Chapter 4

Product & Service

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Strategic 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

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What Does Product & Service Design Do?
1. Translate customer wants and needs into product and service
requirements
2. Refine existing products and services
3. Develop new products and services
4. Formulate quality goals
5. Formulate cost targets
6. Construct and test prototypes
7. Document specifications
8. Translate product and service specifications into process
specifications
9. Involve inter-functional collaboration

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Key Questions
1. Is there a demand for it?
 Market size
 Demand profile
2. 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

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Key Questions (cont.)
3. What level of quality is appropriate?
 Customer expectations
 Competitor quality
 Fit with current offering
4. Does it make sense from an economic
standpoint?
 Liability issues, ethical considerations, sustainability
issues, costs and profits

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Reasons to Design or Re-Design
The driving forces for product and service design or
redesign are market opportunities or threats:
 Economic
 Social and demographic
 Political, liability, or legal
 Competitive
 Cost or availability
 Technological

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Idea Generation
1. Supply-chain based
2. Competitor based
3. Research based

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Supply-Chain Based
Ideas can come from anywhere in the supply
chain:
 Customers
 Suppliers
 Distributors
 Employees
 Maintenance and repair personnel

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Competitor Based
By studying how a competitor operates and its
products and services, many useful ideas can be
generated
Reverse engineering
 Dismantling and inspecting a competitor’s product to
discover product improvements

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Research Based
 Research and development (R&D)
 Organized efforts to increase scientific knowledge or product
innovation
 Basic research
 Has the objective of advancing the state of knowledge about a
subject without any near-term expectation of commercial
applications
 Applied research
 Has the objective of achieving commercial applications
 Development
 Converts the results of applied research into useful commercial
applications.

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Legal Considerations
 Legal considerations
 Product liability
 The responsibility a manufacturer has for any injuries or
damages caused by as faulty product
 Some of the concomitant costs
 Litigation
 Legal and insurance costs
 Settlement costs
 Costly product recalls
 Reputation effects
 Uniform Commercial Code
 Under the UCC, products carry an implication of
merchantability and fitness

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Ethical Considerations
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

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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

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Cradle-to-Grave Assessment
Cradle-to-Grave Assessment
 aka Life-Cycle Assessment (LCA)
 The assessment of the environmental impact of a
product or service throughout its useful life
Focuses on such factors as
 Global warming
 Smog formation
 Oxygen depletion
 Solid waste generation
LCA procedures are part of the ISO 14000 environmental
management procedures

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Reduce: Costs and Materials
 Value analysis
 Examination of the function of parts and materials in an effort to
reduce the cost 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?
 Could another material, part, or service be used instead?
 Can two or more parts be combined?
 Can specifications be less stringent to save time or money?
 Do suppliers/providers have suggestions for improvements?
 Can packaging be improved or made less costly?

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Re-Use: Remanufacturing
 Remanufacturing
 Refurbishing used products by replacing worn-out or
defective components
 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
 In the global market, European lawmakers are increasingly
requiring manufacturers to take back used products
 Design for disassembly (DFD)
 Designing a product to that used products can be easily taken apart

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Recycle
 Recycling
 Recovering materials for future use
 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 must show that a specified
proportion of 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

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Product or Service Life Stages

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Standardization
Standardization
 Extent to which there is an absence of variety in a
product, service, or process
Products are made in large quantities of identical items
Every customer or item processed receives essentially the
same service

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Designing for Mass Customization
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

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Delayed Differentiation
Delayed differentiation
 The process of producing, but not quite completing, a
product or service until customer preferences are known
 It is a postponement tactic
 Produce a piece of furniture, but do not stain it; the customer
chooses the stain

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Modular Design
 Modular design
 A form of standardization in which component parts are grouped
into modules that are easily replaced or interchanged
 Advantages
 Easier diagnosis and remedy of failures
 Easier repair and replacement
 Simplification of manufacturing and assembly
 Training costs are relatively low
 Disadvantages
 Limited number of possible product configurations
 Limited ability to repair a faulty module; the entire module must
often be scrapped

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Reliability
Reliability
 The ability of a product, part, or system to perform its
intended function under a prescribed set of conditions
 Failure
Situation in which a product, part, or system does not
perform as intended
 Reliabilities are always specified with respect to certain
conditions
Normal operating conditions
 The set of conditions under which an item’s reliability is specified

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Robust Design
Robust design
 A design that results in products or services that can
function over a broad range of conditions
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

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Degree of Newness
 Product or service design changes:
1. Modification of an existing product or service
2. Expansion of an existing product line or service offering
3. Clone of a competitor’s product or service
4. New product or service
 The degree of change affects the newness of the product or
service to the market and to the organization
 Risks and benefits?

