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Operations Operations ManagementManagement

Design of Goods and ServicesDesign of Goods and ServicesChapter 5Chapter 5

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OutlineOutline Product Strategy.

Selection.

Product Development Stages.

Design Issues.

Documents.

Service Design.

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Find new products to design, develop and market.

Develop and implement a product strategy that: Meets demands of the marketplace. Provides a competitive advantage.

Differentiation. Low cost. Rapid response.

GoalsGoals

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Product strategy includes:

Selection - What good or service should be offered.

Development - From product concept to introduction.

Design (and redesign) - To define and redefine product.

Product StrategyProduct Strategy

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Deciding which products (goods and services) to provide.

Product includes: Physical good or service, including features,

quality, durability, reliability, etc. Brand. Packaging. Service & Warranty.

Product SelectionProduct Selection

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Product Life CycleProduct Life Cycle

Growth

Decline

Time

IntroductionMaturity

Sale

s

Sales Revenue

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Product Life Cycle, Sales, Cost, Product Life Cycle, Sales, Cost, and Cash Flowand Cash Flow

Sale

s, C

ost &

Pro

fit

.

Introduction Maturity DeclineGrowth

Cost ofDevelopment

& Manufacture Sales Revenue

TimeCash flowLoss

Profit

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Product Life CycleProduct Life CycleIntroductionIntroduction

Initial designs. Product development. Process modification and enhancement. Supplier development.

Increasing costs and revenues. Generally cost>revenue, so negative cash flow!

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Idea GenerationIdea Generation

Provides basis for entry into market.

Sources of ideas. Market need (60-80%). Engineering & operations (20%). Technology; competitors; inventions; employees.

Very few ideas become marketable products & few marketed products are successful!

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Need Very Many Ideas for Need Very Many Ideas for Successful New ProductsSuccessful New Products

0

500

1000

1500

2000

Development Stage

Number

1000

Market requirement

Design review,Testing, Introduction

25

Ideas

1750

Product specification

100

Functional specifications

One success!

500

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Assess Abilty to Offer ProductAssess Abilty to Offer Product

Can the firm provide the product/service?

Should the firm provide the product/service?

Make vs. Buy A firm may be able to purchase the product as a

“standard item” from another manufacturer.

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Product Development StagesProduct Development Stages

1. Customer Requirements.

2. Functional Specification.

3. Product Specifications.

4. Design Review.

5. Test Market.

6. Transition to Production.

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1. Customer Requirements1. Customer Requirements

Identifies & positions key product benefits. Example: Quiet, fast, low cost color printer.

Identifies detailed list of product attributes desired by customer.

Use customer focus groups or interviews.

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2. Functional Specification2. Functional Specification Defines product in terms of how the product

would meet desired attributes.

Identifies product’s engineering characteristics.

Example: Printer noise (dB), pages per minute.

Prioritizes engineering characteristics.

May rate product compared to competition.

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Determines how product will be made.

Gives product’s physical specifications.

Example: Dimensions, material, amount of insulation, technology, etc.

Defined by engineering drawing.

Done often on computer.

Computer-Aided Design (CAD).

3. Product Specifications 3. Product Specifications

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Review design from multiple perspectives.

Evaluate in terms of:

Customer requirements.

Ability to produce product or deliver service.

Revise design if needed.

4. Design Review 4. Design Review

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Quality Function Deployment - QFDQuality Function Deployment - QFD Technique to help:

Identify customer requirements. Translate these into functional specifications and

product specifications. Also helps focus quality efforts.

Involves creating 4 tabular ‘Matrices’ or ‘Houses’. Breakdown product design into increasing levels of

detail.

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House of Quality SequenceHouse of Quality Sequence

DesignCharacteristics

Cus

tom

erR

equi

rem

ents

House1

Production Process

Spec

ific

Com

pone

nts

House3

SpecificComponents

Des

ign

Cha

ract

eris

tics

House2

QualityPlan

Prod

uctio

n Pr

oces

s House4

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5. & 6. Test Marketing & Transition 5. & 6. Test Marketing & Transition to Productionto Production

Test market product to assess design and market.

Transition to production. Use a trial period to work the bugs out and revise

product and process design.

Refine supplier selections.

Transfer responsibility from design group to production group.

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Design IssuesDesign Issues

Concurrent design.

Manufacturability & Value Engineering.

Modular Design.

Robust Design.

Computer-aided design.

Environmentally friendly design.

Time-based competition.

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Traditional DesignTraditional Design

Design is a separate activity. Nearly independent of production, engineering, etc.

Design Production

Traditional

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Design & Production& other units

Concurrent DesignConcurrent Design

Design product using cross-functional teams. Production, engineering, marketing, customers, etc.

