1 Chapter 4 Product and Service Design. 2 Trends in Product & Service Design –Customer satisfaction Designing products & services that are user friendly.

1

Chapter 4

Product and Service Design

2

Trends in Product & Service Design

– Customer satisfaction• Designing products & services that are “user friendly”

– User friendly software

– Reducing time to introduce/produce new product or service

– PhD degree in 6 months

– The organization’s capabilities to produce or deliver the right item on time

– Compaq could not deliver enough laptops in mid 90s

– Environmental concerns • Designing products that use less material

– Toyota Prius

3

• Major factors in design strategy–Cost–Quality–Time-to-market–Customer satisfaction–Competitive advantage

Product and Service DesignProduct and Service Design

Product and service design – or redesign – should be closely tied to an organization’s strategy

4

• Translate customer wants and needs into product and service requirements

• Refine existing products and services• Develop new products and services• Formulate

– quality goals– cost targets

• Construct and test prototypes• Document specifications

Activities of Product or Service Design

5

Reasons for Product or Service Design

• Economic• Low demand, excessive warranty claims

– SUVs easily topple over and have high warranty claims

• Social and demographic• Changing tastes, aging population

– SUVs for generation X people who age but want to stay dynamic

• Political, liability, or legal• Safety issues, new regulations, government changes

– SUVs easily topple over and manufacturers are sued

• Competitive• New products and services in the market, promotions

– SUV sales are increased with promotions.

– The profit margins on SUVs are huge so a lot of room for promotions

• Cost or availability• Raw materials, components, labor

• Technological• Components, production processes

6

Objectives of Product and Service Design

• Main focus–Customer satisfaction

• Secondary focus–Function of product/service–Cost/profit–Quality–Appearance–Ease of production/assembly–Ease of maintenance/service

7

• Taking into account the capabilities of the organization in designing goods and services

• Location of facilities• Suppliers • Transportation fleet• Current workforce• Current technology• Standing contracts

– All can all limit the implementation of a new design

Design For Operations

8

• Legal– IRS, FDA, OSHA

– Product liability: A manufacturer is liable for any injuries or damages caused by a faulty product.

– Uniform commercial code: Products carry an implication of merchantability and fitness

• Ethical– Releasing products with defects

• Releasing Software with bugs

• Sending genetically altered food to nations suffering food shortages

• Environmental– EPA

Legal, Ethical, and Environmental Issues

9

Designers Adhere to Guidelines

• Produce designs that are consistent with the goals of the company

• Give customers the value they expect

• Make health and safety a primary concern

• Consider potential harm to the environment

10

Forthcoming Aspects of Product Design

• Product Life Cycles

• Standardization

• Mass Customization

• Modular Design

• Robust Design

• Concurrent Engineering

• Computer-Aided Design

11

Other Issues in Product and Service Design

• Product/service life cycles

• How much standardization

• Product/service reliability

• Range of operating conditions

12

Life Cycles of Products or Services

Time

Introduction

Growth

Maturity

Saturation

Decline

Dem

and

Flash memoryFlash memory

Compact discsCompact discs

cassettescassettes

Design for low volume

Design for low volume

13

Standardization

• Standardization –Extent to which there is an absence of variety in a

product, service or process

• The degree of Standardization?

• Standardized products are immediately available to customers

Calculators & car wash

14

Advantages of Standardization

• Fewer parts to deal with in inventory & manufacturing

– Less costly to fill orders from inventory

• Reduced training costs and time

• More routine purchasing, handling, and inspection procedures

• Opportunities for long production runs, automation

• Need for fewer parts justifies increased expenditures on perfecting designs and improving quality control procedures.

15

Disadvantages of Standardization

• Decreased variety results in less consumer appeal.

• Designs may be frozen with too many imperfections remaining.

• High cost of design changes increases resistance to improvements

– Who likes optimal Keyboards?

• Standard systems are more vulnerable to failure

– Epidemics: People with non-standard immune system stop the plagues.

– Computer security: Computers with non-standard software stop the dissemination of viruses.