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Quality Function Deployment
Quality Function Deployment (QFD)
 An approach that integrates the “voice of the customer”
into both product and service development
The purpose is to ensure that customer requirements are
factored into every aspect of the process
Listening to and understanding the customer is the central
feature of QFD

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4-27
The House of Quality Sequence

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Kano Model
 Basic quality
 Refers to customer requirements that have only limited effect on
customer satisfaction if present, but lead to dissatisfaction if absent
 Performance quality
 Refers to customer requirements that generate satisfaction or
dissatisfaction in proportion to their level of functionality and
appeal
 Excitement quality
 Refers to a feature or attribute that was unexpected by the customer
and causes excitement

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The Kano Model – As Time Passes

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Concurrent Engineering
Concurrent engineering
 Bringing engineering design and manufacturing
personnel together early in the design phase
Also may involve manufacturing, marketing and purchasing
personnel in loosely integrated cross-functional teams
Views of suppliers and customers may also be sought
 The purpose is to achieve product designs that reflect
customer wants as well as manufacturing capabilities

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Computer-Aided Design (CAD)
 CAD
 Product design using computer graphics
 Advantages
 Increases productivity of designers, 3 to 10 times
 Creates a database for manufacturing information and product
specifications
 Provides possibility of engineering and cost analysis on proposed
designs
 CAD that includes finite element analysis (FEA) can significantly reduce
time to market
 Enables developers to perform simulations that aid in the design,
analysis, and commercialization of new products

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Production Requirements
Designers must take into account production
capabilities
 Equipment
 Skills
 Types of materials
 Schedules
 Technologies
 Special abilities

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Manufacturability
Manufacturability
 Ease of fabrication and/or assembly
 It has important implications for
Cost
Productivity
Quality

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Component Commonality
 When products have a high degree of similarity in features
and components, a part can be used in multiple products
Example: The Toyota Avalon and Lexus ES are powered by
the same 3.5 litre V6 engine, that is also used in highlander,
camry and Lexus RX
 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

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Service Design
Begins with a choice of service strategy, which
determines the nature and focus of the service, and
the target market
 Key issues in service design
Degree of variation in service requirements
Degree of customer contact and involvement

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Differences between Service
and Product Design
1. Products are generally tangible, services intangible
2. Services are created and delivered at the same time
3. Services cannot be inventoried
4. Services are highly visible to consumers
5. Some services have low barriers to entry and exit
6. Location is often important to service design, with convenience
as a major factor
7. Service systems range from those with little or no customer
contact to those that have a very high degree of customer
contact
8. Demand variability alternately creates waiting lines or idle
service resources
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The Well-Designed Service System
 Characteristics
 Being consistent with the organization mission
 Being user-friendly
 Being robust if variability is a factor
 Being easy to sustain
 Being cost-effective
 Having value that is obvious to the customer
 Having effective linkages between back- and front-of-the-house
operations
 Having a single, unifying theme
 Having design features and checks that will ensure service that is
reliable and of high quality

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Successful Service Design
1. Define the service package in detail
2. Focus on the operation from the customer’s perspective
3. Consider the image that the service package will present both to
customers and to prospective customers
4. Recognize that designers’ familiarity with the system may give them a
quite different perspective than that of the customer, and take steps to
overcome this
5. Make sure that managers are involved and will support the design once it
is implemented
6. Define quality for both tangibles and intangibles
7. Make sure that recruitment, training, and reward policies are consistent
with service expectations
8. Establish procedures to handle both predictable and unpredictable events
9. Establish system to monitor, maintain, and improve service
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Reliability
It is the measure of the ability of a product,
service, system to perform its intended function
Measures of Reliability
 Probability of functioning when activated
 Probability of functioning for a given length of time

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Probability of Functioning
when activated
Independent events
No relation to other events
 Probability that all events occur

Events with backups or built in redundancy

 Probability of at least one occurring from two or more

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Probability of Functioning for a given length
of time
Modeled by negative exponential distribution

1
 = 2.7183
 = Length of service before failure
 = Mean time between failures

F(T
) Reliability =
Reliability = 1 -

T
0 Time
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4-43
Life of your cell phone
 Expected life that is exponential with a mean of 4 years
(MTBF = 4)
 Probability that life ends
 After initial 4 years of service
T = 4, MTBF = 4, T/MTBF = 1
From table = .3679
 Before 4 years of service are completed
1= .3679, = .6321 F(T)
Reliability =
 Not before 6 years of service
T = 6, MTBF = 4, T/MTBF = 1.5
From table = .2231
T
0 Time

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Probability of Functioning modeled by
Normal Distribution
Calculate z value
Z =

Normal dist table contains normal probabilities

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4-46
Your laptop
 The mean life of your laptop is modeled using normal
distribution with a mean of six years and standard
deviation of one year
 Probability that your laptop will stop working before
seven years of service
 (.8413)
 Probability it will stop working after seven years of
working
 (1-.8413)
 Life/duration that will provide a wear out probability of
10 percent
 (z = -1.28)
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