Products and Services To Accompany Russell and Taylor, Operations Management, 4th Edition, 2003 Prentice-Hall, Inc. All rights reserved.

Products and Products and ServicesServices

To Accompany Russell and Taylor, Operations Management, 4th Edition, 2003 Prentice-Hall, Inc. All rights reserved.

Design of ProductsDesign of Products

As Engineering designed it.

© 1984-1994 T/Maker Co.

As Operations made it.

© 1984-1994 T/Maker Co.

As Marketing interpreted it.

© 1984-1994 T/Maker Co.

As the customer wanted it.

© 1984-1994 T/Maker Co.

Humor in Product DesignHumor in Product Design

• Need-satisfying offering of an organization–Example

•P&G does not sell laundry detergent

•P&G sells the benefit of clean clothes

• Customers buy satisfaction, not parts• May be a good or a service

What is a Product?What is a Product?

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

• Translate customer wants and needs into product and service requirements

• Refine existing products and services• Develop new products and services• Formulate quality goals• Formulate cost targets• Construct and test prototypes• Document specifications

Product or Service Design Product or Service Design ActivitiesActivities

Product Life Cycle, Sales, Product Life Cycle, Sales, Cost, and ProfitCost, and Profit

Sale

s, C

ost &

Pro

fit

.

Introduction Maturity DeclineGrowth

Cost ofDevelopment

& ManufactureSales Revenue

Time

Cash flowLoss

Profit

Products in VariousProducts in Various Stages of Stages of Life CycleLife Cycle

GrowthDecline

Time

Sales

Flat-screen monitors

CD-ROMInternet Jet Ski, fax machines

Boeing 7273 ½ Floppy disks

IntroductionMaturity

Degree of NewnessDegree of Newness of a of a Product/ServiceProduct/Service

1.Modification of an existing product/service

2.Expansion of an existing product/service

3.Clone of a competitor’s product/service

4.New product/service

Degree of Design ChangeDegree of Design Change

Type of Design Change

Newness of the organization

Newness to the market

Modification Low Low

Expansion Low Low

Clone High Low

New High High

Trends in Product & Service Trends in Product & Service DesignDesign (1 of 2) (1 of 2)

Increased emphasis on or attention to:

Customer satisfaction (by translating customer wants and needs into product and service requirements)

Reducing time to introduce new product or service

Reducing time to produce product

Trends in Product & Service Trends in Product & Service Design Design (2 of 2)(2 of 2)

Increased emphasis on or attention to:

The organization’s capabilities to produce or deliver the item

Refining existing products and servicesEnvironmental concernsDesigning products & services that are “user

friendly” Designing products that use less material

Why Companies Design New Why Companies Design New Products and ServicesProducts and Services

To be competitiveTo increase business growth and profitsTo avoid downsizing with development

of new productsTo improve product qualityTo achieve cost reductions in labor or

materials

Main Main Reasons for Product or Service Reasons for Product or Service DesignDesign

• Economic

• Social and demographic

• Political, liabili

• Cost or availability

• Competitive

• Technological

Objectives of Product and Objectives of Product and Service DesignService Design

• Main focus–Customer satisfaction

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

An Effective Design ProcessAn Effective Design Process

Matches product/service characteristics with customer needs

Meets customer requirements in the simplest, most cost-effective manner

Reduces time to market

Minimizes revisions

Few SuccessesFew Successes

0

500

1000

1500

2000

Development Stage

Number of

1000

Market requirement

Design review,Testing, Introduction

25

Ideas1750

Product specification

100

Functional specifications

One success!

500

StStagesages in the in the Design ProcessDesign Process

1. Idea Generation — Product Concept

2. Feasibility Study — Performance Specifications

3. Preliminary Design — Prototype

4. Final Design — Final Design Specifications

5. Process Planning — Manufacturing Specifications

The Design ProcessThe Design Process

Pilot runand final tests

New product or service launch

Final designFinal design& process plans& process plans

Ideageneration

Feasibilitystudy

Product or Product or service conceptservice concept

Performance Performance specificationsspecifications

Functionaldesign

Form design

Production design

Revising and testing Revising and testing prototypesprototypes

Design Design specificationsspecifications

Manufacturing Manufacturing or delivery or delivery specificationsspecifications

SuppliersSuppliersR&DR&D

CustomersCustomers

MarketingMarketing CompetitorsCompetitors

Step 1: Idea Generation Suppliers, distributors, salespersons,

competitors Trade journals and other published material Warranty claims, customer

complaints, failures Customer surveys, focus

groups, interviews Field testing, trial users Research and development

Research & Development (R&D)Research & Development (R&D)

• Organized efforts to increase scientific knowledge or product innovation & may involve:Basic Research advances knowledge about a subject without near-term expectations of commercial applications.

