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Critical to Cost (CTC) analysis is the input to the Quality Function Deployment activity designed for the satisfaction of customers’ requirements. This is the process of analyzing the inputs and outputs and find out the path that influence the cost of process outputs. CTC are similar to CTQ but the former deals entirely with the impact of cost on the customer. This is the way to compute numbers and an overall project.
Critical to Cost (CTC) is subjective to a degree because it requires interpretation of the situation, estimating probabilities, costs etc and helps in making better decision regarding projects. Every organization and business processes has constraints. There are different forms of constraints. When a product or service is lacking a sufficient amount of some resource to fulfil the market demand or the requirements of customers, then the projects of improvement should be implemented to correct the fault identified in the processes. They depict the necessities of quality but have deficiency in the specificity to be measurable. CTC helps in understanding the true tone of the customer and translating customer requirements into reality.
With the sole intention to satisfy the ever-changing customer needs and expectations, business processes often introduce innovative tools and techniques to design and develop completely new products and services to meet the customer satisfactory level. This is the perfect solution to correct the error in the process. But in reality, it is certainly not so simple because consumer related behaviour is quite complex and very difficult to comprehend. While critical to cost analysis plays an important role in this field and deals only with the impact of cost on the customer. The impact of cost on the customer should always be measured in terms of throughput. If any of the process upstream from the constraint affects the throughput which is then considered to be a constraint. If the average of an upstream process yield is sufficient to feed the constraint on the average level, there exists a problem in the process. The throughput is determined by the constraint and, hence, the cost of the constraint becoming less is the lost throughput of the whole processes. This can turn the cost of constraint down time at extreme high level. The cost of function the constraint is generally miniscule by comparison. Critical to cost projects have an adverse impact on quality or schedule. For this reason, the critical to cost projects at the constraint are of low priority.
It is necessary that quality engineering should start with an understanding of quality costs in various situations. At almost every conventional industrial engineering, the quality costs are simply symbolized by the number of items outside specification which is computed by multiplying the cost of rework or scrap. CTC is moderate throughput priority before the constraint. At the constraint, CTC is found to be low and it is again moderate throughput priority after the constraint. CTC are said to be similar to Critical to Quality (CTQ) but the former is associated with the impact of cost on the customer. Nevertheless, both CTC and CTQ are identical, though stated by the customer for different reasons. To quote an example-
The weight of the product may also term as a CTC. The customer may in need of the weight to be in between 15 to 20 pounds. On the other hand, the requirement should have an effect on the cost. The cost may be increasing if any product is heavier than 20 pounds which include more consumption of power. Process of Implementation of CTC: - CTC is used to find out the cost related features or characteristics, which are related to the customer.
- It must be included while drawing a detailed flowchart of a business process.
- The flowchart developed by CTC identifies problems as well as finds out their root causes.
- It also uses to create development in a process.
The critical to cost concept is an essential part of six sigma projects. CTCs are developed in order to fulfil the needs of valuable customers. Customer satisfaction is a primary factor in the development of CTC parameters. Considering the cost, one may remain focused to customer needs at the initial stage. The performance level of CTC should be at such a level that it may meet the requirement of the customer. They harmonize improvement or design efforts in tune with customer requirements.
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