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INSE 6230

TOTAL QUALITY PROJECT MANAGEMENT

1. Introduction:
1.1 Business Case
1.11 Introduction/ Background
The aim of our project is to introduce a new product Shoe Insole in the market.
According to several reports the number of people using shoe-insoles is increasing day by day to
improve their foot health. This product can provide advanced arch support, deep heel cupping
and unique cushioning which can prevent over pronation. It is also heat moldable for custom fit.
The main advantages of using this product is, It provides flexible arch support, Relieves sore
feet, Provides all-day pain relief for the heel, arch, and ball-of-foot.
1.12 Business Objective
Our strategic business goals include becoming worlds leading Shoe Insole Company and
achieving sales target of $200,000 during the first year of business with the payback period
estimated to be from the 2nd year after the project has completed its deliverables. Our main goal
is to provide high quality Shoe Insole products to people all over the world at the lowest possible
price. We aim to sell these products at reduced prices by incorporating efficiencies through total
quality management practices in our operations and by targeting a distinct segment of the market
- those customers who care about the health benefits of the feet. By focusing on this segment, it
gives us an opportunity to increase brand recognition and exploit first mover advantage by
offering unique and distinct products at a reduced price. We hope to be able to thrive by
maintaining low overhead and operating costs and exceed customer expectations with superior
pricing.
Primary business objectives:
1) To provide customer satisfaction achievement by the use of better customer service and
better raw materials for mass production of the sole.
2) Collecting feedback regularly from the user - a means of continuous improvement of business
line in every area.
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3) Making the business sustainable by ensuring a stable customer base, at the same time
coming up with a new or improved line of products for more recognition among new users.
4) To provide good customer service a good products popularity always comes with having a
good customer service associated with that product. One of the business objectives is to be able
to provide an efficient customer service to ensure timely service delivery to the customers.
5) Increase brand recognition by advertising use of efficient and cheaper marketing schemes
such as social networking sites and information technology to get in touch with a larger customer
base.
6) To achieve sales target during first year of business quantify the profit for the current fiscal
year which is the total revenue deducted by total costs. Have an achievable amount not overly
ambitious at the same time not grossly below average keeping in mind the operating efficiency
target of the business during its initial year.
7) Minimize operational losses / improve operating efficiency of production during the initial
year of the business, and further beyond. Focus on the quality of delivered product becomes a top
priority.
8) Be able to achieve international presence by the use of efficient marketing schemes.
1.13 Current Situation and Problem/Opportunity Statement
Our business is currently new and our aim is to penetrate in the roots of the shoe market.
We currently offer Shoe Insoles which provide flexible arch support, relieve sore feet and
provide all day pain relief for the heel, arch and ball of the feet. We have a research division
which currently tests and continually improves quality of the shoe insole focusing more on the
health benefits for people. Our main objective is to market our shoe insole products division by
giving people more insight on the health benefits of the product. According to the new report by
Global Industry Analysts, the global footwear market is expected to reach US $195 billion by the
end of year 2015 owing to increasing consumer inclination towards better comfort for their
shoes. Escalating prices, high health care and lifestyle costs have actually attracted consumers
towards more healthier and economical option of better comfortable shoe products. Therefore,
there is a booming market for shoe insoles in the world and our businesss top priority is to
exploit this opportunity by introducing and marketing our low priced shoe products for people
around the world.
1.14 Critical Assumption and Constraints