Applied Research achieves commercial applications.

Development converts results of applied research into commercial applications.

More Idea GeneratorsMore Idea Generators

Perceptual Maps Visual comparison of

customer perceptions

Benchmarking Comparing product/service

against best-in-class

Reverse engineering Dismantling and inspecting a competitor’s

product to discover product improvements

Perceptual Map of Breakfast Perceptual Map of Breakfast CerealsCereals (1 of 2) (1 of 2)

HIGH HIGH NUTRITIONNUTRITION

LOW LOW NUTRITIONNUTRITION

GOOD GOOD TASTETASTE

BAD BAD TASTETASTE

Perceptual Map of Breakfast Perceptual Map of Breakfast CerealsCereals (2 of 2) (2 of 2)

HIGH HIGH NUTRITIONNUTRITION

LOW LOW NUTRITIONNUTRITION

GOOD GOOD TASTETASTE

Cocoa PuffsCocoa Puffs

BAD BAD TASTETASTE

Rice Rice KrispiesKrispies

WheatiesWheaties

CheeriosCheerios

Shredded Shredded WheatWheat

Step 2: Step 2: Feasibility StudyFeasibility Study

Market Analysis

Economic Analysis

Technical / Strategic Analysis

Performance Specifications are written for product concepts that pass the feasibility study

Step 3: Step 3: Preliminary DesignPreliminary Design

Create form & functional designBuild prototypeTest prototypeRevise prototypeRetest

3.1. 3.1. Form DesignForm Design(How the Product Looks)(How the Product Looks)

Cellular Personal Cellular Personal Safety AlarmSafety Alarm Personal ComputerPersonal Computer

3.2. 3.2. Functional DesignFunctional Design(How the Product Performs(How the Product Performs))

Reliability: The ability of a product, part or system to perform its intended function under a prescribed set of conditions over a specified length of time. It is expressed as the probability that the product performs intended function for a specified length of time

Normal Operating Conditions: the set of conditions under which an item’s reliability is specified

Maintainability: Ease and/or cost of maintaining/ repairing product

How to improve ReliabilityHow to improve Reliability

Component designProduction/assembly techniquesTestingRedundancy/backupPreventive maintenance proceduresUser educationSystem design

3.3. 3.3. Production DesignProduction Design

Part of the preliminary design phase Simplification Standardization Mass customization

3.3.1. 3.3.1. Design SimplificationDesign Simplification (1 of 3) (1 of 3)

(a) The original design(a) The original design

Assembly using Assembly using common fastenerscommon fasteners

3.3.1. 3.3.1. Design SimplificationDesign Simplification (2 of 3) (2 of 3)

(a) The original design(a) The original design

Assembly using Assembly using common fastenerscommon fasteners

(b) Revised design(b) Revised design

One-piece base & One-piece base & elimination of elimination of fastenersfasteners

3.3.1. 3.3.1. Design SimplificationDesign Simplification (3 of 3) (3 of 3)

(a) The original design(a) The original design

Assembly using Assembly using common fastenerscommon fasteners

(b) Revised design(b) Revised design

One-piece base & One-piece base & elimination of elimination of fastenersfasteners

(c) Final design(c) Final design

Design for Design for push-and-snap push-and-snap assemblyassembly

3.3.2. 3.3.2. StandardizationStandardization

Standardization Extent to which there is absence of variety in

a product, service or process

Standardized products are immediately available to customers

Advantages of StandardizationAdvantages of Standardization (1 of 2) (1 of 2)

• Fewer parts to deal with in inventory &

manufacturing

• Design costs are generally lower

• Reduced training costs and time

• More routine purchasing, handling, and inspection procedures

Advantages of StandardizationAdvantages of Standardization (2 of 2)(2 of 2)

• Orders fillable from inventory

• Opportunities for long production runs and automation

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

Disadvantages of StandardizationDisadvantages of Standardization

• Designs may be frozen with too many imperfections remaining.

• High cost of design changes increases resistance to improvements.

• Decreased variety results in less consumer appeal.

