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Om lect 02(r0-may08)_product decision and analysis_mms_bharti_sies

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  • 1. Product Decision and Analysis/ Product Development N.K.Agarwal
  • 2. Major Classification of Products • Consumer and Industrial Products – Consumer products are those which are destined to be used by the ultimate consumers or households without any further processing / personal use • Soaps, toothpastes, wrist watches etc – Industrial products are those which are destined to be used by buyers as inputs in producing other products and for further commercial processing / business use • Machine tools, computers, trucks etc. – However some products could be a consumer product as well as industrial product • Oil when used by the housewife is a consumer product but when purchased by a hair oil or soap manufacturer can be industrial product
  • 3. Major Classification of Products • Durable and Non-durable Products – Durable products are those tangible products which normally survive many uses • Machinery, cars, scooters etc – Non-durable products are those tangible products which normally survive a few uses or consumed in one use itself • Toffees, lubricating oils, etc • Convenience, Shopping and Specialty Products – Consumer products have been divided into three categories – Convenience products • Those consumer products which a customer usually purchases frequently, immediately and within the minimum effort – Soaps, toothpaste, bread etc
  • 4. Major Classification of Products – Shopping products • Those consumer products which the customer in the process of selection and purchase characteristically compares on such criteria as suitability, quality, price etc – Refrigerator, suiting, etc – Specialty products • Those consumer products with unique brands identification for which significant group of people are habitual & willing to make a special purchasing effort – Ice cream, special eating items, fancy goods etc
  • 5. Classification of product • • Further classification is done based on nature of the product Custom built products     Products especially designed to specifications and needs of customers. Example: an aircraft, construction etc. Not available from inventory Emphasis on uniqueness, on-time delivery, quality etc. Cost / price is a secondary consideration  Strategy: obtain high profit margin
  • 6. Classification of product • Standardised product    Products available off-the-shelf from inventory Ready availability and cost are important. Examples: standard shapes in steel and aluminum, sugar etc. Very little Product differences between producers and limited options available in the product Purchase decisions based on dependability of supply & lower cost
  • 7. Classification of product • Between these two extremes there are products that are sensitive to – – – – • Quality of products in such cases is important but not as much as in custom built products Multiple sizes and type of products available • – • Variety, Flexibility, Cost, and Reliability of supply From inventory or by order Some products are available in low volumes whereas others like automobiles, TVs are available in high volumes
  • 8. Classsification of product • Majority of products available fall in this middle category • Most consumer products are available from inventory • Producer goods are available by order, and – May be subject to special design modifications to meet customer’s needs • Although the basic designs are quite standard
  • 9. Design of a Product • Defined as determining its shape, specifications and pattern of the product • Types of design • Product design may be divided into four groups – Functional – Developing an idea: a sketch of the product gives an idea of its overall shape and parts necessary to accomplish the task – Drafting specifications: to draft the correct dimensions of the product – Experimental Model: proposed and tested thoroughly starting actual production
  • 10. Design of a Product – Aesthetic design • The product design must appeal to the customers’ eyes and induce them to buy the product – Production design • Functional design has to be translated to Production design without sacrificing the functional efficiency • Design of jigs and fixtures needed in production should be done simultaneously – Packaging design • Design of package and labels must be aesthetically pleasing • Must be sturdy so that the product does not get damaged • Special packing for export consignments • Should attract the customer and meet his requirement
  • 11. Product Development • Devising the product to meet market or customer requirement • Two aspects are involved – Introduction of new products confirming the demands of customer – Improvement in existing product in order to satisfy the needs of the customer • Need for product development – Immediate objectives include • Stimulation of sales function • Offer of new look; quality advantage to public • Utilisation of existing equipment and skilled men • Fulfillment of immediate requirement of the customer
  • 12. Product Development – Ultimate objectives include • Monopolisation of the market • Making possible its manufacture on quality basis • Persuasion of the person to only branded product • Reduction of the cost of production by creating demand and producing on large scale • Supply of goods at lower price
  • 13. Product Development • Factors responsible for product development – Are the customers satisfied with the size, colour etc and other characteristics of the product? – Reduction in price for the consumer – Chances and scope for the product protection – How does it affect other products in line? – Durability of the product – Chances of increasing demand due to improvement in quality – Ease of handling during transportation or in use – Scope for using waste during production for some other by product of the utility – Convenience to stock – New product to have an edge over existing competitive products
  • 14. Product Standardisation • Fixation of standard dimensions for the product with a view to having large production of only limited number of varieties • Object is to measure, to identify: to compare, to describe product process, activities and performance in an organisation • It helps in controlling function of the organisation • Advantages – Facilitates large scale production – Eliminates the wastage in designing and purchasing – Helps in introducing mechanisation
