In any project there are risks and issues that must be managed by a CE team. A risk is an uncertainty associated with one or more key project deliverables.
Major risk factors include accurately capturing customer requirements, meeting the agreed upon project schedule, meeting cost targets, and successfully deploying the required technology related to the product, as well as the process required to produce it, and the functionality of the new product or process design relative to targeted specifications. In addition to risks, there are environmental factors that may impact a design project. These environmental factors include macroeconomic trends and competitive threats. Although the CE team cannot eliminate these envi- ronmental factors, contingency plans can be created to mitigate their impact on the project. Project risks are also characterized by an occurrence probability. Figure 4.8 shows how the CE team can manage these project risks by category. Each category of Figure 4.8 has an impact rating as well as a probability of occurrence. The risk scale ranges from 0 to 9. High risks must be managed by the CE team to ensure project success.
The first risk category, i.e., capture CTQs, relates to the fact the CE team must accurately capture the VOC information. Failure to do so will result in a situa- tion in which the new product or service cannot be sold or must be retrofitted at great expense to make it saleable to customers. The tools and methods presented in Chapter 3 will help the CE team avoid this situation. Failure to accurately cap- ture the VOC can result in poor estimation of demand, a failure to consider rel- evant competitive threats, and a failure to achieve cost, schedule, or quality targets. These situations may result in a diminished demand for a new product or service. However, this type of risk can be mitigated if the team has properly conducted its market research. Alternatively, in situations in which the new product is designed for a few major customers, it is important for the CE team to maintain close con- tact with these customers throughout the design process to ensure there will be a market for the new product or service. Relative to late entry into the market, it is important the CE team meet its schedule commitments because competitors may be working in parallel to develop similar products and services. As mentioned earlier, in some industries, organizations arriving to market late may experience a
Failure
Impact: Low(1) Medium(5) High(9)
<.25 .26–.50 .51–.75 >.76 <.25 .26–.50 .51–.75 >.76 <.25 .26–.50 .51–.75 >.76 Failure Probability: Risk Type 1. Capture CTQs 2. Schedule 3. Cost Targets 4. Deploy Technology 5. Meet Specifications
Risk Rating Range: 0 to 9
Designing for Customer Value Using DFSS n 109
significant reduction in potential market share over the life of a new product or ser- vice. Finally, issues that impact performance or cost and delay commercialization of a new product or service may make it unattractive to customers when it finally reaches the market.
The second type of major project risk is a failure to achieve the originally agreed upon project schedule. Scheduling risk occurs for a variety of reasons, including unavailable labor, capital, technology, or information, or inefficient coordination of resources. Lack of useful and timely information is another cause of poor schedule attainment. Contingency plans must be made using a risk assessment model similar to the one shown in Figure 4.8. If the project is subject to schedule risk, then all the factors associated with the scheduling risk should be listed and countermeasures applied to reduce their occurrence probability. Scheduling risks must be managed by the CE team throughout a project because the types of risks may change as the team moves through the concept phase to the production phase of a project.
The third project risk category is related to cost issues that negatively impact a project. Scheduling issues will usually have a direct impact on project cost. These costs may vary from their budgeted amount for a variety of reasons, e.g., unex- pected raw material cost increases or increased usage of materials and components. An additional reason for a higher than expected standard cost may include a failure to meet expected process yields, due to technical issues, requiring additional labor and materials. Scarce or unavailable materials, labor, or capital may also adversely impact project costs. However, to the extent that costs do not exceed budgeted amounts, a new product or service should be cost competitive based on the original project assumptions.
Technological risks are a fourth major project risk. This is especially true if a project’s business justification and assumptions were based on the development and use of leading-edge or “to be developed” technology. In fact, the further an organi- zation moves from its current technology basis toward unfamiliar technology, the greater the risk impact on a project. Organizations should try not to base commer- cial projects (as opposed to R&D projects) on the development of new technologies. These situations almost always result in a delayed schedule, higher project cost, and lower than expected product performance. Organizations should develop leading- edge technology in advance of a new product or service. However, if new technol- ogy must be developed in parallel, the CE team must create contingency plans to mitigate and manage the associated technological risks.
The fifth project risk is a failure to meet performance requirements. Because a new design concept has never been fully evaluated as an entire system, it is not surprising that once the entire system has been built, there may be incompatibilities and issues with performance of the system as a whole. This is especially true for rad- ically new designs, as opposed to variations of current products or services. How- ever, proper design practices as well as the use of optimization and other advanced tools and methods found in DFSS will provide the CE team with the best chance to optimize an entire system relative to all its required inputs and outputs prior to
the production phase of the project and full-scale commercialization. Specific issues relative to performance risk may include an inability to scale up the new design concept from the laboratory to full-scale production, a failure to properly analyze a product’s performance against customer requirements, inaccurate assumptions relative to the VOC prior to the project inception, or just poor design work during the development process. However, these issues can be prevented or managed by the CE team to minimize their impact on a project.