Tset Blog | Effective target setting and technical concept evaluation

Setting Targets

When developing a new product, setting targets puts the team on the same page and establishes a baseline to work towards by starting from the end in mind. Setting the goals as early in development as possible facilitates an easier development cycle and ultimately reduces costs and resources associated with the product.

The goal can look different for various participants. For all departments however, cost and function will always be part of the main target. By identifying and estimating costs at the beginning, and in a detailed manner, potential risks and unexpected expenses can be anticipated and mitigated during the lifecycle of the product.

Part of target setting is to create goals that are measurable. The most straightforward way to do that is setting a target cost for the final product to be made.

Technical Concept

A technical concept is predetermined based on the function and cost of the final product, as well as economic, regulatory and legal considerations (e.g. licenses and patents) and whatever additional goals a company might have (e.g. environmental). The development of the technical concept is usually an iterative process where the different constraints are evaluated against each other to give a high level approach to the final product. These starting hypotheses limit the number of technology options, materials, assembly methods, etc. that can be utilized when creating the concept for the final product.

Creating a technical concept is a necessary step in order to break down and set the target cost of a product and its elements.

This categorization can be based on market prices, but it can also already use the tools of cost and value engineering by utilizing data of previous products, assumptions and the engineers’ knowhow. Doing this can help determine which cost components are the cost drivers and therefore need more attention during the conception phase, and which cost components are static and cannot be changed. Overheads, like profit, are also determined at this stage.

Target costing helps avoid unnecessary and unanticipated costs, which in turn prevents these costs occurring during the life cycle of the product. This then results in large lifetime savings on minimal cost at an early stage, and eliminates the need for later cost-cutting measures, which could incur additional resource overheads.

The goal of the product team afterwards is to stick to the target costs and not exceed them. Calculating greenfield bottom-up costs of a given design gives the baseline of a comparison between the target cost and current cost. Finding the gaps is just the first step though, and a more detailed analysis of the predetermined cost elements is needed, and one way to achieve this is to utilize the toolbox of VA/VE.

Conclusion

By setting measurable goals early, evaluating technical concepts systematically, and employing methodologies like target costing and value analysis/value engineering (VA/VE), companies can significantly improve their product development process. Not only does this approach help avoid unnecessary costs, it also empowers teams to make informed decisions at every stage of the product life cycle. Tset offers an innovative software to support these efforts, providing transparency, efficiency, and insight to drive better results.