16

Mass customization:– A strategy of producing standardized goods or

services, but incorporating some degree of customization

– Modular design– Delayed differentiation

Mass Customization

17

Mass Customization I: Customize Services Around Standardized Products

DEVELOPMENT PRODUCTION MARKETING DELIVERY

Deliver customized services aswell as standardized productsand services

Market customized services with standardizedproducts or services

Continue producing standardized products or services

Continue developing standardized products or services

Source: B. Joseph PineWarranty for contact lenses:

18

Mass Customization II: Create Customizable Products and Services

DEVELOPMENT PRODUCTION MARKETING DELIVERY

Deliver standard (but customizable) productsor services

Market customizable products or services

Produce standard (but customizable) products or services

Develop customizable products or services

Gillette sensor adjusting to the contours of the face:

19

Mass Customization III: Provide Quick Response Throughout Supply Chain

DEVELOPMENT PRODUCTION MARKETING DELIVERY

Reduce Delivery Cycle Times

Reduce selection and order processing cycle times

Reduce Production cycle time

Reduce development cycle time

Skiing parkas manufactured abroad vs in USA

20

Mass Customization IV: Provide Point of Delivery Customization

DEVELOPMENT PRODUCTION MARKETING DELIVERY

Deliver standardize portion

Market customized products or services

Produce standardized portion centrally

Develop products where point of delivery customization is feasible

Point of deliverycustomization

Paint mixing:

21

Delayed Differentiation

• Delayed differentiation is a postponement tactic– Producing but not quite completing a product or service until customer

preferences or specifications are known• Postponing the completion until customer specification are

known • Examples: Wheeled loaders

22

Postponement Case Study: Hewlett & Packard

• H&P produces printers for Europe market. Product manuals (different languages), labels and power supplies (plugs are different for UK, Continental EU and US) were used to be packaged along with printers in US.

• HP postpones commitment of a printer to a certain geographic market by producing universal printers and then applying power supplies and labels (the parts that differentiate printers for local markets) at the last stage once demand is more certain

• Packaging was postponed to local distribution centers in each European country. Packaging is closer to demand (in location and time) so H&P can respond faster and redistribute the supply:– Ireland has 1600 with demand 1100– Portugal has 800 with demand 1000– Send 200 from Ireland to Portugal

• For more read: H.L. Lee and C. Billington, "Evolution of Supply Chain Management Models and Practice at Hewlett-Packard Company," Interfaces, 25, 5, 1995: 42-63.

23

Delayed Differentiation=Postponement

• Postponement is delaying customization step as much as possible. Producing but not quite completing a product or service until customer preferences or specifications are known.

• (Salad) + (Dressings ={1000 Islands, Vinaigrette, …})

• Need:– Indistinguishable products before customization– Customization step is high value added– Unpredictable, negatively correlated demand for finished

products– Flexible processes to allow for postponement

24

Modular Design

Modular design is a form of standardization in which component parts are subdivided into modules that are easily replaced or interchanged. It allows:

– easier diagnosis and remedy of failures

– easier repair and replacement

– simplification of manufacturing and assembly

Disadvantage: variety decreasesDisadvantage: variety decreases

25

Modular Design

Modular design is a form of standardization in which component parts are subdivided into modules that are easily replaced or interchanged.

– A bad example: Earlier Ford SUVs shared the lower body with Ford cars

Due to standardization, it allows:

– easier diagnosis and remedy of failures

– easier repair and replacement

– simplification of manufacturing and assembly

26

Types of Modularity for Mass Customization

Component Sharing Modularity, Dell

Cut-to-Fit Modularity, Gutters that do not require seams

Bus Modularity, E-books

Mix Modularity, Paints

Sectional Modularity, LEGO

+ =

27

Mass Customization V: Modularize Components to Customize End Products

DEVELOPMENT PRODUCTION MARKETING DELIVERY

Deliver customized product

Market customized products or services

Produce modularized components

Develop modularized products

Computer industry, Dell computers:

28

Reliability

• Reliability: The ability of a product, part, or system to perform its intended function under a prescribed set of conditions

• Failure: Situation in which a product, part, or system does not perform as intended

• Normal operating conditions: The set of conditions under which an item’s reliability is specified

