniture went through a huge contraction that led to many plant closings, including mine. I eventually went to Gateway Computers where I acquired my interest in all things tech. I was fascinated with the assembly of laptop computers and plasma TVs and learned all about the latest MP3 players and digital cameras. The world of tech was like a bizarro alternate universe to me where prices and costs were consistently on a downward trajectory. If you bought too many hard drives or memory chips, sucks to be you, because those same components would be ten percent cheaper in a month. I loved working at Gateway Computers, almost enough to relocate to the Los Angeles area. After we merged with eMachines, I was the chief forecast analyst for the server group and my entire department was moved to Orange County. But of the few places in the United States where I absolutely refuse to live, Los Angeles is one of them.
Lucky for me, the World’s Foremost Outfitter, Cabela’s, was looking for a senior operations analyst. They were struggling with the new reporting they needed to do with having recently gone public and the new Sarbanes Oxley regulations. Part of their problem was that they had about four or five different major software applications that didn’t speak to each other. It was my job to decipher how the systems interacted with each other and identify the pain points.
If I had to pick my single favorite project that I’ve worked on in my career it would be an easy choice to make. By far, it was creating a logistics footprint computer model using Oracle’s SNO (Supply Chain Network Optimization) for the Batesville Casket Company. Most companies make the mistake of relying too much on simple freight company rate shopping to reduce their freight costs, when in reality that’s only a small part of the equation. Freight companies are all too happy to keep hauling your stuff on the same old routes and they are even willing to lower their costs to keep that business. But they’ll never suggest that you’re probably better off setting up a distribution center in the middle of your target market. It’s on you to figure out that it’s more efficient to haul those 100% full trailers down to your staging point. You need to war-game your territory by placing all your pieces on the board and moving them around to get the lowest cost. That might mean closing down or opening up new distribution centers, and potential millions in freight savings.
I once heard someone say that the stuff which you know and you think is ordinary will be amazing to others. Everyone has a unique history and set of experiences that they bring which colors the way they see an issue. Because of my operations analysis background, I tend to see Apple’s product decisions from the lens of “What would I advise them to do?”. But I hail from the operations side of the business which is often at odds with the sales and marketing groups or engineering side. So I don’t claim to be the final arbiter of truth.
But just like in a court of law that mandates that both sides of the story must be heard, I believe that tech journalism needs to represent the various viewpoints that are relevant. Too often we hear from only the marketing or engineering side and forget that there is a practical business viewpoint that needs to be considered. In the end, if you can't pay the bills, all those exciting new things may not be around for the long haul.
robert@perezonomics.com
I’ve been interested in cost and manufacturing accounting ever since my days at Harding University where I graduated in 1993. Calculating product costs and forecasting their impact on the income statement seemed so much more interesting than processing accounts payable or calculating 401K liabilities.
But I could probably say that my days working for NASA may have influenced my view that making things was super cool. While in school I was a co-op student at NASA’s Stennis Space Center where “manufacturing” meant assembling space shuttle engines and test equipment destined for the international space station.
I spent some time working with the Amway Corporation in the mid to late 90’s as an international specialist. Whenever Amway would open an independent subsidiary, it was my job to design, test, and implement the AS400-based inventory management system. It was a great gig that I loved. I found that designing a new software application is like working on an intricate painting. So many details work together to make a beautiful picture. I handled system implementations in Venezuela and India. The Indian subsidiary was Amway’s largest and most complex project to date.
International travel is great for a while but hard on the family longterm. But in order to do system implementations right, you need to be on the ground riding herd. So I ended up leaving after getting India successfully launched and went to work for the second-largest office furniture manufacturer in the country, Herman Miller.
At Herman Miller I developed my sense for the importance of overhead allocations and product-line income statements. I couldn’t believe that the costs for running a huge warehouse full of fabric was being spread evenly over all of our products when most of the fabric was for a small product line of “custom” products. I did what any good cost accountant would do and started allocating warehouse based on who was consuming the resources. That meant our small custom product line started getting 80% of the costs, and for the first time our sales group realized that they were losing money.