Mass customization: A strategy of producing basically standardized goods or services, but incorporating some degree of customization by: – Delayed differentiation– Modular design

3.3.3. 3.3.3. Mass CustomizationMass Customization

Delayed differentiation is a postponement tactic Producing but not quite completing a

product or service until customer preferences or specifications are known

3.3.3.1. 3.3.3.1. Delayed DifferentiationDelayed Differentiation

3.3.3.2. 3.3.3.2. Modular DesignModular 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

And it adds flexibility to both production and marketing

Steps 4&5: Steps 4&5: Final Design & Final Design & Process PlansProcess Plans

Produce detailed drawings & specifications

Create workable instructions for manufacture

Select tooling & equipmentPrepare job descriptionsDetermine operation & assembly orderProgram automated machines

Improving the Design ProcessImproving the Design Process Design teams & concurrent design

Design for manufacture & assembly

Design for disassembly

Design to prevent failures and ensure value

Design for environment

Measure design quality

Utilize quality function deployment

Utilize Computer Aided Design

Design for robustness

Engage in collaborative design

Organizing for Product Organizing for Product DevelopmentDevelopment (1 of 2) (1 of 2)

• Historically – distinct departments

– Duties and responsibilities are defined

– Difficult to foster forward thinking

• Today – team approach

– Representatives from all disciplines or functions

– Concurrent engineering – cross functional team

• Traditional Approach

– “We design it, you build it” or “Over the wall”

• Concurrent Engineering

– “Let’s work together simultaneously”

Organizing for Product Organizing for Product

DevelopmentDevelopment (2 of 2) (2 of 2)

““Over the Wall” ApproachOver the Wall” Approach

DesignMfg

New Product

Breaking Down Barriers to Effective Design

Design TeamsDesign Teams

Marketing, manufacturing, engineering

Suppliers, dealers, customersLawyers, accountants,

insurance companies

Concurrent EngineeringConcurrent EngineeringDefinedDefined

Concurrent engineering is the bringing together of personnel from various functions together early in the design phase.

CE can be defined as the simultaneous development of project design functions, with open and interactive communication existing among all team members for the purposes of reducing time to market, decreasing cost, and improving quality and reliability

Time savings are created by performing activities in parallel

Concurrent DesignConcurrent Design

Improves quality of early design decisions

Scheduling and management can be complex as tasks are done in parallel

Design for Design for Manufacture and AssemblyManufacture and Assembly

Design a product for easy& economical production

Incorporate production design early in the design phase

Taking into account the manufacturing capabilities of the organization in designing goods

The more general term “design for operations” encompasses services as well as manufacturing

Improves quality, productivity and reduces costs

Shortens time to design and manufacture

DFM GuidelinesDFM Guidelines

1. Simplify products by reducing the number of separate parts

2. Minimize the number of parts, tools, fasteners, and assemblies

3. Use standard parts and repeatable processes

4. Design parts for many uses

5. Incorporate modularity in design

6. Design for ease of assembly, minimal handling

7. Allow for efficient testing and parts replacement

Design for Assembly (DFA)Design for Assembly (DFA)

Procedure for reducing the number of parts

Evaluate methods for assemblyDetermine the sequence of

assembly operations

Design for DisassemblyDesign for Disassembly

Designing products so that they can be more easily taken apart.

Includes fewer parts and less material and using snap-fits where possible instead of screws or nuts and bolts

Value AnalysisValue Analysis//Value EngineeringValue Engineering(VA/VE) ( 1 of 4)(VA/VE) ( 1 of 4)

Achieve equivalent or better performance at a lower cost while maintaining all functional requirements defined by the customer

Ratio of value / cost

Value analysis focuses on design improvements during production

Value AnalysisValue Analysis//Value EngineeringValue Engineering (2 of 4)(2 of 4)

Assessment of value : 1. Can we do without it?2. Does it do more than is required3. Does it cost more than it is worth?4. Can something else do a better job5. Can it be made by less costly method, tools,

material?6. Can it be made cheaper, better or faster by someone

else?7. Does the item have any design features that are not

necessary?8. Can two or more parts be combined into one?

Benefits ofBenefits of V VA/VE (3 of 4)A/VE (3 of 4)

• Benefits:simplified productsadditional standardization of productsimproved functional aspects of productimproved job design and job safetyimproved maintainability of the productrobust design

Cost Reduction of a Bracket Cost Reduction of a Bracket via Value Engineeringvia Value Engineering (4 of 4) (4 of 4)

Design for EnvironmentDesign for Environment Design safe and environmentally

sound (eg. recyclable) products

Design from recycled material

Use materials which can be recycled

Design for ease of repair

Minimize packaging

Minimize material & energy used during manufacture, consumption & disposal

Recycling: Recovering materials for future useRecycling: Recovering materials for future use

““Green Manufacturing”Green Manufacturing”

• Make products recyclable

• Use recycled materials

• Use less harmful ingredients

• Use lighter components

• Use less energy

• Use less material

Design for Environment

Quality Function Deployment Quality Function Deployment (QFD)(QFD)