– A regular car is not to be driven at 200 mph

– A bed is not to be used as a trampoline

29

Improving ReliabilityImproving Reliability

• Good component design improve system reliability

• Production/assembly techniques

• Testing

•To figure out defectives / weak units

•Dell tests each computer’s electric circuitry after the assembly

• Redundancy/backup

•Exactly why your car has a spare tire

• Preventive maintenance procedures

•Medical check-ups to discover potential diseases

• User education

• System design

30

Design that can function over a broad range of conditions

Taguchi’s Approach:• Design a robust product

– Insensitive to environmental factors either in manufacturing or in use. • Columbia parkas with fleece inside

– For skiing and rainy weather: Take out the fleece use the outer shell– For dry cold air: Wear the fleece without the outer shell– For a snow storm: Wear the fleece with the shell– When you put on weight: Ease the belts for a relaxed fit– When you are sweating: Open air ducts for breathing your body

• Central feature is Parameter Design. How to set design parameters?– Design of experiments – a Statistics concept

• Determines:– factors that are controllable and those not controllable– their optimal levels relative for good product performance

Robust Design

31

Phases in Product Development Process

1. Idea generation

2. Feasibility analysis (Demand, cost/profit, capacity)

3. Product specifications (customer requirement)

4. Process specifications (produce in economic way)

5. Prototype development

6. Design review

7. Market test

8. Product introduction (promotion)

9. Follow-up evaluation

32

Idea Generation

Ideas Competitor based

Supply chain based

Research based

33

• Internal– Employees– Marketing department– R&D department

• External– Customers, sometimes misleading

– Competitors • Reverse engineering is the dismantling and inspecting

of a competitor’s product to discover product improvements.• Benchmarking is comparing and contrasting product and process

characteristics against those of competitors • Both can be classified as environmental scanning activity

– Suppliers & Customers, • Ford helps its suppliers in designing components

Sources of Ideas for Products and Services

34

Research & Development (R&D)

• Organized efforts to increase scientific knowledge or product innovation & may involve:– Basic Research advances

• Universities, IBM research centers– Applied Research

• Motorola, Alcatel– Development

• All companies

35

Manufacturability

• Manufacturability is the ease of fabrication and/or assembly which is important for the following aspects:

– Cost

– Productivity

– Quality

36

Design for Manufacturing

Beyond the overall objective to achieve customer satisfaction while making a reasonable profit is:

Design for Manufacturing (DFM) : The designers’ consideration of the organization’s manufacturing capabilities when designing a product.

The more general term design for operations encompasses transportation, services as well as manufacturing

37

“Over the Wall” Approach vsConcurrent Engineering

DesignMfg

New Product

38

Concurrent Engineering

Concurrent engineering: Bringing engineering design and manufacturing personnel together early in the design phase.

• Manufacturing personnel helps to identify production capabilities, selecting suitable materials and process, the conflicts during production can be reduced.

• Early consideration of technical feasibility.

• Shortening the product development process.

• Manufacturing personnel helps to identify production capabilities, selecting suitable materials and process, the conflicts during production can be reduced.

• Early consideration of technical feasibility.

• Shortening the product development process.

39

• Design for manufacturing (DFM)

• Design for assembly (DFA)

number of parts, methods, sequence.

• Design for recycling (DFR)

• Remanufacturing

• Design for disassembly (DFD)

Product design

40

Computer-Aided Design

• Computer-Aided Design (CAD) is product design using computer graphics.

• increases productivity of designers, 3 to 10 times

• creates a database for manufacturing information on product specifications

• Simplifies communication of a design. Design teams at various locations can work together.

• provides possibility of engineering and cost analysis on proposed designs

• Transonic Systems Inc. manufactures customized medical devices; pomps, blood vessel, blood pressure measurement equipment. – Design to manufacturing was long, problematic, designers and manufacturing

engineers could not work on designs simultaneously, some of the previous designs were lost (talking of knowledge management).

– Savior: CAD

41

– Recycling: recovering materials for future use– Recycling reasons

• Cost savings• Environment concerns• Environment regulations

– Remanufacturing: replacing worn out parts in used products

• Kodak cameras

– Design for disassembly is considering ease of disassembly while designing a product

– Reverse supply chains

Recycling-Remanufacturing

42

• Quality Function Deployment–Voice of the customer–House of quality

Quality Function Deployment

QFD: An approach that integrates the “voice of the customer” into the product and service development process.

