Emre Sami Süzer  
Operations Director  
Aktif Mühendislik

When developing the product, we want to develop the best quality product, lowest cost, as soon as possible. Unfortunately, achieving this balance is not possible in most R&D projects, and it forced managers to make a choice. What should we do with this preference?

I. INTRODUCTION

R&D studies are long-term, quite costly works that cannot be predicted as a result of profit or loss.

When developing a product, it is aimed that the costs spent in the R & D process are first redeemed on the basis of the sale of the product and then revenues are obtained. The point that is often not overestimated, the R&D costs of products developed in low quality are increased with additional undesirable costs directly or indirectly.

Another important factor is the time of the entrance to markets. Products that do not enter to the market in time are at risk of being old technology and losing to other players on the market.

The time, cost and quality aspects of the R&D projects mentioned above need to be well balanced and their ratios of importance are adjusted accordingly.

II. TIME, COST, QUALITY TRIANGLE

The best way to understand the effect of these elements on each other is to examine the Triangle of Time / Cost / Quality. Another name is “Project Management Triangle”.

At the corners of the triangle, we have the elements to be decided in project management. Unfortunately, as with all of these elements, a good option can be achieved in a very small fraction of projects. In the majority case, it is necessary to choose between two elements.

When low cost and high quality products are desired to be produced, extensive R&D activities must be carried out and the test phase must be kept very long. For this reason, there is a risk that the product cannot come out at the right time.

If a low cost and fast R&D work is required, then a poor quality product will probably be available.

The product we will try to produce with high quality and fast R&D will be costly to be made of ready-made and proven market products.

It is not easy to establish this balance in R&D projects, and it is necessary that the decision be made at the beginning of the project and that the work be done in accordance with this decision.

III. EXCHANGE DECISION

The exchange decision between elements is often not on the initiative of a single person and it should not be single person.

The sales department will take care of the product as soon as it is available and at a better price than its competitors.

Quality, Production and Service departments like to have the highest quality of products and expect no return.

R&D employees will not be interested in the cost of the product, they will work on the product as much as possible and will try to develop the best quality product.

Even if we expect to make the decision in the most rational way, at projects which have bad technical research and market study, the strongest manager makes decision. Therefore the project in danger.

IV. POOR QUALITY PRODUCT COSTS

he inability to develop the product on time and high cost development of the developer cannot be achieved in the desired result and even the R&D can be interrupted in the half.

Developing poor quality products will also have very serious additional costs. We can collect these costs in four groups:

1. Scrap and reprocessing cost
2. Cost of defects – Warranty costs, customer relationship costs, cost of returned products, etc.
3. Preventative cost – training costs, quality upgrading costs
4. Defect Fixing Costs – All operating costs associated with identifying material defects before the shipment [2]

V. COST / QUALITY EXCHANGE

Above you can see the graph of product cost, product quality cost. The first thing you will notice is that as the quality increases, the total quality cost will not decrease continuously, but will increase after a break point.

Thanks to better quality products and production techniques, problems will be reduced both during production, quality control and field returns.

The reason for the increase in cost due to the increase in quality is the third item “Preventive Cost” that we have discussed in “Poor Product Costs”. We can summarize the upgrade costs in preventive costs as follows:

• Usage of equipment with higher protection
• User error protection
• Advanced error collecting and forwarding mechanism, etc.

 

When we look at the curve, it is understood that the quality is exaggerated, the situation is not a logical choice. The point that needs to be stopped is the high quality and the point where the fault costs will no longer create customer dissatisfaction.

A commonly used method for determining the point to be addressed is described as follows. When we separate the costs of the curve to the right and left of our selection point on the X axis as follows…

YKM: The costs of increasing the quality needed to produce and produce better quality products than we choose

DKM: Costs due to defective products, resulting in poor quality product.

The point is that we will make a cost – quality change, which is YKM costs higher than the DKM costs, preferably double. This double is not exact calculation and may vary from project to project.

SOURCES

[1] http://smarterwebsiteowner.com/the-project-management-triangle/
[2] https://www.mbaskool.com/business-concepts/operations-logistics-supply-chain-terms/2199-quality-tradeoff-curve.html
[3] https://www.linkedin.com/pulse/advance-cost-quality-coq-al-diaz-mba-pmp-cba