  • 15. Product Standardisation – Helps in assisting the controlling function of the production system – Gives incentives to management for producing new styles – Loan on standard commodities easier – Service and maintenance costs reduced – Higher productivity – Easier purchasing and selling • Disadvantages – Standardisation promotes rigidity – Not suitable for small entrepreneurs – Excessive standardisation has deleterious effects
  • 16. Simplification • Elimination of superfluous varieties, sizes, dimensions etc. • Advantages : To Producers – – – – – – – – – – Reduction in the manufacturing costs Use of specialised plants Reduction in inventories Increase in efficiency Better market control Increased profit Use of skilled labour Reduction of cost after sales Saving in storage costs Makes supervision and production planning easier
  • 17. Simplification • Advantages: to Consumer – Quality products at cheaper rates – Greater repair and service facilities – Steady supply of products • Disadvantages – Effects of seasonal fluctuations – Low competitive position is especially in complementary products
  • 18. Product Life Cycle • Demand for a product generally tends to follow a predictable pattern called the Product Life Cycle (PLC) • PLC is defined as – An attempt to recognise different distinct stages in the sales history of the product, and – A generalised model of sales and profit trends for a product class or category over a period of time • The various stages through which a product passes are – – – – – Introduction Growth Maturity Saturation Decline
  • 19. Product Life Cycle • Introduction – First stage which begins with launching of a product – Product entry into the market requires a large investment which gradually comes down as sales pick up – Sales at this stage are fairly low and the competitors are already there in the field • Growth – Both sales and profit begins to rise and arrangement of distribution is likely to get completed at the end of this stage
  • 20. Product Life Cycle • Maturity – Manufacturers introduce new models or adopt new techniques for production of products with a view to retaining their position in the market – Stage marked by stiff competition and the rate of growth could be quite low • Decline ( Decay) – Last stage during which the sales decline and profits reduce down as the new competitors appear in the market with newer and better products – Customers start using them
  • 21. STAGES OF DEVELOPMENT DECLINE SATURATION MATURITY GROWTH INTRODUCTION SALES VOLUME PRODUCT LIFE CYCLE
  • 22. Process focused systems • Production systems for custom built products – Should be flexible, and – Able to accommodate requirements • As per customer specifications • Typical machine shop can have a number of types of machines to do various jobs • Nature of demand on the production system results in intermittent demand on the production system’s facilities • This physical arrangement of departments by generic types is Job Shop
  • 23. Product focused systems • High volume, standardised products call for continuous use of facilities as in a flow shop • Special processing equipment and dedicated production systems justified • Mechanisation & automation to achieve standardisation & low cost are the main features
  • 24. Production systems • In between these two extremes are systems that deal with – Low-volume multiple products, – Or/and relatively high volume multiple products • The former usually involves a process- focused system – Products are produced in batches to give some economies of scale in comparison to the job shop system • The high volume multi-product situation employs a mixed production strategy – That combines both the process- focused and product- focused systems
  • 25. Production systems • Parts fabrication in manufacturing is often organised on a batch-intermittent basis – Parts produced in economical batches & resulting investment provides an important production strategy • Final assembly is organised on a line or continuous basis – Nature of assembly makes possible continuous lines dedicated to certain products
  • 26. Production - To - Order • Offers – Product design flexibility to customers, – Minimise risk of inventories, – Closer quality control ,etc.
  • 27. Production - To - Stock • Offers benefits of – Better service in terms of availability, – To reduce variable costs, and – To increase market share by making items available offthe-shelf when customer wants to buy
  • 28. Production strategy TYPES OF SYSTEMS EXAMPLES OF 2-DIMENSIONS OF POSITIONING PRODUCT FOCUSED PROCESS FOCUSED FINISHED GOODS INVENTORY POLICY TO STOCK TO ORDER PRODUCT FOCUSED / PRODUCT FOCUSED / TO STOCK TO ORDER PROCESS FOCUSED / PROCESS FOCUSED / TO STOCK TO ORDER
  • 29. PRODUCTION SYSTEM FINISHED GOODS INVENTORY POLICY TO STOCK TO ORDER PRODUCT FOCUSSED- PRODUCT FOCUSSEDTO STOCK TO ORDER OFFICE COPIER TV SETS PRODUCT FOCUSSED CALCULATORS GASOLINE CAMERAS CONSTRUCTION EQUIPMENTS BUSES/TRUCKS EXPERIMENTAL CHEMICALS TEXTILES CABLES PROCESS FOCUSSED- PROCESS FOCUSSEDTO STOCK TO ORDER MEDICAL INSTRUMENTS PROCESS FOCUSSED TEST EQUIPMENTS SPARE PARTS STEEL PRODUCTSSPECIAL SECTIONS MACHINE TOOLS NUCLEAR COMPONENTS AEROPLANES CONSTRUCTION PROJECTS
  • 30. References • Production and Operations Management: R.C. Manocha • Production & operations management: Aswathappa / Bhat • Modern production / operations management: Buffa / Sarin
  • 31. Thank You
  • 32. PRODUCT LIFE CYCLE • FOR A PRODUCT, AS IT DEVELOPS THROUGH ITS LIFE CYCLE, THE PRODUCTION SYSTEM GOES THROUGH A LIFE CYCLE OF ITS OWN – A PROCESS FOCUSSED, TO-ORDER JOB SHOP SYSTEM (IN THE INITIAL STAGE) – INTERMEDIATE STAGE OF PROCESS FOCUSSED, TO ORDER BATCH PRODUCTION – PRODUCT FOCUSSED , TO STOCK BATCH PRODUCTION, AND ULTIMATELY – A PRODUCT FOCUSSED TO-STOCK CONTINUOUS PRODUCTION SYSTEM • WHEN THE PRODUCT IS DEMANDED IN LARGE VOLUMES
  • 33. PRODUCT LIFE CYCLE AND PRODUCTIVE SYSTEM TYPES PROCESS FOCUSSED, TO ORDER, BATCH PRODUCT FOCUSSED, TO STOCK, BATCH PRODUCT FOCUSSED, TO STOCK, CONTINUOUS STAGES OF DEVELOPMENT DECLINE MATURITY GROWTH INTRODUCTION SALES VOLUME PROCESS FOCUSSED, TO ORDER, JOB SHOP
  • 34. PRODUCT- PROCESS MATRIX LOW VOLPRODUCT CYCLE LOW STANDARDISA TION, ONE OF A KIND HIGHER VOLFEW MAJOR PRODUCTS NONE JOB SHOP PROCESS LINE JOB SHOPBATCH PROCESS ASSEMBLY LINE CONTINUOUS / FLOW SHOP LOW VOLMULTIPLE PRODUCTS HIGHER VOL-HIGH STANDARDISATION ,COMMODITY PRODUCTS NONE

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