43

The House of Quality

Correlation matrix

Designrequirements

Customerrequire-ments

Competitiveassessment

Relationshipmatrix

Specificationsor

target values

44

A structured and disciplined process that provides a means to identify and carry the voice of the customer through each stage of product or service development and implementation

QFD is for:

•Communication

•Documentation

•Analysis

•Prioritization breakthroughsbreakthroughs

Quality Function Deployment

45

Customer Requirements

Importance to Cust.

Easy to close

Stays open on a hill

Easy to open

Doesn’t leak in rain

No road noise

Importance weighting

Engineering Characteristics

Ene

rgy

need

ed

to c

lose

doo

r

Che

ck f

orce

on

leve

l gr

ound

Ene

rgy

need

ed

to o

pen

door

Wat

er r

esis

tanc

e

63 63 45 27 6 27

7

5

3

3

2

X

X

X

X

X

Correlation:Strong positive

PositiveNegativeStrong negative

X*

Competitive evaluationX = UsA = Comp. AB = Comp. B(5 is best)

1 2 3 4 5

X AB

X AB

XAB

A X B

X A B

Relationships:Strong = 9

Medium = 3

Small = 1Target values

Red

uce

ener

gy

leve

l to

7.5

ft/lb

Red

uce

forc

eto

9 lb

.

Red

uce

ener

gy to

7.5

ft/l

b.

Mai

ntai

ncu

rren

t lev

el

Technical evaluation(5 is best)

54321

B

A

X

BAX B

AX

B

X

A

BXABA

X

Doo

r se

al

resi

stan

ce

Acc

oust

. Tra

ns.

Win

dow

Mai

ntai

ncu

rren

t lev

el

Mai

ntai

ncu

rren

t lev

el

House of Quality Example for a Car Door

46

The QFD and Kano Model

Japanese QFD Results– Design time reduced by ¼ to ½– Problems with initial quality decreased– Comparison and analysis of competitive products became possible– Communication between divisions improved

The Kano Model• Product Characteristics:

– Must have = Order qualifiers– Expected = Order qualifiers, winners– Excitement = Order winners

1. Make sure that you have the order qualifiers2. Determine the level of order winners with a cost/benefit analysis

47

Service Design

• Service is an act• Service delivery system

– Facilities– Processes– Skills

• Explicit services– Core of the service: Hair styling

• Implicit services– Excitement characteristics: Courtesy

• Many services are bundled with products– Maintenance services– Conecpt of selling solutions: Products and Services

• E.g. IBM

48

Phases in Service Design

1.Conceptualize

2.Identify service components

3.Determine performance specifications

4.Translate performance specifications into design specifications

5.Translate design specifications into delivery specifications

49

Service Blueprinting

• Service blueprinting: A method used in service design to describe and analyze a proposed service

• A useful tool for conceptualizing a service delivery system

• Major Steps in Service Blueprinting1. Establish boundaries

2. Identify steps involved3. Prepare a flowchart, see the next page, source in justice-flowchart.pdf

4. Identify potential failure points

5. Establish a time frame

6. Analyze profitability

50

51

Characteristics of Well Designed Service Systems

1. Consistent with the organization mission

2. User friendly: Do we understand it?

3. Robust: Can it function under various conditions?

4. Easy to sustain: Requires to much effort?

5. Cost effective: Does it cost too much?

6. Value to customers: Who are the customers?

7. Effective linkages between back-office operations

8. Single unifying theme: What does the justice system do?

9. Ensure reliability and high quality

10. Consistency.

11. Up-to-date: Does it evolve?

You be the judge for

the justice system

How do you rate the

system in terms of

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

52

Challenges of Service Design

• Variable requirements– Criminals and the cases are different

• Difficult to describe– How do you describe a criminal action?– We need the court system.

• Descriptions are not exact because they are based on words.• This is exactly why lawyers make a living; or perhaps more.

• High customer contact– Service cannot be inventoried

• Service – customer encounter

53

Most often product and services are provided together.

