Product and Service Design

Operations Management and TQM

Unit 3
 Why is it that product and
service design strategically
important?
4 Product and Service Design

 The essence of an organization is the goods

and services it offers
 Every aspect of the organization is structured
around them

 Product and Service design (or redesign)

should be closely tied to an organization’s
strategy
5 What Does Product and
Service Design Do?
▼ Translate customer wants and needs into
product and service requirements.
▼ Refine existing products and services.
▼ Develop new products and/or services.
▼ Formulate quality goals.
▼ Formulate cost targets.
6 What Does Product and
Service Design Do?

▼Construct and test prototypes.

▼Document specifications.
▼Translate product and service
specifications into process specifications.
7
Key Questions
 Is there a demand?
 Market size
 Demand profile

 Can we do it?
 Manufacturability - the capability of an
organization to produce an item at an acceptable
profit
 Serviceability - the capability of an
organization to provide a service at an
acceptable cost or profit
8
Key Questions

 What is the appropriate level of quality?

 Customer expectations
 Competitor quality
 Fit with current offering

 Does it make sense from an economic standpoint?

 Liability issues, ethical considerations, sustainability
issues, costs and profits
 Reasons for Product and Service
9
Design or Redesign
 Economic
 low demand, excessive warranty
claims, the need to reduce costs
 Social and demographic
 Aging populations, population shifts
 Political, liability, or legal
 Government changes, safety
issues, new regulations
 Reasons for Product and Service
10
Design or Redesign
 Competitive
 new or changed products or services, new
promotions
 Cost or availability
 Raw materials, components, labor, water,
energy
 Technological
product components, processes
 The Suppliers R&D Customers

Design Design firms New technology

Idea
Process Marketing
generation Competitors
Concept

Feasibility
study

Preliminary Performance
Specifications
Design Form
design
Functional Production
design design
Design Manufacturing or
specifications delivery specifications

Pilot run and

Final tests
Final design &
Process Plans

New product or
service launch
12
Phases of Product Development
IDEA GENERATION
Sources of new ideas for products of services
 Customers
 surveys, focus groups, complaints, and unsolicited
suggestions for improvement
 Suppliers
 Distributors
 Employees
 interviews, direct or indirect suggestions, and
complaints
13
Phases of Product Development
IDEA GENERATION
Sources of new ideas for products of services
 Competitors
 One of the strongest motivators for new and
improved products or services
 Also by studying how the competitors operate
 Others will resort to reverse engineering
(dismantling and inspecting a competitor’s product
to discover product improvements)
14 REFLECTION

 Is reverse engineering ethical?

 Can reverse engineering be used
for service?
15
Phases of Product Development
IDEA GENERATION
 Research and development
 organized efforts that are directed toward increasing
scientific knowledge and product or process
innovation
 semiconductors, medicine, communications, and
space technology
16
Phases of Product Development
IDEA GENERATION
 Research and development
 Basic research
 Objective: advancing the state of knowledge about a
subject without any near-term expectation of commercial
applications
 Applied research
 Objective: achieving commercial applications
 Development
 Converts the results of applied research into useful
commercial applications.
18
Phases of Product Development
 Feasibility analysis
 market analysis (demand)
 economic analysis (development cost and
production cost, profit potential)
 technical analysis (capacity requirements and
availability, and the skills needed)
 Does it fit with the mission?
 It requires collaboration among marketing,
finance, accounting, engineering, and operations.
19
Phases of Product Development

Product specifications.
 detailed descriptions of what is needed
to meet (or exceed) customer wants
 requires collaboration between legal,
marketing, and operations.
21
Phases of Product Development
 Process specifications
 specifications for the process that will be needed
to produce the product.
 Alternatives must be weighed in terms of cost,
availability of resources, profit potential, and
quality.
 This involves collaboration between accounting
and operations.
23
Phases of Product Development
 Prototype development
 Production of one (or a few) units to see if there are
any problems with the product or process
specifications.

 Design review
 At this stage, any necessary changes are made or the
project is abandoned.
 Marketing, finance, engineering, design, and
operations collaborate to determine whether to
proceed or abandon
24
Phases of Product Development
 Market test
 used to determine the extent of consumer acceptance
 If unsuccessful, will undergo design review
 This phase is handled by marketing.

 Product introduction. The new product is promoted.

This phase is handled by marketing.

