Design Of Goods And Services

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  • Design Of Goods And Services

    1. 1. Operations Management Winter 2004 Design of Goods and Services Chapter 5
    2. 2. Outline <ul><li>GOODS AND SERVICES SELECTION </li></ul><ul><ul><li>Product Strategy Options Support Competitive Advantage </li></ul></ul><ul><ul><li>Product Life Cycles </li></ul></ul><ul><ul><li>Life Cycle and Strategy </li></ul></ul><ul><ul><li>Product-by-value Analysis </li></ul></ul><ul><li>GENERATING NEW PRODUCTS </li></ul><ul><ul><li>New Product Opportunities </li></ul></ul><ul><ul><li>Importance of New Product s </li></ul></ul>
    3. 3. Outline - continued <ul><li>PRODUCT DEVELOPMENT </li></ul><ul><ul><li>Product Development System </li></ul></ul><ul><ul><li>Quality Function Deployment (QFD) </li></ul></ul><ul><ul><li>Organizing for Product Development </li></ul></ul><ul><ul><li>Manufacturability and Value Engineering </li></ul></ul><ul><li>ISSUES FOR PRODUCT DESIGN </li></ul><ul><ul><li>Robust Design </li></ul></ul><ul><ul><li>Modular Design </li></ul></ul><ul><ul><li>Computer-Aided Design (CAD) </li></ul></ul><ul><ul><li>Computer-Aided Manufacturing </li></ul></ul><ul><ul><li>Virtual Reality Technology </li></ul></ul><ul><ul><li>Value Analysis </li></ul></ul><ul><ul><li>Environmentally Friendly Design </li></ul></ul>
    4. 4. Outline - continued <ul><li>Time-Based Competition </li></ul><ul><ul><li>Purchase of Technology by Acquiring Firm </li></ul></ul><ul><ul><li>Joint Ventures </li></ul></ul><ul><ul><li>Alliances </li></ul></ul><ul><li>Defining the Product </li></ul><ul><ul><li>Make-or-buy Decisions </li></ul></ul><ul><ul><li>Group Technology </li></ul></ul><ul><li>DOCUMENTS FOR PRODUCTION </li></ul><ul><li>SERVICE DESIGN </li></ul><ul><ul><li>Documents for Service </li></ul></ul><ul><li>Application of Decision Trees to Product Design </li></ul><ul><li>Transition to Production </li></ul>
    5. 5. <ul><li>Identify or Define : </li></ul><ul><ul><li>Product life cycle </li></ul></ul><ul><ul><li>Product development team </li></ul></ul><ul><ul><li>Manufacturabililty and value engineering </li></ul></ul><ul><ul><li>Robust design </li></ul></ul><ul><ul><li>Time-based competition </li></ul></ul><ul><ul><li>Modular design </li></ul></ul><ul><ul><li>Computer aided design </li></ul></ul><ul><ul><li>Value analysis </li></ul></ul><ul><ul><li>Group technology </li></ul></ul><ul><ul><li>Configuration management </li></ul></ul>
    6. 6. Humor in Product Design 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 .
    7. 7. <ul><li>Need-satisfying offering of an organization </li></ul><ul><ul><li>Example </li></ul></ul><ul><ul><ul><li>P&G does not sell laundry detergent </li></ul></ul></ul><ul><ul><ul><li>P&G sells the benefit of clean clothes </li></ul></ul></ul><ul><li>Customers buy satisfaction, not parts </li></ul><ul><li>Charles Revson says “Revlon sells hope, not cosmetics. </li></ul><ul><li>May be a good or a service </li></ul>What is a Product?