QFD is an approach that integrates the “voice of the customer” into the product and service development process. Translates customer preferences into specific product characteristics

Enables to design for the customer

Displays requirements in matrix diagrams

First matrix called “house of quality”

Series of connected houses

Quality Function DeploymentQuality Function Deployment ProcessProcess

Identify customer wantsIdentify how the good/service will satisfy

customer wantsRelate customer wants to product howsIdentify relationships between the firm’s

howsDevelop importance ratingsEvaluate competing products

House of QualityHouse of Quality

Correlation matrix

Design requirements

Customer requirements

Target values

Relationship matrix

Competitive assessment

Imp

ort

ance

11 22

33

44

55

66

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

10 6 6 9 2 3

7

5

3

3

2

X

X

X

X

X

Correlation:Strong positivePositiveNegativeStrong negative

X*Competitive evaluation

X = 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 = 9Medium = 3Small = 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

BXA

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 ExampleHouse of Quality Example

Customer requirements information forms the basis for this matrix, used to translate them into operating or engineering goals.

• Designing products at a computer terminal or work station– Design engineer

develops rough sketch of product

– Uses computer to draw product

• Often used with CAM© 1995 Corel Corp.

Technology in Design: Technology in Design: Computer Aided Design Computer Aided Design

(CAD)(CAD)

Benefits of CADBenefits of CAD

Produces better designs faster Builds database of designs and creates

documentation to support them Shortens time to market Reduces time to manufacture Enlarges design possibilities Enhances communication and promotes

innovation in design teams Provides possibility of engineering and cost

analysis on proposed designs

Design for RobustnessDesign for Robustness Product can fail due to poor design quality Products subjected to many conditions Robust Design results in products or services that

can function over a broad range of conditions A robust product is to be designed that is insensitive

to environmental factors either in manufacturing or in use

Robust design studies• Controllable factors - under designer’s control• Uncontrollable factors - from user or environment

Design products for consistent performance

Consistency is ImportantConsistency is Important

Consistent errors are easier to correct than random errors

Parts within tolerances may yield assemblies which aren’t

Consumers prefer product characteristics near their ideal values

RemanufacturingRemanufacturing

Refurbishing used products by replacing worn out or defective components and reselling the products.

Reverse EngineeringReverse Engineering

Reverse engineering is the dismantling and inspecting of a competitor’s product to discover product improvements.

Kano Model

Customer Needs

Cu

sto

mer

Sati

sfa

cti

on

Excitement

Expected

Must Have

Kano Model

Customer Needs

Cu

sto

mer

Sati

sfa

cti

on

Excitement

Expected

Must Have

The Kano ModelThe Kano Model

Global Product DesignGlobal Product Design

Virtual teamsUses combined efforts of a team of designers

working in different countriesProvides a range of comparative advantages

over traditional teams such as:Engaging the best human resources around the worldPossibly operating on a 24-hr basisGlobal customer needs assessmentGlobal design can increase marketability

Design Guidelines (1 of 2)Design Guidelines (1 of 2)

Produce designs that are consistent with the goals of the company

Take into account the operations capabilities of the organization in order to achieve designs that fit with those capabilities

Take into account the cultural differences related to product design (for multinationals)

Give customers the value they expect

Make health and safety a primary concern

Consider potential harm to the environment

Design Quidelines (2 of 2)Design Quidelines (2 of 2)

• Increased emphasis on components commonality

• Package products and services• Use multiple-use platforms• Consider tactics fodr mass customization• Look for continual improvement• Shorten time to market

Design of ServicesDesign of Services

Characteristics of ServicesCharacteristics of Services (1 of 2)(1 of 2)

1. Services are acts, they are intangible but highly visible to the customers

2. Services are idiosyncratic

3. Services are created and delivered at the same time and are not consumed but experienced, cannot be inventoried.

4. Service requirements are variable

5. Service have customer contact

6. Services are perishable

Characteristics of ServicesCharacteristics of Services (2 of 2) (2 of 2)

7. Services have low barriers to entry

8. Location is yimportant for service

9. Service inseparable from delivery

10.Tend to be decentralized and dispersed

11.Consumed more often than products

12.Services can be easily emulated

Service BusinessesService BusinessesDefinedDefined

• Facilities-based services: Where the customer must go to the service facility

• Field-based services: Where the production and consumption of the service takes place in the customer’s environment

A service business is the management of organizations whose primary business requires interaction with the customer to produce the service