 Follow-up evaluation. Based on user feedback, changes

may be made or forecasts refined. This phase is handled
by marketing.
25
DESIGN CONSIDERATIONS
 Legal & Ethical
▪ Designers are often under pressure to
▪ Speed up the design process
▪ Cut costs
▪ These pressures force trade-off decisions
▪ What if a product has bugs?
▪ Release the product and risk damage to your reputation
▪ Work out the bugs and forego revenue
26
DESIGN CONSIDERATIONS
 Human factors
 Safety and Liability
 Adding new features
 Good? Bad?
27
DESIGN CONSIDERATIONS
 Cultural considerations
 Customers come from all over the world.
 Different designs for different countries or
regions.
 Language
 Other?
 Localization
28
Sustainability
 Sustainability
 Using resources in ways that do not harm ecological
systems that support human existence

Key aspects of designing for sustainability

 Cradle-to-grave assessment (Life-Cycle assessment)
 End-of-life programs
 The 3-Rs
 Reduction of costs and materials used
 Re-using parts of returned products
 Recycling
29
Sustainability
 Cradle-to-grave assessment
 Life-Cycle analysis
 assessment of the environmental impact of a product or
service throughout its useful life, focusing on such factors
as
 global warming (the amount of carbon dioxide released into
the atmosphere)
 smog formation
 oxygen depletion
 solid waste generation
 GOAL: to choose products and services that have the
least environmental impact while still taking into account
economic considerations
30
Sustainability
 End-of-Life Program
 deal with products that have reached the end of
their useful lives
 PURPOSE: to reduce the dumping of products,
particularly electronic equipment, in landfills or
third-world countries, as has been the common
practice, or incineration, which converts materials
into hazardous air and water emissions and
generates toxic ash
31 Sustainability
The Three R’s
 Designers often reflect on three particular
aspects of potential cost saving and reducing
environmental impact
 reducing the use of materials through value analysis
 refurbishing and then reselling returned goods that
are deemed to have additional useful life, which is
referred to as remanufacturing
 reclaiming parts of unusable products for recycling
  Value analysis
3R’s: Examination of the function of
32
Reduce: parts and materials in an
Costs & effort to reduce the cost
Materials and/or improve the
performance of a product
 Common questions used in value analysis
 Is the item necessary; does it have
value; could it be eliminated?
 Are there alternative sources for the
item?
3R’s:  Could another material, part, or service
33
Reduce: be used instead?
Costs &  Can two or more parts be combined?
 Can specifications be less stringent to
Materials save time or money?
 Do suppliers/providers have
suggestions for improvements?
 Can packaging be improved or made
less costly?
 Refurbishing used products
by replacing worn-out or
defective components
3R’s: Re-Use -
34
Remanufacturing  Can be performed by the
original manufacturer or
another company
 Reasons to remanufacture:
 Remanufactured products can be sold
for about 50% of the cost of a new
product
 The process requires mostly unskilled
and semi-skilled workers
35
3R’s: Re-Use -  In the global market, European
Remanufacturing lawmakers are increasingly requiring
manufacturers to take back used
products

Design for disassembly (DFD)

 Designing a product so that used
products can be easily taken apart
 Recycling
Recovering materials for
future use
3R’s:
36
Recycle  Applies to manufactured
parts
 Also applies to materials used
during production
 Why recycle?
 Cost savings
 Environmental concerns
 Environmental regulations
 Companies doing business in the EU
37
3R’s: must show that a specified proportion of
Recycle their products are recyclable

Design for recycling (DFR)

 Product design that takes into account the
ability to disassemble a used product to
recover the recyclable parts
38
OTHER DESIGN CONSIDERATIONS
 Strategies for product or service life stages
 Standardization
 Product or service reliability
 Product or service robustness
 Degree of newness
39
Product Life Cycle
 Products and services go through a series of
stages over their useful life, referred to as their
life cycle
 Demand typically varies by phase.
 Different phases call for different strategies.
 In every phase, forecasts of demand and cash
flow are key inputs for strategy.
40
Product Life Cycle

Cost of development and production

Sales, cost, and cash flow Sales revenue
Net revenue (profit)

Cash
flow

Negative
cash flow Loss

Introduction Growth Maturity Decline

 Other Design Considerations
Product/Service Life-Stages

Discontinue?
high cost, Replace?
low Find new
demand, uses
possibly
quality
issues,
getting
first into
the
market
lower cost, low cost, high productivity,
increased standardization, few design
demand, changes are needed ,
higher higher reliability
reliability
42
Degree of Standardization
 Standardization – extent to which there is
absence of variety in a product, service, or
process
 Standardized products are made in large
quantities of identical items
 Standardized service implies that every customer
or item processed receives essentially the same
service
 Standardized processes deliver standardized
service or produce standardized goods
Coaxial Cable
46
Designing for Mass Customization
 A strategy of producing basically standardized goods
or services, but incorporating some degree of
customization in the final product or service
 Facilitating Techniques
▪ Delayed differentiation
▪ Modular design

