Product and

Service Design
 Product and Service Design

This section discusses what product and service designers do, the reasons for design (or
redesign), and key questions that management must address.

What Does Product and

Service Design Do?
The various activities and responsibilities of product and service design include the following
(functional interactions are shown in parentheses):

1. Translate customer wants and needs

5. Formulate cost targets. (accounting,
into product and service requirements.
finance, operations)
(marketing operations)

2. Refine existing products and services. 6. Construct and test prototypes.

(marketing) (operations, marketing, engineering)

3. Develop new products and/or services.

7. Document specifications.
(marketing, operations)

8. Translate product and service

4. Formulate quality goals. (marketing,
specifications into process specifications.
operations)
(engineering, operations)

Product and service design involves or affects nearly every functional area of an organization. However,
marketing and operations have major involvement.

Key Questions
From a buyer’s standpoint, most purchasing decisions entail two fundamental considerations; one is cost
and the other is quality or performance. From the organization’s standpoint, the key questions are:

What is the potential size of the market, and what is the expected demand
Is there demand for it? profile (will demand be long term or short term, will it grow slowly or quickly)?

Do we have the necessary knowledge, skills, equipment, capacity, and

Can we do it? supply chain capability? For products, this is known as manufacturability; for
services, this is known as serviceability. Also, is outsourcing some or all of
the work an option?

What level of quality is What do customers expect? What level of quality do competitors provide
appropriate? for similar items? How would it fit with our current offerings?

Does it make sense from an What are the potential liability issues, ethical considerations, sustainability
economic standpoint? issues, costs, and profits? For nonprofits, is the cost within budget?

Manufacturability The capability of an organization to Serviceability The capability of an organization to

produce an item at an acceptable profit. provide a service at an acceptable cost or profit.
 Reasons for Product
and Service Design or
Product and service design has typically had strategic
implications for the success and prosperity of an
organization. Furthermore, it has an impact on future

Redesign activities. Consequently, decisions in this area are some

of the most fundamental that managers must make.

Organizations become involved in product and service design or redesign for a variety of
reasons. The main forces that initiate design or redesign are market opportunities and threats.
The factors that give rise to market opportunities and threats can be one or more changes:

Economic Competitive
(e.g., low demand, excessive warranty (e.g., new or changed products or
claims, the need to reduce costs). services, new advertising/promotions).

Social and demographic Cost or availability

(e.g., aging baby boomers, (e.g., of raw materials,
population shifts). components, labor, water, energy).

Technological Political, liability, or legal

(e.g., in product components, (e.g., government changes, safety
processes). issues, new regulations).

An obvious way is new technology that can be

used directly in a product or service (e.g., a faster,

Idea Generation
smaller microprocessor that spawns a new
generation of personal digital assistants or cell
phones).

Technology also can indirectly affect product and Ideas for new or redesigned products or services can
service design: Advances in processing come from a variety of sources, including customers, the
technology may require altering an existing design supply chain, competitors, employees, and research.
to make it compatible with the new processing Customer input can come from surveys, focus groups,
technology. complaints, and unsolicited suggestions for
improvement. Input from suppliers, distributors, and
employees can be obtained from interviews, direct or
indirect suggestions, and complaints.

One of the strongest motivators for new and improved products or services is
competitors’ products and services. By studying a competitor’s products or services
and how the competitor operates (pricing policies, return policies, warranties, location
strategies, etc.), an organization can glean many ideas. Beyond that, some companies
purchase a competitor’s product and then carefully dismantle and inspect it, searching
for ways to improve their own product. This is called reverse engineering.

Research is another source of ideas for new or improved products or services. Research
and development (R&D) refers to organized efforts that are directed toward increasing
scientific knowledge and product or process innovation. Most of the advances in
semiconductors, medicine, communications, and space technology can be attributed to
R&D efforts at colleges
and universities, research foundations, government agencies, and private enterprises.

