When a startup is in the development stage, there are often trade-offs to be made to keep commitments to stakeholders and meet the milestones that have been promised to investors.
A much younger Michael Keer learned early in his career that saving two days in development can turn into over $700,000 in additional production costs.
Product Realization Group’s CEO Michael Keer tells the story of the decision a VP of Engineering he worked with made many years ago to use a less costly functional test versus taking the extra time to develop an in-circuit test for the intelligent motor control system that his company was developing. The promising company that Keer had recently joined had been aggressive with the commitments it made to its VC investors. The Engineering VP was looking for ways to recover time during product development. It would have added 2-3 additional days to the schedule to develop the in-circuit test. The Engineering VP chose the functional test he knew– it required no additional development time to be added to the schedule. The decision he made saved time in the short-term. In the long term, it became a costly decision.
The functional test was one typically used in R&D, not production. The functional test took longer to complete, 15 minutes versus 30 seconds. However, because a test takes longer during the production stage, it costs the company more on the manufacturing line. Keer estimated that the added cost to perform a 15 minute test during production versus a 30 second test was $540k versus $18k. And the company lived with this test scenario for three more years, because as is often the case, the engineering resources that might have fixed this problem, even when it was discovered, had already moved on to work on the next version of the product.
The functional test was not only slower though. It also provided less test coverage. As a result, the company ended up with what Keer described as a “bone pile” of dead equipment from problems the functional test did not reveal, another $200k in costs.
Looking back, Keer describes this as a classic case of the wrong person being asked to make the costly decision. According to Keer, this kind of decision should be made owned and made by a Technical Program Manager (TPM). A TPM brings technical experience to the job, usually having had several roles on product development teams. Keer looks to TPMs who typically have 10 years of project management experience. A strong TPM has had experience going through the new product launch process more than several times, both successfully and unsuccessfully. There are learnings from an unsuccessful product launch that a good TPM won’t repeat! Like a general contractor, the TPM has responsibility for a project from onset through product launch, creating the development plan and schedule, identifying risks, assigning and driving action items, tracking resources, and keeping the project both on time and on budget.
Because the TPM has responsibility for the new product introduction (NPI) process, the TPM is not biased to any particular area. The TPM owns the whole product, end to end. And like a general contractor and a house, the TPM cares about the overall impact to the business.
So if we go back to this case, we can look at the benefits a TPM could have brought. Keer estimates that in the original case, the company wasted 9000 hours for extra functional tests. If it had a TPM in place, the company would have had the knowledge and the insight to spend the money on 2-3 days of development time to incorporate a circuit test into the process, creating both a potential $700k savings and a better product. And $700k to a startup company, even today, is a lot of money.
And this is just one decision that a good TPM can make. TPMs help drive cross-functional communications within the company so that leaders can make better important strategic decisions. A good TPM ensures that the company has a comprehensive development plan that includes provisions for regulatory issues, supply chain, manufacturing, intellectual property protection, operations, marketing, finance, and more.
- A good TPM can be the difference between making that market window with the on-time launch of a new product, or missing the window, and never making back the opportunity.
- A good TPM can be the difference in whether or not you meet your product cost targets.
- A good TPM can be the difference in whether or not you track your development plan against your schedule and realize your desired feature set for your launch.
- A good TPM can help you set up the lean supply chain to scale your business.
- A good TPM can help you watch your bottom line, grow your business and make your investors happy.
Product Realization Group (PRG) is an electronic hardware focused project management firm based in Silicon Valley. Our seasoned experts can help seamlessly transition your electronic hardware product from concept to scale. We pride ourselves on being your go-to source for prototype design and build, operations and manufacturing insights, and marketing consulting.
PRG’s team includes experienced TPMs, VPs of operations and other seasoned service providers that support our extensive hardware ecosystem. We can help find the right TPM for your organization, whether you have a short-term on-demand need or you are looking for someone to join your team.