Design Production

Traditional Concurrent design

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Manufacturability andManufacturability and Value Engineering Value Engineering

Key is to SIMPLIFY. Minimize parts. Use common components in different products. Use standard off-the-shelf components. Simplify and mistake-proof assembly. Use modules to add variety. Design for robustness.

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Modular & Robust DesignModular & Robust Design

Modular design. Design in easily segmented components.

Modules add flexibility to both production and marketing.

Design for robustness. Design so small variations in production or

assembly do not adversely affect the product.

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Designing products at acomputer work station. Design engineer uses

computer to draw product.

Often used with CAM (Computer Aided Manufacturing).

Computer Aided Design (CAD)Computer Aided Design (CAD)

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Environmentally Friendly DesignEnvironmentally Friendly Design

Make products recyclable.

Use recycled materials.

Use less harmful (toxic) ingredients.

Use lighter components. Less weight lowers transportation cost.

Use less energy and material.

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Time-based CompetitionTime-based Competition

Product life cycles are becoming shorter.

Faster developers of new products gain on slower developers and obtain a competitive advantage. First to market is often the market leader.

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Engineering drawing. Shows dimensions, tolerances, &

materials.

Bill of Material. Lists components, quantities &

where used. Shows product structure.

Product DocumentsProduct Documents

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1-5/8

13/163/8

13/16

13/16diameter

13/32diameter

1/4 R

12-1/2

5/16

2-1/4

45°

BracketScale: FULL

Drawn: J. Thomas A- 435-038

1-5/8

13/163/8

13/16

13/16diameter

13/32diameter

1/4 R

12-1/2

5/16

2-1/4

45°

BracketScale: FULL

Drawn: J. Thomas A- 435-038

Engineering Drawing ExampleEngineering Drawing Example

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Bill of MaterialP/N: 1000 Name: Bicycle

P/N Desc Qty Units Level1001 Handle Bars 1 Each 11002 Frame Assy 1 Each 1

1003 Wheels 2 Each 2 1004 Frame 1 Each 2

Bill of MaterialP/N: 1000 Name: Bicycle

P/N Desc Qty Units Level1001 Handle Bars 1 Each 11002 Frame Assy 1 Each 1

1003 Wheels 2 Each 2 1004 Frame 1 Each 2

Bill of Material ExampleBill of Material Example

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Production DocumentsProduction Documents

Assembly drawings. Assembly chart. Route sheet. Work order.

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Assembly Drawing and Assembly Assembly Drawing and Assembly ChartChart

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Route SheetRoute Sheet

Lists all operations.Route Sheet for Bracket

Sequence Machine Operation SetupTime

OperationTime/Unit

1 Shear # 3 Shear tolength

5 .030

2 Shear # 3 Shear 45°corners

8 .050

3 Drillpress

Drill bothholes

15 3.000

4 Brakepress

Bend 90° 10 .025

Route Sheet for BracketSequence Machine Operation Setup

TimeOperationTime/Unit

1 Shear # 3 Shear tolength

5 .030

2 Shear # 3 Shear 45°corners

8 .050

3 Drillpress

Drill bothholes

15 3.000

4 Brakepress

Bend 90° 10 .025

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Work OrderWork Order

Dept Oper DateWork Order

Approved: JM

Manufacturing

Authorizes producing a given item, usually to a schedule.

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Service Design PrinciplesService Design Principles

SIMPLIFY! Minimize number of steps. Minimize repetition. Reduce waiting time for customer.

Use modularity to create variety. Example: Hospital, University certificate programs.

Design for robustness. Accommodate large variation, since all people are

different.

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Service Design PrinciplesService Design Principles

Consider range of services offered. Customized vs standard services (Medical clinics). Full service vs. self service (Gasoline station).

Manage expectations. Gourmet restaurant vs. fast food.

Schedule staff to match demand. Use appointments. Provide distractions to ease waiting.

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Decision Trees for Product DesignDecision Trees for Product Design

Useful with a series of decisions and outcomes.

Example: Select design of product of service from several options. Different costs. Different benefits: Benefits depend on future

(unknown) market.

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Decision Tree for DesignDecision Tree for Design

Coffee only

Coffee & Dessert

High Demand (0.7)

Low Demand (0.3)

High pm

Demand

(0.6)

Low pm Demand (0.4)

Add dessert

Do nothing

Do nothing

Do not offer dessert

Dessert popular (0.7)

Dessert Unpopular (0.3)

$5.5

-$0.5

$3.5

-$2.0

$6.0

$1.0

-$3.0

1

3

2