    8. 8. Product Strategy Options <ul><li>Product differentiation Strategies </li></ul><ul><li>Low cost </li></ul><ul><li>Rapid response/High Quality Service </li></ul><ul><li>Best Technology </li></ul>
    9. 9. Causes Generating New Product Opportunities <ul><li>Economic change </li></ul><ul><li>Sociological and demographic change </li></ul><ul><li>Technological change </li></ul><ul><li>Political/legal change </li></ul><ul><li>Changes in </li></ul><ul><ul><li>market practice </li></ul></ul><ul><ul><li>professional standards </li></ul></ul><ul><ul><li>suppliers and distributors </li></ul></ul>
    10. 10. Restricts even minute use of dangerous substances, such as ethanol, in products such as cosmetics and detergents Eliminates health hazards due to chemicals Chemicals review (staggered through 2012) Raises costs of cars and restricts automaker’s design freedom Reduces injuries and casualties in road accidents Pedestrian-protection initiative (2001-2012) (when all new cars sold in Europe must comply) Encourages food processors and supermarkets to avoid using genetically modified ingredients, and farmers could stop growing them Strengthens existing food-label laws and introduces labeling for animal feed containing genetically modified content Biotech-Labeling laws (2003) Makes surfing more onerous by restricting use of “cookies” to remember peoples preferences Protects privacy on e-mail and the internet Telecom-data-protection directive (mid-2003) Bans some common flame retardants, raising the likelihood of fires Makes electrical equipment easier to recycle in part by banning some hazardous substances Electrical-Waste directive (2006) Industry Criticism Stated Purpose Legislation/ Implementation Date Warning
    11. 11. Product Components Product Product Idea Package Physical Good Features Quality Level Service (Warranty) Brand (Name)
    12. 12. Product Life Cycle <ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul><li>Maturity </li></ul><ul><li>Decline </li></ul>
    13. 13. Product Life Cycle Introduction <ul><li>Fine tuning </li></ul><ul><ul><li>research </li></ul></ul><ul><ul><li>product development </li></ul></ul><ul><ul><li>process modification and enhancement </li></ul></ul><ul><ul><li>supplier development </li></ul></ul>
    14. 14. Product Life Cycle Growth <ul><li>Product design begins to stabilize </li></ul><ul><li>Effective forecasting of capacity becomes necessary </li></ul><ul><li>Adding or enhancing capacity may be necessary </li></ul>
    15. 15. Product Life Cycle Maturity <ul><li>Competitors now established </li></ul><ul><li>High volume, innovative production may be needed </li></ul><ul><li>Improved cost control, reduction in options, paring down of product line </li></ul>
    16. 16. Product Life Cycle Decline <ul><li>Unless product makes a special contribution, must plan to terminate offering </li></ul><ul><li>Harvard’s 4 squares of product development: </li></ul>
    17. 17. Product Life Cycle, Sales, Cost, and Profit Sales, Cost & Profit . Introduction Maturity Decline Growth Cost of Development & Manufacture Sales Revenue Time Cash flow Loss Profit
    18. 18. Percent of Sales From New Product 3M wants 25% of its sales from products less than 5 years old
    19. 19. Products in Various Stages of Life Cycle Growth Decline Time Roller Blades Introduction Maturity Sales Virtual Reality Jet Ski Boeing 727
    20. 20. Few Successes 0 500 1000 1500 2000 Development Stage Number 1000 Market requirement Design review, Testing, Introduction 25 Product specification 100 Functional specifications One success! 500 Ideas 1750
    21. 21. Product-by-Value Analysis <ul><li>Lists products in descending order of their individual dollar contribution to the firm. </li></ul><ul><li>Helps management evaluate alternative strategies. </li></ul>