The question for producers is how to resolve these

issues without (1) losing the benefits of standardization
and (2) incurring a host of problems that are often
linked to variety
49
Delayed Differentiation
 The process of producing, but not quite
completing, a product or service, postponing
completion until customer preferences or
specifications are known
 Result: product or service with customized features
than can be quickly produced appealing to the
customer’s desire for variety and speed of delivery
 for the most part production is standardized,
enabling the producer to realize the benefits of
standardized production
50
Delayed Differentiation
 almost-finished units might be held in inventory
until customer orders are received, at which time
customized features are incorporated, according
to customer requests
 It is a postponement tactic
 Produce a piece of furniture, but do not stain it; the
customer chooses the stain
51
Modular Design
 A form of standardization in which component
parts are grouped into modules that are easily
replaced or interchanged
 Modules represent groupings of component parts
into subassemblies, usually to the point where the
individual parts lose their separate identity

 One familiar example of modular design is

computers, which have modular parts that can be
replaced if they become defective
52
Apple MacBook Pro
53
Modular Design
 For mass customization, modular design enables
producers to quickly assemble products with
modules to achieve a customized configuration
for an individual customer, avoiding the long
customer wait
54
Reliability
 Reliability is the ability of a product, part, a service or
an entire system to perform its intended function
under a prescribed set of conditions

 used by prospective buyers in comparing alternatives

 used by sellers as one determinant of price
 have an impact on repeat sales
 reflect on the product's image
 Can create legal implications
 a consideration for sustainability
56
Robust Design
 There are products or services that will function as
designed only within a narrow range of
conditions, while others will perform as designed
over a much broader range of conditions.

 The latter have robust design or design that

results in products or services that can function
over a broad range of conditions..
57
Robust Design
 The more robust a product or service, the less
likely it will fail due to a change in the
environment in which it is used or in which it is
performed.

 Hence, the more designers can build robustness

into the product or service, the better it should
hold up, resulting in a higher level of customer
satisfaction.
Designing (products) for Production

1. Concurrent engineering
2. Computer-Assisted Design (CAD)
3. Production requirements
4. Component commonality
 1. Concurrent Engineering
Concurrent engineering
Bringing design and manufacturing engineers together early in
the design phase
manufacturing personnel, marketing and purchasing personnel in loosely
integrated cross-functional teams
Views of suppliers and customers may also be sought

The purpose:
achieve product designs that reflect
customer wants as well as manufacturing
capabilities
 2. Computer Aided Design (CAD)
Increases designers’ productivity.
Directly provides information to
manufacturing (dimensions, material - BOM).
Perform analysis: engineering ,cost.
Shortens time-to-market

e.g., AutoCad, SolidWorks, Visio

 3. Production Requirements
• Designers must take into account production capabilities
– Equipment
– Skills
– Types of materials
– Schedules
– Technologies
– Special abilities
• When opportunities and capabilities do not match management must consider
expanding or changing capabilities.
• Related concepts:
a. Design For Manufacturing (DFM)
b. Design For Assembly (DFA)
c. Manufacturability
 DFM and DFA
a. Design for Manufacturing (DFM)
– The designing of products that are compatible with an
organization’s abilities
b. Manufacturability
– Ease of fabrication and/or assembly
– It has important implications for
• Cost
• Productivity
• Quality

c. Design for Assembly (DFA)

– Design that focuses on reducing the number of parts in a
product and on assembly methods and sequence.
A more general term
Manufacturability
Ease of fabrication and/or assembly
It has important implications for
Cost
Productivity
Quality
 4. Component Commonality
When products have a high degree of similarity in
features and components, a part can be used in
multiple products

Benefits:
Savings in design time
Standard training for assembly and installation
Opportunities to buy in bulk from suppliers
Commonality of parts for repair
Fewer inventory items must be handled
4-68
 SERVICE DESIGN
69
70
Service Design
 Service refers to an act, something that is done to
or for a customer (client, patient, etc.).
 It is provided by a service delivery system, which
includes the facilities, processes, and skills needed
to provide the service.
 Many services are not pure services, but part of a
product bundle —the combination of goods and
services provided to a customer
71
Service Design
System design involves development or refinement
of the overall service package:
 The physical resources needed.
 The accompanying goods that are purchased or
consumed by the customer, or provided with the
service.
 Explicit services (the essential/core features of a
service, such as tax preparation).
 Implicit services (ancillary/extra features, such as
friendliness, courtesy)
76
Service Blueprint
78

Any
Questions?