Products vs. Services are• Tangible – intangible• Services created and delivered at the same time• Services cannot be inventoried• Services highly visible to customers• Services have low barrier to entry• Location important to service

– Ambiance– Convenience

Differences Between Product and Service Design

54

Service Variability & Customer Influence Service Design

Variabilityin

ServiceRequire-

ments

Figure 4-3

Degree of Contact with Customer

High

Moderate

Low

None

None Low Moderate High

TelephonePurchase

Dept. StorePurchase

CustomizedClothing

InternetPurchase

Where are medical services, internet law consultants?

55

• Shorten time-to-market• Package products and services

– Sell “solutions” not products

• Increase emphasis on component commonality• Use multiple-use platforms• Consider tactics for mass customization• Look for continual improvement

Operations Strategy

56

• Remanufacturing-recycling

• Robust design

• Design for manufacturing (DFM)

• Design for assembly (DFA)

• Design for disassembly (DFD)

• Design for recycling (DFR)

• Reliability

Summary: Product design

57

Practice Questions

• True/ False:

• 1.One of the main advantages of standardization is that it increases the potential variety of products.

• 2. Product failures can be easier to remedy with modular design.

• 3. Quality function deployment (QFD) is based on a set of standards which relate customer requirements to company capabilities.

1.Answer: False Page: 1272.Answer: True Page: 129 3.Answer: False Page: 143

1.Answer: False Page: 1272.Answer: True Page: 129 3.Answer: False Page: 143

58

Practice Question

• Multiple-Choice:

• 4. The term standardization is closely associated with:

• A) customization

• B) high cost

• C) longer lead times

• D) variety

• E) interchangeability Answer: E Page: 127Answer: E Page: 127

59

Practice Question

• 4. A formal way to document customer requirements is:

• A) consumer surveys

• B) quality function deployment (QFD)

• C) focus groups

• D) Delphi technique

• E) sales/marketing matrix Answer: B Page: 142Answer: B Page: 142

60

Practice Question

• 6. The stage in a product or service life cycle where some firms adopt a defensive research posture is:

• A) incubation

• B) growth

• C) maturity

• D) saturation

• E) decline

Answer: E Page: 126Answer: E Page: 126

61

Reliability

• Reliability: The ability of a product, part, or system to perform its intended function under a prescribed set of conditions

• Failure: Situation in which a product, part, or system does not perform as intended

• Normal operating conditions: The set of conditions under which an item’s reliability is specified

• Reliability is a Probability, that the product or system will:– Function when activated– Function for a given length of time

• Independent events• Redundancy; Why to have spare tires on the car?

62

Parallel vs Serial ComponentsA product is composed of several components. Suppose components fail/work

independently.

If all components must function for the product to function, components are serial. Example: Laptop and projector.

If at least one component must function for the product to function, components are parallel. Example: Two batteries of a laptop.

P(System fails)=P(A fails) P(B fails)

AAAA BBBB

Water flowing from left to right analogy. P(System works)=P(A works) P(B works)

AAAA

BBBB

63

Example: Reliability Diagram

Determine the reliability of the system shown

.98.98

.95.95

.92.92

.90.90

.90.90

Compare this diagram to that of Example S-1

64

Example

The system can be reduced to a series of three componentsBy collapsing parallel components

0.98 1-(0.10)(0.10) 1-(0.05)(0.08)

0.98 x 0.99 x 0.996

65

Failure Rate: Personal life expectancy – Strike life expectancy

Few (random) failuresInfantmortality

Failures dueto wear-out

Time, T

Figure 4S-1

66

Exponential Distribution for Life X

Tx eTXPMTBFXEexfExpoX )( ,/1)( ,)( ),(~

T Time

Reliability=P(x>T)=1-F(T)

pdf f(x)

cdf F(T)=P(X<T)

67

Use Exponential Distribution to Model Lifetime

• Exponential distribution is a simple density used to model lifetimes

• Its failure rate is constant– So does not apply to human life. Insurers use more

complicated densities.

• The reliability of each part in a system Reliability=P(Part works at T)=1-F(T)

• Once reliabilities are computed for all parts, combine parts according to whether serial or parallel

68

Improving Reliability

• Component design

• Production/assembly techniques

• Testing

• Redundancy/backup

• Preventive maintenance procedures

• User education

• System design

How much of reliability is good? Cost-benefit analysis.