BME01 Operations Management & TQM

Course Syllabus

Week 1 Introduction to Operations Management

Week 2-3 Product and Service Design

Week 4-5 Forecasting

Preliminary Exam

Week 7 Capacity Planning for Product & Service

Week 8 Process Selection & Facility Layout

Week 9-10 Inventory Management

Week 11-12 Supply Chain Management

Midterm Examination

Week 13-14 Management of Quality

Week 15-17Quality Management Systems

Week 18 Integration Period and Final Examination

Learning Objectives:

1. Explain the importance of product and service design

DISCUSSION

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 into product and service requirements (marketing, operations)
2. Refine existing products and services (marketing)
3. Develop new products and/or services (marketing, operations)
4. Formulate quality goals(marketing, operations)
5. Formulate cost targets ( accounting, finance, operations)

Reasons for Product and Service Design or Redesign

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 threat can be one or more changes on:

Economic ( e.g. low demand, excessive warranty claims, the need to reduce costs)

Social and demographic (e.g. aging baby boomers, population shift)

Political, liability or legal (e.g. government changes, safety issues, new regulations)

Competitive (e.g. new or changed products or services, new advertising)

Cost or Availability (e.g. of raw materials, components, labor, energy)

Technological (e.g. in product component, processes)

IDEA GENERATION

Ideas for new design or redesign or services can come from a variety of sources, including customers, the supply
chain, competitors, employees and research. Customer input can come from surveys, focus groups, complaints and
unsolicited suggestions for improvement.

One of the strongest motivators for new and improved products or services is competitors’ products and services. By
studying a competitor’s product or service and how the competitor operates (pricing policies, warranties, etc) an
organization can gleam 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. The Ford Motor Company used this tactic to develop its highly successful Taurus model. It examined
competitors’ automobiles, searching for best- in-class component (best hood, best dashboard display, best door
handle).

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 semi-conductors, medicine, communication, and space technology can be
attributed to R&D efforts of colleges and universities, government agencies and private enterprises.

LEGAL AND ETHICAL CONSIDERATIONS

Designers must be careful to take into account a wide array of legal and ethical considerations. Generally, they are
mandatory. Moreover, if there is a potential to harm the environment, those issues also become important. Most
organizations are subject to numerous government agencies that regulate them. Among the more familiar federal
agencies include the Food and Drug Administration which monitors and ban red food dye, and asbestos which sent
designers back to their drawing boards to find alternative designs that are acceptable to both government regulators
and customers.

Product liability can be a strong incentive for design improvements. Product liability is the responsibility of a
manufacturer for any damages or injuries caused by faulty product because of poor workmanship or design. Many
business firms have faced lawsuits related to their products, including Firestone Tire and Rubber, tobacco companies
and toy manufacturers.

Manufacturers are faced with implied warranties created by State laws under the Uniform Commercial Code,
which says that products carry an implication of merchantability and fitness; that is, a product must be usable for
intended purpose.

Ethical issues often arise in the design of the products and services; it is important for managers to be aware of these
issues and for designers to adhere to ethical standards. Designers are often under pressure to speed up the design
process and to cut costs.

Organizations generally want designers to adhere to guidelines such as the following:

-Product design that are consistent with the goals of the organization.
-Give customers the value that they expect.
-Make health and safety a primary concern.

GLOBAL PRODUCT AND SERVICE DESIGN

Traditionally, product design has been conducted by members of the design team who are located in one facility of a
few nearby facilities. However, an organization that operates globally are discovering advantages in global product
design, which uses the combined efforts of a team of designers who work in different countries and even in different
continents.

ENVIRONMENTAL FACTORS: SUSTAINABILITY

Product and service design is a focal point in the quest for sustainability. Key aspects include: cradle to grave
assessment, end-of life programs, Reduction of costs and materials used, reuse of parts of returned products and
recycling.

Cradle to Grave Assessment

It also known as life cycle analysis, is the 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 in the
atmosphere, smog formation and solid waste generation. For products, cradle to grave analysis takes in account
impacts in every phase of product’s life cycle, from raw material extraction from the earth, growing and harvesting
of plant materials, fabrication of parts and assembly 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 the product’s useful life.

End of Life Programs

End of life programs deal with products that have reached the end of their useful lives. The products include both
consumer products and business equipment. The purpose of these programs is 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.

The Three Rs: Reduce, Reuse and Recycle

Reduce: Value Analysis

Value Analysis refers to an examination of the function of parts and materials in an effort to reduce the cost and/or
improve the performance of a product. Typical questions that would be asked as part of the analysis include: Could a
cheaper part or material be used? Is the function necessary? Could product specifications be relaxed, and would this
result in a lower price?

Reuse: Remanufacturing

As emerging concept in manufacturing is the remanufacturing of products. Remanufacturing refers to the

Recycle
Recycling is sometimes an important consideration for designers. Recycling means recovering materials for future
use. This applies not only to manufactured 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.

PHASES IN PRODUCT DESIGN AND DEVELOPMENT

Product design and development generally proceeds in a series of phases.

Feasibility analysis entails market analysis (demand), economic analysis (development cost and production cost),
technical analysis (capacity requirements and availability and the skills needed).

Product Specifications. This involves detailed description of what is needed to meet (or exceed) customer wants,
and requires collaboration between legal, marketing and operations.

Process specifications. Once product specification 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 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 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.

Reference:

Stevenson, 2018. Operations Management 13th edition.PH: C& E Publishing Inc.