2. 2
Product Development Process
Product Development Process
Economic Analysis of
Economic Analysis of
Development Projects
Development Projects
OBJECTIVES
Development Projects
Development Projects
Designing for the Customer
Designing for the Customer
Design for Manufacturability
Design for Manufacturability
Measuring Product Development
Measuring Product Development
Performance
Performance
3. 3
Product Design Process
Product Design Process
Companies
Companies outsource
outsource major
major functions
functions to
to
outside
outside parties,
parties, termed
termed as
as contract
contract
manufacturers
manufacturers.
.
manufacturers
manufacturers.
.
Contract
Contract manufacturers
manufacturers specializes
specializes in
in
mfg
mfg.
. products
products for
for other
other companies
companies.
.
Example
Example:
: in
in electronic
electronic industry,
industry, clothing,
clothing,
medicines,
medicines, plastics
plastics etc
etc.
.
4. 4
Contract manufacturers defined:
Contract manufacturers defined:
An organization capable of mfg. and/or
purchasing all the components needed to
produce a finished product or device.
produce a finished product or device.
5. 5
Because of potential advantages of contract mfrs., a firm must
decide what their core competencies should be.
Core competency of a firm is one thing that it can do better than
Core competency of a firm is one thing that it can do better than
its competitors.
Core competency can be anything from product design to
sustained dedication of a firm’s employees.
The goal is to have a core competency that yields a long-term
competitive advantage to the company.
6. 6
Characteristics of Core
Characteristics of Core
Competencies
Competencies
Provides potential access to a wide
variety of markets.
Increases perceived customer benefits.
Hard for competitors to imitate.
7. 7
Typical Phases of Product Development
Phase 0: Planning
Phase 1: Concept Development
Phase 2: System-Level design
Phase 3: Design Detail
Phase 4: Testing and Refinement
Phase 5: Production Ramp-up
8. 8
Phase 0: Planning
Phase 0: Planning
It precedes the project approval and launch of the
actual product development process.
Begins with corporate strategy
Begins with corporate strategy
Includes assessment of technology developments and
mkt. objectives.
o/p of planning stage is the project mission statement
specifying the target mkt. for the product, business
goals, key assumptions, and constraints.
9. 9
Phase 1: Concept Development
Phase 1: Concept Development
Needs of the tgt. mkt. are identified.
Alternative product concepts are
generated and evaluated.
One or more concepts are selected for
further development and testing.
10. 10
Phase 2: System
Phase 2: System-
-level design
level design
Includes definition of product architecture and
the decomposition of the product into
subsystems and components.
subsystems and components.
Final assembly scheme for the productions
system is usually defined during this phase.
o/p of this phase include a geometric layout of
the product, a functional specification of each
of product’s subsystems, and a preliminary
process flow diagram for the final assembly
process.
11. 11
Phase 3: Design Detail
Phase 3: Design Detail
Includes the complete specification of the geometry,
materials, and tolerances of all the unique parts in the
product and identification of all the standard parts to be
purchased from suppliers.
purchased from suppliers.
A process plan is established, and tooling is designed
for each part to be fabricated within the system.
o/p of this stage is the drawings or computer files
describing the geometry of each part and its
production tooling, the specifications of purchased
parts, and the process plans for the fabrication and
assemble of the product.
12. 12
Phase 4: Testing and
Phase 4: Testing and
Refinement
Refinement
Involves the construction and evaluation of
multiple preproduction versions of the product.
Prototypes are usually built with parts with the
same geometry and material properties.
Prototypes are tested to determine whether the
product will work as designed and whether the
product satisfies customer needs.
13. 13
Phase 5: Production ramp
Phase 5: Production ramp-
-up
up
Product is made using the intended production
system.
Purpose of the ramp-up is to train the
Purpose of the ramp-up is to train the
workforce and to work out any remaining
problems is the production processes.
Products produced during production ramp-up
are sometimes supplied to preferred customer
and are carefully evaluated to identify any
remaining flaws.
14. 14
Economic Analysis of Project
Economic Analysis of Project
Development Costs
Development Costs
Using measurable factors to help determine:
Operational design and development decisions
Ex: should we spend Rs. 1 L more to hire an outside firm to develop this
component in order to save two months of development time? Should we
launch the product in four months at a unit cost of Rs. 450 or wait six
launch the product in four months at a unit cost of Rs. 450 or wait six
months when we can reduce the cost to Rs. 400?
Go/no-go milestones
Ex: Should we try to develop a product to address a new mkt. opportunity?
Should we proceed with the implementation of a selected concept?
Should we launch the product we have developed?
Building a Base-Case Financial Model
A financial model consisting of major cash flows
Sensitivity Analysis for “what if” questions
15. 15
Building a Base
Building a Base-
-Case Financial
Case Financial
Model
Model
Consists of estimating the timing and
magnitude of future cash flows and then
computing the NPV of those cash flows.
Timing and magnitude of the case flows are
estimated by merging the project schedule
with:
The project budget
Sales volume forecasts, and
Estimated production costs.
16. 16
Most basic categories of cash flow for a typical
new product development project are:
Development cost
Building a Base
Building a Base-
-Case Financial
Case Financial
Model (Continued)
Model (Continued)
Development cost
All remaining design
Testing and refinement cost
Ramp-up cost
Mktg. and support cost
Production cost
Sales revenue.
17. 17
Sensitivity analysis to
Sensitivity analysis to
understand Project Trade
understand Project Trade-
-Offs
Offs
Project development time
What if there is an impact of a 25 % increase in the project
development time.
Sales volume
Sales volume
What if the sales is decreased (impact of decrease in sales
can result in significant loss)
Product cost or sales price
Increase in price or decrease in cost results in increase in
profit
Development cost
Money spent or saved on development cost is worth the
present value of that money to the value of the project.
18. 18
Designing for the Customer
Designing for the Customer
House of Quality
Quality Function
Deployment
Value Analysis/
Value Engineering
Ideal
Customer
Product
19. 19
Designing for the Customer:
Designing for the Customer:
Quality Function Deployment
Quality Function Deployment
Inter-functional teams from marketing,
design engineering, and manufacturing
Voice of the customer
House of Quality
21. 21
Designing for the Customer:
Designing for the Customer:
Value Analysis/Value Engineering
Value Analysis/Value Engineering
Achieve equivalent or better performance at a
lower cost while maintaining all functional
requirements defined by the customer
Does the item have any design features that are
Does the item have any design features that are
not necessary?
Can two or more parts be combined into one?
How can we cut down the weight?
Are there nonstandard parts that can be
eliminated?
22. 22
Design for Manufacturability
Design for Manufacturability
Traditional Approach
“We design it, you build it” or “Over the wall”
Concurrent Engineering
“Let’s work together simultaneously”
23. 23
Design for Manufacturing and Assembly
Design for Manufacturing and Assembly
Greatest improvements related to DFMA arise from
simplification of the product by reducing the number of
separate parts:
1. During the operation of the product, does the part move
relative to all other parts already assembled?
2. Must the part be of a different material or be isolated
from other parts already assembled?
3. Must the part be separate from all other parts to allow
the disassembly of the product for adjustment or
maintenance?
24. 24
Measuring Product Development Performance
Measuring Product Development Performance
Measures
•Freq. Of new products introduced
•Time to market introduction
•Number stated and number completed
•Actual versus plan
Time-to-market
Performance
Dimension
•Percentage of sales from new products
Productivity
Quality
•Engineering hours per project
•Cost of materials and tooling per project
•Actual versus plan
•Conformance-reliability in use
•Design-performance and customer satisfaction
•Yield-factory and field