Reverse engineering Dismantling and inspecting a

Research and development (R&D) Organized efforts to
competitor’s product to discover product
increase scientific knowledge or product innovation.
improvements.
Design Considerations
LEGAL ETHICAL

Designers must be careful to take into account Ethical issues often arise in the design of
a wide array of legal and ethical products and services; it is important for
considerations. Moreover, if there is a potential managers to be aware of these issues and for
to harm the environment, then those issues designers to adhere to ethical standards.
also become essential. Bans on harmful Designers are often under pressure to speed up
substances have sent designers scurrying back the design process and to cut costs. These
to their drawing boards to find alternative pressures often require them to make trade-off
designs acceptable to both government decisions, many of which involve ethical
regulators and customers. Similarly, considerations. One example of what can
automobile pollution standards and safety happen is “vaporware,” when a software
features, such as seat belts, airbags, safety company doesn’t issue a release of software
glass, and energy-absorbing bumpers and as scheduled as it struggles with production
frames, have substantially impacted problems or bugs in the software. The
automotive design. Much attention has been company faces the dilemma of releasing the
directed toward toy design to remove sharp software right away or waiting until most of the
edges, small pieces that can cause choking, bugs have been removed—knowing that the
and toxic materials. The government further longer it waits, the more time will be needed
regulates construction, requiring the use of before it receives revenues and the greater the
lead-free paint, safety glass in entranceways, risk of damage to its reputation.
access to public buildings for individuals with
disabilities, and standards for insulation,
electrical wiring, and plumbing.
GLOBAL PRODUCT
AND SERVICE DESIGN

HUMAN FACTOR Traditionally, product design has been

conducted by members of the design team
who are located in one facility or a few nearby
Human factor issues often arise in the design facilities. However, organizations that operate
of consumer products. Safety and liability are globally are discovering advantages in global
two critical issues in many instances, and they product design, which uses the combined
must be carefully considered. For example, the efforts of a team of designers who work in
crashworthiness of vehicles is of much interest different countries and even on different
to consumers, insurance companies, continents. Global product design can provide
automobile producers, and the government. design outcomes that increase the
marketability and utility of a product. The
diversity of an international team may yield
different points of view and ideas and
information to enrich the design process.
CULTURAL FACTOR However, care must be taken in managing the
diversity, because if it is mismanaged, that can
lead to conflicts and miscommunications.
Product designers in companies that operate
globally also must take into account any
cultural differences of different countries or
regions related to the product.

Product liability The responsibility of a manufacturer

Uniform Commercial Code Products carry an implication
for any injuries or damages caused by a
of merchantability and fitness.
faulty product.
 Design Considerations
ENVIRONMENTAL End-of-Life Programs
End-of-life (EOL) programs deal with products
that have reached the end of their useful lives.
The products include both consumer products
Product and service design is a focal point in
and business equipment. The purpose of these
the quest for sustainability. Key aspects
programs is to reduce the dumping of products,
include cradle-to-grave assessment, end-of-life
particularly electronic equipment, in landfills or
programs, reduction of costs and materials
third-world countries, as has been the common
used, reuse of parts of returned products, and
practice, or incineration, which converts
recycling.
materials into hazardous air and water
emissions and generates toxic ash. Although
the programs are not limited to electronic
Cradle-to-Grave Assessment equipment, that equipment poses problems
Cradle-to-grave assessment, also known as life
because the equipment typically contains toxic
cycle analysis, is the assessment of the
materials such as lead, cadmium, chromium,
environmental impact of a product or service
and other heavy metals. IBM provides a good
throughout its useful life, focusing on such
example of the potential of EOL programs. Over
factors as global warming (the amount of
the last 15 years, it has collected about 2 billion
carbon dioxide released into the atmosphere),
pounds of product and product waste.
smog formation, oxygen depletion, and solid
waste generation. For products, the cradle-to-
grave analysis takes into account impacts in
every phase of a product’s life cycle, from raw
material extraction from the earth, or the
growing and harvesting of plant materials,
through the fabrication of parts and assembly
The Three Rs: Reduce,
Reuse, and Recycle
operations, or other processes used to create
products, as well as the use or consumption of
the product, and final disposal at the end of a
product’s useful life. It also considers energy
Designers often reflect on three particular
consumption, pollution and waste, and
aspects of potential cost saving and
transportation in all phases. Although services
reducing environmental impact: reducing the
generally involve less use of materials, cradle-
use of materials through value analysis;
to-grave assessment of services is important
refurbishing and then reselling returned
because services consume energy and apply
goods that are deemed to have additional
many of the same or similar processes that
useful life, which is referred to as
products involve.
remanufacturing; and reclaiming parts of
unusable products for recycling.

Value analysis refers to an examination of the function of parts and materials in

Reduce: Value Analysis
an effort to reduce the cost and/or improve the performance of a product.

An emerging concept in manufacturing is the remanufacturing of products. Remanufacturing

Reuse: Remanufacturing
refers to refurbishing used products by replacing worn-out or defective components, and
reselling the products. This can be done by the original manufacturer, or another company.
Among the products that have remanufactured components are automobiles, printers, copiers,
cameras, computers, and telephones.

Recycling means recovering materials for future use. This applies not only to manufactured
Recycle
parts but also to materials used during production, such as lubricants and solvents. Reclaimed
metal or plastic parts may be melted down and used to make different products.

Design for recycling (DFR) Design that facilitates the

recovery of materials and components
in used products for reuse.
Design Considerations
Degree of Standardization
An important issue that often arises in both product/service
design and process design is the degree of standardization.
OTHER FACTORS Standardization refers to the extent to which there is absence
of variety in a product, service, or process. Standardized
products are made in large quantities of identical items;
Aside from legal, ethical, environmental, and calculators, computers, and 2 percent milk are examples.
human considerations designers must also Standardized service implies that every customer or item
take into account product or service life cycles, processed receives essentially the same service. An
how much standardization to incorporate, automatic car wash is a good example; each car, regardless
product or service reliability, and the range of of how clean or dirty it is, receives the same service.
operating conditions under which a product or Standardized processes deliver standardized service or
service must function. These topics are produce standardized goods.
discussed in this section.
Advantages
• Fewer parts to deal with in inventory and in
Mass Customization •
manufacturing.
Reduced training costs and time.
A strategy of producing standardized goods or • More routine purchasing, handling, and inspection
services, but incorporating some degree of procedures.
customization in the final product or service. • Orders fillable from inventory.
• Opportunities for long production runs and automation.
Delayed differentiation • Need for fewer parts justifies increased expenditures on
The process of producing, but not quite perfecting
completing, a product or service until customer • designs and improving quality control procedures.
preferences are known. In the case of goods,
almost finished units might be held in inventory Disadvantages
until customer orders are received, at which time • Designs may be frozen with too many imperfections
customized features are incorporated, according remaining.
to customer requests. For example, furniture • High cost of design changes increases resistance to
makers can produce dining room sets, but not improvements.
apply stain, allowing customers a choice of • Decreased variety results in less consumer appeal.
stains. Once the choice is made, the stain can be
applied in a relatively short time, thus eliminating
a long wait for customers, giving the seller a
competitive advantage.
Reliability
Reliability is a measure of the ability of a product, a part, a
Modular design service, or an entire system to perform its intended function
A form of standardization in which component under a prescribed set of conditions. The importance of
parts are grouped into modules that are easily reliability is underscored by its use by prospective buyers in
replaced or interchanged. One familiar example comparing alternatives and by sellers as one determinant of
of modular design is computers, which have price. Reliability also can have an impact on repeat sales,
modular parts that can be replaced if they reflect on the product’s image, and, if it is too low, create legal
become defective. By arranging modules in implications.
different configurations, different computer
capabilities can be obtained. For mass The term failure is used to describe a situation in which an
customization, modular design enables item does not perform as intended. This includes not only
producers to quickly assemble products with instances in which the item does not function at all, but also
modules to achieve a customized configuration instances in which the item’s performance is substandard or
for an individual customer, avoiding the long it functions in a way not intended.
customer wait that would occur if individual
parts had to be assembled. Reliabilities are always specified with respect to certain
conditions, called normal operating conditions. These can
include load, temperature, and humidity ranges as well as
operating procedures and maintenance schedules.
Phases in Product Design
And Development

Feasibility analysis. Feasibility analysis entails market analysis (demand),

economic analysis (development cost and production cost, profit potential),
and technical analysis (capacity requirements and availability, and the skills
needed). Also, it is necessary to answer the question, Does it fit with the
mission? It requires collaboration among marketing, finance, accounting,
engineering, and operations.

Product specifications. This involves detailed descriptions of what is needed

to meet (or exceed) customer wants, and requires collaboration between
legal, marketing, and operations.

Process specifications. Once product specifications have been set, attention

turns to 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.

Prototype development. With product and process

specifications complete, one (or a few) units are made 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.

Market test. A market test is used to determine the extent of

consumer acceptance. If unsuccessful, the product returns to
the design review phase. 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.

Layout by Edrick Morales for PM 103 – Productions and Operations Management

Lifted from Operations Management, WJS, 11e