Office furniture went through a huge contraction that led to many plant closings, including mine. I eventually went to Gateway Computers where I acquired my interest in all things tech. I was fascinated with the assembly of laptop computers and plasma TVs and learned all about the latest MP3 players and digital cameras. The world of tech was like a bizarro alternate universe to me where prices and costs were consistently on a downward trajectory. If you bought too many hard drives or memory chips, sucks to be you, because those same components would be ten percent cheaper in a month. I loved working at Gateway Computers, almost enough to relocate to the Los Angeles area. After we merged with eMachines, I was the chief forecast analyst for the server group and my entire department was moved to Orange County. But of the few places in the United States where I absolutely refuse to live, Los Angeles is one of them.
Lucky for me, the World’s Foremost Outfitter, Cabela’s, was looking for a senior operations analyst. They were struggling with the new reporting they needed to do with having recently gone public and the new Sarbanes Oxley regulations. Part of their problem was that they had about four or five different major software applications that didn’t speak to each other. It was my job to decipher how the systems interacted with each other and identify the pain points.
If I had to pick my single favorite project that I’ve worked on in my career it would be an easy choice to make. By far, it was creating a logistics footprint computer model using Oracle’s SNO (Supply Chain Network Optimization) for the Batesville Casket Company. Most companies make the mistake of relying too much on simple freight company rate shopping to reduce their freight costs, when in reality that’s only a small part of the equation. Freight companies are all too happy to keep hauling your stuff on the same old routes and they are even willing to lower their costs to keep that business. But they’ll never suggest that you’re probably better off setting up a distribution center in the middle of your target market. It’s on you to figure out that it’s more efficient to haul those 100% full trailers down to your staging point. You need to war-game your territory by placing all your pieces on the board and moving them around to get the lowest cost. That might mean closing down or opening up new distribution centers, and potential millions in freight savings.
I once heard someone say that the stuff which you know and you think is ordinary will be amazing to others. Everyone has a unique history and set of experiences that they bring which colors the way they see an issue. Because of my operations analysis background, I tend to see Apple’s product decisions from the lens of “What would I advise them to do?”. But I hail from the operations side of the business which is often at odds with the sales and marketing groups or engineering side. So I don’t claim to be the final arbiter of truth.
But just like in a court of law that mandates that both sides of the story must be heard, I believe that tech journalism needs to represent the various viewpoints that are relevant. Too often we hear from only the marketing or engineering side and forget that there is a practical business viewpoint that needs to be considered. In the end, if you can't pay the bills, all those exciting new things may not be around for the long haul.
robert@perezonomics.com
The Tesla Bubble
From the creator of Perezonomics, The Tesla Bubble
I take a look at why Tesla is wildly over valued as a stock and the biggest obstacles they face in success with electric vehicles. Everyone thinks that the Gigafactory will make them the low cost producer when the opposite could be true. Everyone thinks that demand is their number one issue when in fact that is not their biggest problem. Not even their second largest problem. Why has this stock been so popular with investors when it’s such a lousy company? Are Tesla fans right that all the naysayers are wrong? That’s what Saturn fans said right up until the time that their beloved car company closed shop. Will the same thing happen to Tesla or will they get purchased? Will Donald Trump save the day?
Available on iTunes now
I take a look at why Tesla is wildly over valued as a stock and the biggest obstacles they face in success with electric vehicles. Everyone thinks that the Gigafactory will make them the low cost producer when the opposite could be true. Everyone thinks that demand is their number one issue when in fact that is not their biggest problem. Not even their second largest problem. Why has this stock been so popular with investors when it’s such a lousy company? Are Tesla fans right that all the naysayers are wrong? That’s what Saturn fans said right up until the time that their beloved car company closed shop. Will the same thing happen to Tesla or will they get purchased? Will Donald Trump save the day?
Available on iTunes now