Page 85 - Design for Six Sigma a Roadmap for Product Development

60 Chapter Three

The liabilities include the following categories:

1. Economic liabilities
■ Price
■ Acquisition cost such as transportation cost, shipping cost, time
and effort spent to obtain the service
■ Usage cost: additional cost to use the product/service in addition
to purchasing price, such as installation
■ Maintenance costs
■ Ownership costs
■ Disposal costs
2. Psychological liabilities
■ Uncertainty about product/service dependability
■ Self-esteem liability of using unknown brand product
■ Psychological liability of low-performance product/service
3. Service and convenience liability
■ Liability due to lack of service
■ Liability due to poor service
■ Liability due to poor availability (such as delivery time, distance
to shop)
Obviously, the value defined as above determines how much sales
revenue a product can bring to the company. For most companies,
achieving high profit is the major goal, and

Profit revenue cost
Therefore, maximizing revenue and minimizing cost are the way to
maximize the profit. From Fig. 3.1, we can see that the cost of provid-
ing product has the following components:

■ Cost of product development
■ Cost of production
■ Cost of running supporting operations

In summary, we can derive the following economic model for product
development and production system, as illustrated in Fig. 3.2.
The third factor, the time factor in Fig. 3.2, means that the product
should be introduced to the market with the right timing. In many
cases this time factor depends on how quickly and flexibly the com-
pany can introduce a new product into the marketplace. If the market
demands a product and you are the first one to deliver this product,
you will have a dominant position in the marketplace.
Based on the above analysis, we can see that the total cost, product
value, and time are three dominant factors in product development