    22. 22. Product Development Stages <ul><li>Idea generation </li></ul><ul><li>Assessment of firm’s ability to carry out </li></ul><ul><li>Customer Requirements </li></ul><ul><li>Functional Specification </li></ul><ul><li>Product Specifications </li></ul><ul><li>Design Review </li></ul><ul><li>Test Market </li></ul><ul><li>Introduction to Market </li></ul><ul><li>Evaluation </li></ul>Scope of product development team Scope of design for manufacturability and value engineering teams
    23. 23. Quality Function Deployment <ul><li>Identify customer wants </li></ul><ul><li>Identify how the good/service will satisfy customer wants </li></ul><ul><li>Relate customer wants to product hows </li></ul><ul><li>Identify relationships between the firm’s hows </li></ul><ul><li>Develop importance ratings </li></ul><ul><li>Evaluate competing products </li></ul>
    24. 24. Idea Generation Stage <ul><li>Provides basis for entry into market </li></ul><ul><li>Sources of ideas </li></ul><ul><ul><li>Market need (60-80%); engineering & operations (20%); technology; competitors; inventions; employees </li></ul></ul><ul><li>Follows from marketing strategy </li></ul><ul><ul><li>Identifies, defines, & selects best market opportunities </li></ul></ul>
    25. 25. Customer Requirements Stage <ul><li>Identifies & positions key product benefits </li></ul><ul><ul><li>Stated in core benefits proposition (CBP) </li></ul></ul><ul><ul><li>Example: Long lasting with more power (Sears’ Die Hard Battery) </li></ul></ul><ul><li>Identifies detailed list of product attributes desired by customer </li></ul><ul><ul><li>Focus groups or 1-on-1 interviews </li></ul></ul>House of Quality Customer Requirements Product Characteristics
    26. 26. Functional Specification Stage <ul><li>Defines product in terms of how the product would meet desired attributes </li></ul><ul><li>Identifies product’s engineering characteristics </li></ul><ul><ul><li>Example: printer noise (dB) </li></ul></ul><ul><li>Prioritizes engineering characteristics </li></ul><ul><li>May rate product compared </li></ul><ul><li>to competitors’ </li></ul>House of Quality Customer Requirements Product Characteristics
    27. 27. <ul><li>Determines how product will be made </li></ul><ul><li>Gives product’s physical specifications </li></ul><ul><ul><li>Example: Dimensions, material etc. </li></ul></ul><ul><li>Defined by engineering drawing </li></ul><ul><li>Done often on computer </li></ul><ul><ul><li>Computer-Aided </li></ul></ul><ul><ul><li>Design (CAD) </li></ul></ul>Product Specification Stage House of Quality Product Characteristics Component Specifications
    28. 28. Quality Function Deployment <ul><li>Product design process using cross-functional teams </li></ul><ul><ul><li>Marketing, engineering, manufacturing </li></ul></ul><ul><li>Translates customer preferences into specific product characteristics </li></ul><ul><li>Involves creating 4 tabular ‘Matrices’ or ‘Houses’ </li></ul><ul><ul><li>Breakdown product design into increasing levels of detail </li></ul></ul>
    29. 29. <ul><li>You’ve been assigned temporarily to a QFD team. The goal of the team is to develop a new camera design. Build a House of Quality. </li></ul>House of Quality Example © 1984-1994 T/Maker Co.
    30. 30. House of Quality Example  High relationship  Medium relationship  Low Relationship Customer Requirements Customer Importance Target Values
    31. 31. House of Quality Example  High relationship   Medium relationship  Low Relationship Target Values Light weight Easy to use Reliable What the customer desires (‘wall’) Aluminum Parts Auto Focus Auto Exposure Customer Requirements Customer Importance
    32. 32. House of Quality Example  High relationship  Medium relationship  Low Relationship Customer Requirements Customer Importance Target Values Light weight Easy to use Reliable Aluminum Parts Auto Focus Auto Exposure 3 1 2 Average customer importance rating
    33. 33. House of Quality Example  High relationship   Medium relationship  Low Relationship Customer Requirements Customer Importance Light weight Easy to use Reliable Aluminum Parts Auto Focus Auto Exposure      3 2 1 Relationship between customer attributes & engineering characteristics (‘rooms’)