INSE 6230

TOTAL QUALITY PROJECT MANAGEMENT

We wanted to employ a novel strategy of introducing our products by handing out free
samples on the weekends in major shopping malls. Providing business decision makers of the
key shoe distribution companies of the sales statistics which would help us in increasing our
sales. This new product is expected to reach a wider and deeper in to the market sectors there by
boosting yearly sales increase at least $200,000 for the 1st year, $230,000 for the 2nd and
$250,000 by the end of the year 2014. Our marketing project team should work diligently to
clear the hurdle of expansion by being prompt, assertive and approachable.
1.15 Analysis of Option and Recommendation
There are five options available for covering this opportunity.
Project 1: Develop Orthotic Shoe Insoles: The Company has the option of developing Orthotic
Shoe Insoles which can cure foot ailments. According to our own research, developing Orthotic
Shoe insoles requires more research and development. Since this product is mainly targeted only
on Orthotic patients it may not reach the Companys annual sales target.
Project 2: Develop a Nano Tech Shoes: The Company has the option of developing Nano Tech
Shoes instead of shoe insoles. But the drawback for this idea is, it involves lot of scientific
research, time consuming and the market for this product is low. The Company may have to
upgrade its equipment to meet the requirements.
Project 3: Import Shoe Insole from other manufacturer: The Company has the idea of
importing shoe insoles from another manufacturer. The problem involved in this idea is that the
company would not have any control over the quality of the product. There are several risks
associated with this idea as it can affect the brand name in case if the product does not satisfy the
customers.
Project 4: Develop a Shoe Insole for Arch support: The business has the required equipments
and tools to develop and transport this product. According to our own research, there is an
excellent demand for this product and many stores have already expressed their interest in
buying the product.
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No Action: The Company is doing great so far and achieved its annual target since its
established. In case any new product is launched, it widens our market.
1.16 Preliminary Project Requirements
1. An effective survey strategy has to be implemented to collect business intelligence data. This
data would help to know consumer satisfaction levels and implement suggestions. These
suggestions would help in further developing product according to customer needs.
2. It is very important to provide prompt after sales support, thereby developing a strong business
relationship with the distributors.
3. The product, if having immediate competition, should be made available at a competitive
price.
4. With the help of technology like social media, the business should be able to develop a healthy
network of business developers and distributions.
5. The e- commerce technology and communication technology should be used effectively to
develop prompt Customer response
6. The assertiveness, honesty, loyalty and commitment of team members will be essential for
project success
7. The web technology like online sales, web applications have to be implemented to have an
Internet presence and the ability to research and by the product online.
8. Online marketing strategies such as web advertising and use of Google ad word search can be
implemented to enhance online sales.
1.17 Budget Estimate and Financial Analysis
The entire project will incur a cost of $202,000. The total cost is estimated based on the
following:
1. Cost applicable to conducting a market research.
2. Costs to ensure the product meets regulatory compliance.
3. Cost involved for prototyping the production and also eventually being able to do mass
production including equipments, time taken to put proper operational processes in
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place, etc.
4. Cost of human resources.
5. Cost of raw materials to be able to produce the shoe insole.
6. Marketing, advertising and promotional costs
7. Costs associated with ensuring quality of operation and quality of product.
8. Cost of obtaining market data on a regular basis to get an update of market trends for the
product.
9. Maintenance and Servicing costs
Before launching the new product in the market, careful research of the industry is necessary.
According to our analysis, a typical external market research firm charges around $5000-$8000
for conducting the research. In this case we count in the worst case which is $8000 for this
activity.
To be able to meet regulatory requirements or to make sure the product is compliant with the
government of Canada, as well as meets the quality standards expected for any country in North
America and Europe we set aside a certain amount which is just based on an estimate. In this
case, a budget of $7000 has been allocated.
In order to carry out production, we will need the latest equipment capable of mass
production. This also means having the most optimal operational procedures in place for
achieving an optimal production of the shoe insoles. This will involve a substantial amount
which is estimated at $63000 currently.
There are six people working on this project. The hourly rates for the Project Manager and
the Team Members are $50 and $40 respectively. The project is likely to be completed within 2
months. On average, the team will be working for 40 hours weekly. Therefore, the estimated
employee costs will be $86000. Cost of raw materials for the initial batch of production is
estimated at $10000.
Cost of marketing, advertising and promoting the product is initially estimated at $8000. This
is kept on the moderate level as we are planning to leverage the social network and the web to be
able to advertise our product.
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To ensure the product maintains its quality for all areas of production, and to be able to have
it at least equal to that of the competitors, a certain amount needs to be invested in researching
the optimal operational efficiency in producing the product in mass without compromising its
quality. The estimated cost for this is $5000.
Last but not the least; we need to get data pertaining to market trends in order to avoid risk of
being outdated from the market in the area of shoe insoles. Along with this, we need to dedicate
some amount to the maintenance of the processes and product quality as well as servicing costs
to any damaged product. Total estimate for these activities lead to an amount of $15000
Exhibit A summarizes the project annual costs and projected annual benefits of the project for
the next three years. It also shows the estimated net present value (NPV), year in which payback
occurs and the return on investment (ROI) for the project. It also shows the assumptions made in
performing the preliminary financial analysis. According to our preliminary financial analysis,
the NPV value is 304,800 and the ROI based on three years of business is 99%. The estimated
payback period is year 2.
1.18 Schedule Estimate
The project is scheduled to finish within six weeks i.e. 12 June 2012, but the scheduled date
is Flexible.
1.19 Potential Risks
The types of risk in this project can involve allocation of resources, sales and operations,
choosing the right way of marketing the brand, supply chain, and other external type of risks.
The most notable ones include the following:
1. Scope Creep or certain scopes that were not taken into consideration during the project
can inhibit the success of the project because such situations tend to either delay the
project or management might decide to put the whole project on hold.
2. There is also a risk associated with the selection of the best advertising strategy.
Advertising is not always a cheap alternative the cost may range from meager to a
lump sum. Finding out the optimal amount is not a straightforward task and requires
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some intuition based on the current statistics.


3. Risk of not meeting compliance with regulatory agencies Any finished product has
to comply with certain set of regulatory agencies based on the value / service it provides.
It has to be ensured that the product is 100% compliant with the regulatory agencies in
scope; otherwise, it risks not being launched in the market.
4. Operational Risks Risks associated with the mass production of the insole needs to be
minimized. Operational risks can range from having the production lines quality below
par, to not having an efficient production line which can affect the total output.
5. Estimation risks based on a certain data set Having the wrong set of data, or
inaccurate data can affect decision making and hence can be a risk to making estimates
about the progress of the overall project.
6. Market Risks Having a competitor for a product is considered healthy, but having
another cutting edge product that can replace a product and drive one out of business is a
risk in itself and requires due diligence on the project management to make sure they
have the latest data about market needs.
7. Risks due to external factors - other factors such as an economic recession, patent
violation, legal implications of the insole, cultural manifestation, etc. are also considered
risk as they may affect the decisions made by management regarding the progress of the
project.
1.20 Exhibits
Exhibit A: Financial Analysis

INSE 6230

TOTAL QUALITY PROJECT MANAGEMENT

INSE 6230

TOTAL QUALITY PROJECT MANAGEMENT

1.21 weighted decision matrix: