Unit 3: Product and Service Design LH 5

I. Concept on product and service design;

II. Product development process;
III. Difference between product and service design;
IV. Emerging issues in product and service design;
V. Value analysis, concurrent engineering and quality function deployment;
VI. Waiting line theory (Single channel only).

I. Concept on Product and Service Design

Designing new products and getting them to market quickly is the challenge faced by all the
manufacturers in industries as diverse as computer chips and potato chips. Customers of computer chip
manufacturers, such as computer companies, need ever-more-powerful semiconductors for their
evolving product lines. Food producers need to provide their grocery store customers with new taste
sensations to sustain or enlarge their retail market share. How manufactured products are designed and
how the process to produce them is selected are the topics of this unit.

In today’s world, companies often outsource major functions rather than support these functions in-
house. Companies that specialize in manufacturing products for other companies have become very
successful. These companies are called contract manufacturers, and they have become a successful in
industries such as electronic products, clothing, drug, plastics, and custom manufacturing. A simple
definition of a contract manufacturer is an organization capable of manufacturing and/or purchasing all
the components needed to produce a finished product or device.

The use of contract manufacturers has dramatically changed the way traditional manufacturing
companies now operate. Depending on the situation, contract manufacturers will take various roles for
a company. For example, in the automobile industry, contract manufacturer produces many of the
products and subassemblies, such as the seats and other interior parts, the headlight and taillight
assemblies, and the electronic equipment such as radio and GPS navigation systems. The actual
automobiles are often built regionally in the countries where the products will be sold to reduce
transportation cost and manage currency exchange risk. Close coordination is required to manage the
network of assembly plants and contract manufacturing partners for success.

The real challenge for a firm is to decide exactly how the various functions critical to success will be
handled. At one extreme is the fully vertically integrated firm where all activities from the design to the
fabrication of the individual parts are handled in-house. At the other extreme is a company that sells
products and outsources all the design and manufacturing functions.

Similar to the outsourcing of manufacturing, many companies outsource the product design function.
Product design differs significantly depending on the industry. For consumer products, understanding
consumer preferences and market testing prospective products are very important activities. For
pharmaceuticals, extensive clinical tests are often required that involve carefully controlled experiments
to test both the safety and the effectiveness of a potential product. Companies that specialize in the
design of products have highly developed processes to support the activities needed for an industry.
II. Product Development Process
The generic product development process consists of six phases. The process begins with a planning
phase, which is the link to advanced research and technology development activities. The output of the
planning phase is the project’s mission statement, which is the input required to begin the concept
development phase and serves as a guide to the development team. The conclusion of the product
development process is the product launch, at which time the product becomes available for purchase
in the marketplace.

1. Phase 0: Planning
2. Phase 1: Concept Development
3. Phase 2: System-level Design
4. Phase 3: Design Detail
5. Phase 4: Testing and refinement
6. Phase 5: Production ramp-up

III. Differences between Product and Service Design

• Products are generally tangible; services are generally intangible. Consequently, service design
often focuses more on tangible factors than product design does.
• In many instances, services are created and delivered at the same time. In such instances, there
is less latitude in finding and correcting errors before the customer has chance to discover them.
Consequently, training, process, design, and customer relations are particularly important.
• Services cannot be inventoried. This poses restriction on flexibility and makes capacity issues
very important.
• Services are highly visible to consumers and must be designed with that in mind; this adds an
extra dimension to process design, one that usually is not present in product design.
• Some services have low barrier to entry and exit. This places additional pressures on service
design to be innovative and cost-effective.
• Location is often important to service design, with convenience as a major factor. Hence, design
of services and choice of location is closely related.
• Service systems range from those with little or no customer contact to those that have a very
high degree of customer contact.
• Demand variability alternatively creates waiting lines or idle service outcomes.

IV. Emerging Issues in Product and Service Design

• Managing Multiple Customers
• Understanding the Product and Service Concept
• Managing the Outcome and Experience
• Managing in Real-time
• Knowing, implementing and influencing strategy
• Continually improving operations
• Encouraging innovations
• Managing short-term and Long-term issues simultaneously
V. Value Analysis, Concurrent Engineering and Quality Function Deployment
Value Analysis / Value Engineering
One of the well-known ways to consider the customers in designing products is by analyzing the “value”
they see in the end product. Because it is so important that value be designed into products, we briefly
describe the value analysis and value engineering. The purpose of value analysis / value engineering is to
simplify the products and processes. Its objective is to achieve equivalent or better performance at a
lower cost while maintaining all functional requirements defined by the customer. VA/VE does this by
identifying and eliminate unnecessary cost. Technically, VA deals with products already in production
and is used to analyze product specifications and requirements as shown in production documents and
purchase requests. Typically, purchasing departments use VA as a cost reduction technique. Performed
before the production stage, value engineering is considered as cost-avoidance method. In practice,
however there is a looping back and forth between the two for a given product. This occurs because
new materials. Processes, and so forth, require the application of VA techniques to products that have
previously undergone VE. The VA/VE analysis approach involves brainstorming such question as

- 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 non-standard parts that can be eliminated

Concurrent Engineering
Concurrent engineering means bringing design and manufacturing people together early in the design
phase to simultaneously develop the product and processes for manufacturing the product. Concurrent
engineering helps to improve the quality of early design decisions and thereby reduces the length and
cost of design process. Recently this concept has been enlarged to include manufacturing personnel,
design personnel, marketing and purchasing personnel loosely integrated cross-functional teams. In
addition, the views of suppliers and customers are also sought frequently. This will result in product
designs that will reflect customer wants as well as manufacturing capabilities in the design stage itself.

Quality Function Deployment

It is one of the widely used approach to get the voice of the customer in the design specification of a
product. This approach, which uses inter-functional teams from marketing, design, engineering, and
manufacturing, has been credited by Toyota Motor Corporation for reducing costs on its car by more
than 60 percent by significantly shortening design times.

The QFD process begins with studying and listening to customers to determine the characteristics of
superior product. Through market research, the consumers’ products needs and preferences are defined
and broken down into categories called customer requirements. One example is an auto manufacturer
that would like to improve the design of a car door. Through customer surveys and interviews, it
determines that two important customer requirements in a car door are that it “stays open on a hill”
and is “easy to close from the outside”. After the customer requirements are defined, they are weighted
based on their relative importance to the customer. The end result is a better understanding and focus
on product characteristics that require improvement.
Detailed Product Development Process
Phase 0: Planning Phase 1: Concept Phase 2: System- Phase 3: Detail Phase 4: Testing Phase 5:
Development level Design Design and Refinement Production Ramp-
up
Marketing
Articulate Market Collect customer Develop plan for Develop Develop Place early
Opportunity needs. product function Marketing Plan promotion and production with
options and launch materials. key customers.
Define Market Identify lead extended product
segments. users. family. Facilitate field
testing.
Identify Set target sales
Competitive price points.
products
Design
Consider product Investigate Generate Define part Reliability testing. Evaluate early
platform and feasibility of alternative geometry. production
architecture. product concepts. product Life testing. output.
architectures. Choose materials.
Assess new Develop industrial Performance
technologies. design concepts. Define major Assign tolerances. testing.
subsystems and
Build and test interfaces. Complete Obtain regulatory
experimental industrial design approvals.
prototypes. Refine industrial control
design. documentation. Implement design
changes.
MANUFACTURING
Identify Estimate Identify suppliers Define piece-part Facilitate supplier Begin operation
production manufacturing for key production ramp-up. of entire
constraints. cost. components. processes. production
Refine fabrication system.
Set supply chain Assess production Perform make- Design tooling and assembly
strategy. feasibility. buy analysis. processes.
Define quality
Define final assurance Train workforce.
assembly scheme. processes.
Refine quality
Set target costs. Being assurance
procurement of processes.
load-lead tooling.
OTHER FUNCTIONS
Research: Finance: Facilitate Finance: Facilitate Sales: Develop
Demonstrate economic make-up analysis. sales plan.
available analysis.
technologies. Service: Identify
Legal: Investigate service issues.
Finance: Provide patent issues.
planning goals

General
Management:
Allocate project
resources.