    34. 34. House of Quality Example  High relationship   Medium relationship  Low Relationship Customer Requirements Customer Importance Target Values Light weight Easy to use Reliable Aluminum Parts Auto Focus Auto Exposure      3 2 1 5 1 1 Target values for engineering characteristics (‘basement’); key output 
    35. 35. Organizing for Product Development <ul><li>Historically – distinct departments </li></ul><ul><ul><li>Duties and responsibilities are defined </li></ul></ul><ul><ul><li>Difficult to foster forward thinking </li></ul></ul><ul><li>Today – team approach </li></ul><ul><ul><li>Representatives from all disciplines or functions </li></ul></ul><ul><ul><li>Concurrent engineering – cross functional team </li></ul></ul>
    36. 36. Manufacturability and Value Engineering <ul><li>Benefits: </li></ul><ul><ul><li>reduced complexity of products </li></ul></ul><ul><ul><li>additional standardization of products </li></ul></ul><ul><ul><li>improved functional aspects of product </li></ul></ul><ul><ul><li>improved job design and job safety </li></ul></ul><ul><ul><li>improved maintainability of the product </li></ul></ul><ul><ul><li>robust design </li></ul></ul>
    37. 37. Issues for Product Development <ul><li>Robust design </li></ul><ul><li>Time-based competition </li></ul><ul><li>Modular design </li></ul><ul><li>Computer-aided design </li></ul><ul><li>Value analysis </li></ul><ul><li>Environmentally friendly design </li></ul>
    38. 38. Robust Design <ul><li>Product is designed so that small variations in production or assembly do not adversely affect the product </li></ul>
    39. 39. Modular Design <ul><li>Products designed in easily segmented components. </li></ul><ul><li>Adds flexibility to both production and marketing </li></ul>
    40. 40. <ul><li>Designing products at a computer terminal or work station </li></ul><ul><ul><li>Design engineer develops rough sketch of product </li></ul></ul><ul><ul><li>Uses computer to draw product </li></ul></ul><ul><li>Often used with CAM </li></ul>Computer Aided Design (CAD) © 1995 Corel Corp.
    41. 41. <ul><li>Shorter design time </li></ul><ul><li>Database availability </li></ul><ul><li>New capabilities </li></ul><ul><ul><li>Example: Focus more on product ideas </li></ul></ul><ul><li>Improved product quality </li></ul><ul><li>Reduced production costs </li></ul>Benefits of CAD/CAM
    42. 42. Virtual Reality <ul><li>Computer technology used to develop an interactive, 3-D model of a product. </li></ul><ul><li>Especially helpful in design of layouts (factory, store, home, office) </li></ul>
    43. 43. Value Analysis <ul><li>Focuses on design improvement during production </li></ul><ul><li>Seeks improvements leading either to a better product or a product which can be more economically produced. </li></ul>
    44. 44. Environmentally Friendly Designs <ul><li>Benefits </li></ul><ul><ul><li>Safe and environmentally sound products </li></ul></ul><ul><ul><li>Minimum raw material and energy waste </li></ul></ul><ul><ul><li>Product differentiation </li></ul></ul><ul><ul><li>Environmental liability reduction </li></ul></ul><ul><ul><li>Cost-effective compliance with environmental regulations </li></ul></ul><ul><ul><li>Recognition as good corporate citizen </li></ul></ul>
    45. 45. “Green” Manufacturing <ul><li>Make products recyclable </li></ul><ul><li>Use recycled materials </li></ul><ul><li>Use less harmful ingredients </li></ul><ul><li>Use lighter components </li></ul><ul><li>Use less energy </li></ul><ul><li>Use less material </li></ul>
    46. 46. Time-based Competition <ul><li>Product life cycles are becoming shorter. </li></ul><ul><li> Faster developers of new products gain on slower developers and obtain a competitive advantage </li></ul>
    47. 47. <ul><li>Engineering drawing </li></ul><ul><ul><li>Shows dimensions, tolerances, & materials </li></ul></ul><ul><ul><li>Shows codes for Group Technology </li></ul></ul><ul><li>Bill of Material </li></ul><ul><ul><li>Lists components, quantities & where used </li></ul></ul><ul><ul><li>Shows product structure </li></ul></ul>Product Documents © 1984-1994 T/Maker Co.