Internal ServicesInternal ServicesDefinedDefined

Internal Supplier

Internal Supplier

Internal

Customer

External

Customer

Internal services is the management of services required to support the activities of the larger organization. Services including data processing, accounting, etc

Differences Between Product Differences Between Product and Service Design (1 of 2)and Service Design (1 of 2)

Service design often focuses more on intangible factors

Less latitude in finding and correcting errors before the customer, so training & process design are important

As services are noninventoriable, capacity issues are very important

Differences Between Product Differences Between Product and Service Designand Service Design (2 of 2)(2 of 2)

Services are highly visible to consumers and must be designed with that in mind

Some services have low barriers to entry and exit, so service design has to be innovative and cost-effective

As convenience is a major factor, location is important to service design

Service design with high customer contact generally requires inclusion of the service delivery package

Service Delivery SystemService Delivery System

Components of service delivery system:FacilitiesProcessesSkills

Service DesignService Design

• Service design involves– The physical resources needed– The goods that are purchased or

consumed by the customer– Explicit services– Implicit services

Service Demand VariabilityService Demand VariabilityDemand variability creates waiting lines and

idle service resourcesService design perspectives:

Cost and efficiency perspectiveCustomer perspective

Customer participation makes quality and demand variability hard to manage

Attempts to achieve high efficiency may depersonalize service and change customer’s perception of quality

Phases in Service DesignPhases in Service Design

• Determine performance specifications• Translate performance specifications

into design specifications• Translate design specifications into

delivery specifications

Service SystemsService Systems

• Service systems range from those with little or no customer contact to very high degree of customer contact such as:– Insulated technical core (software development)– Production line (automatic car wash)– Personalized service (hair cut, medical service)– Consumer participation (diet program)– Self service (supermarket)

Service-System Design MatrixService-System Design Matrix

Mail contact

Face-to-faceloose specs

Face-to-facetight specs

PhoneContact

Face-to-facetotal

customization

Buffered core (none)

Permeable system (some)

Reactivesystem (much)

High

LowHigh

Low

Degree of customer/server contact

Internet & on-site

technology

SalesOpportunity

ProductionEfficiency

Phases in Service DesignPhases in Service Design

1.Conceptualize

2.Identify service package components

3.Determine performance specifications

4.Translate performance specifications into design specifications

5.Translate design specifications into delivery specifications

Service BlueprintingService Blueprinting

Service blueprintingA 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 Major Steps in Service BlueprintingBlueprinting

1. Establish boundaries

2. Identify sequence of customer interactions

• Prepare a flowchart

3. Develop time estimates

4. Identify potential failure points

Example of Service BlueprintingExample of Service Blueprinting

Brushshoes

Applypolish

Failpoint

BuffCollect

payment

Cleanshoes Materials

(e.g., polish, cloth)

Select andpurchasesupplies

Standardexecution time

2 minutes

Total acceptableexecution time

5 minutes

30secs

30secs

45secs

15secs

Wrongcolor wax

Seen bycustomer 45

secs

Line ofvisibility

Not seen bycustomer butnecessary toperformance

Service Fail-safingService Fail-safingPoka-Yokes (A Proactive Approach)Poka-Yokes (A Proactive Approach)

• Keeping a mistake from becoming a service defect

• How can we fail-safe the three Ts?

Task

TangiblesTreatment

Have we Have we compromised compromised

one of the one of the 3 Ts?3 Ts?

1. Task

2. Treatment

3. Tangible

1. Task

2. Treatment

3. Tangible

Characteristics of a Well-Characteristics of a Well-Designed Service SystemDesigned Service System (1 of 2) (1 of 2)

1. Each element of the service system is consistent with the operating focus of the firm

2. It is user-friendly

3. It is robust and easy to sustain

4. It is structured so that consistent performance by its people and systems is easily maintained

Characteristics of aCharacteristics of a Well-Designed Well-Designed Service SystemService System (2 of 2) (2 of 2)

5. It provides effective links between the back office and the front office so that nothing falls between the cracks

6. It manages the evidence of service quality in such a way that customers see the value of the service provided

7. It is cost-effective

8. It ensures reliability and high quality

Challenges of Service DesignChallenges of Service Design

1. Variable requirements

2. Difficult to describe

3. High customer contact

4. Service – customer encounter

Guidelines for Successful Guidelines for Successful Service DesignService Design

1. Define the service package2. Focus on customer’s perspective3. Consider image of the service package4. Recognize that designer’s perspective is different

from the customer’s perspecticve5. Make sure that managers are involved6. Define quality for tangible and intangibles7. Make sure that recruitment, training and rewards are

consistent with service expectations8. Establish procedures to handle exceptions9. Establish systems to monitor service