    48. 48. Monterey Jack <ul><li>(a) U.S. grade AA. Monterey cheese shall conform to the following requirements: </li></ul><ul><ul><li>(1)Flavor. Is fine and highly pleasing, free from undesirable flavors and odors. May possess a very slight acid or feed flavor. </li></ul></ul><ul><ul><li>(2)Body and texture. A plug drawn from the cheese shall be reasonably firm. It shall have numerous small mechanical openings evenly distributed throughout the plug. It shall not possess sweet holes, yeast holes, or other gas holes </li></ul></ul><ul><ul><li>(3)Color. Shall have a natural, uniform, bright and attractive appearance. </li></ul></ul><ul><ul><li>(4)Finish and appearance - bandaged and paraffin-dipped. The rind shall be sound, firm, and smooth providing a good protection to the cheese </li></ul></ul>
    49. 49.                                                                                           Bill of Materials – Manufacturing Plant and Fast-Food Restaurant Bill of Material for a Panel Weldment   Hard Rock Café’s Hickory BBQ Bacon Cheeseburger Number Description Qty Description Qty A60-71 Panel Weldm’t 1 Bun Hamburger Patty Cheddar Cheese Bacon BBQ Onions Hickory BBQ Sauce Burger Set Lettuce Tomato Red Onion Pickle French Fries Seasoned Salt 11-inch Plate HRC Flag 1 8 oz. 2 slices 2 strips ½ cup 1 oz.   1 leaf 1 slice 4 rings 1 slice 5 oz. 1 tsp 1 1 A 60-7 R 60-17 R 60-428 P 60-2 Lower Roller Assembly Roller Pin Locknet 1 1 1 1 60-72 R 60-57-1 A 60-4 02-50-1150 Guide Assem. Rear Support Angle Roller Assem. Bolt 1 1 1 1 A 60-73 A 60-74 R 60-99 02-50-1150 Guide Assm, Front Support Weldm’t Wear Plate Bolt 1 1 1 1
    50. 50. Make-or-Buy Decisions <ul><li>Decide whether or not you want (or need) to produce an item </li></ul><ul><li>May be able to purchase the item as a “standard item” from another manufacturer </li></ul>
    51. 51. Production Documents <ul><li>Assembly Drawing </li></ul><ul><li>Assembly chart </li></ul><ul><li>Route sheet </li></ul><ul><li>Work order </li></ul>
    52. 52. <ul><li>Shows exploded view of product </li></ul>Assembly Drawing Head Neck Handle End Cap © 1984-1994 T/Maker Co.
    53. 53. Assembly Chart for A Tuna Sandwich Toasted Cheese Story 1 2 3 SA1 A1 A2 Tuna Fish Mayonnaise Bread Tuna Assy FG Sandwich
    54. 54. Route Sheet <ul><li>Lists all operations </li></ul>
    55. 55. Engineering Change Notice (ECN) <ul><li>A correction or modification of an engineering drawing or bill of material </li></ul>
    56. 56. Configuration Management <ul><li>A system by which a product’s planned and changing components are accurately identified and for which control and accountability of change are maintained </li></ul><ul><ul><li>Revisions to Drawings and Assembly Instructions (E.G. Rev NC, Rev A, Rev B, etc.) </li></ul></ul>
    57. 57. Service Design - Nature of Customer Participation Ford Taurus
    58. 58. Application of Decision Trees to Product Design <ul><li>Particularly useful when there are a series of decisions and outcomes which lead to other decisions and outcomes. </li></ul><ul><li>Considerations: </li></ul><ul><ul><li>Include all possible alternatives and states of nature - including “doing nothing” </li></ul></ul><ul><ul><li>Enter payoffs at end of branch </li></ul></ul><ul><ul><li>Approach determining expected values by “pruning” tree </li></ul></ul>
    59. 59. Transition to Production <ul><li>First issue: knowing when to move to production! </li></ul><ul><li>Second: must view product development as evolutionary, not responsibility of single individual/department </li></ul><ul><li>Third: expect to need a trial production period to work the bugs out </li></ul><ul><li>Fourth: recognize that responsibility must also transition </li></ul>
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