6_design of Goods & Services

POM - J. GalvánPOM - J. Galván 11

PRODUCTION AND PRODUCTION AND OPERATIONS OPERATIONS

MANAGEMENTMANAGEMENT

Ch. 6: Design of Goods and Ch. 6: Design of Goods and ServicesServices


Learning ObjectivesLearning Objectives

How should products/services be How should products/services be designed systematically?designed systematically?


As Engineering designed it.

© 1984-1994 T/Maker Co.

As Operations made it.

© 1984-1994 T/Maker Co.

As Marketing interpreted it.

© 1984-1994 T/Maker Co.

As the customer wanted it.

© 1984-1994 T/Maker Co.

Humor in Product DesignHumor in Product Design


Need-satisfying offering of an Need-satisfying offering of an organizationorganization• Example Example

P&G does not sell laundry detergentP&G does not sell laundry detergentP&G sells the benefit of clean clothesP&G sells the benefit of clean clothes

Customers buy satisfaction, not partsCustomers buy satisfaction, not parts May be a good or a serviceMay be a good or a service

What is a Product?What is a Product?


Product Strategy OptionsProduct Strategy Options• Product differentiationProduct differentiation• Low costLow cost• Rapid responseRapid response


Generation of New Product Generation of New Product OpportunitiesOpportunities

Economic changeEconomic change Sociological and demographic change Technological change Political/legal change Changes in

• market practice

• professional standards

• suppliers and distributors


Product

ProductIdea

Package

PhysicalGood

FeaturesQualityLevel

Service(Warranty)

Brand(Name)

Product ComponentsProduct Components


Product Life CycleProduct Life Cycle

IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline


Product Life CycleProduct Life CycleIntroductionIntroduction

Fine tuningFine tuning• researchresearch• product developmentproduct development• process modification and enhancementprocess modification and enhancement• supplier developmentsupplier development


Product Life CycleProduct Life CycleGrowthGrowth

Product design begins to stabilizeProduct design begins to stabilize Effective forecasting of capacity Effective forecasting of capacity

becomes necessarybecomes necessary Adding or enhancing capacity may be Adding or enhancing capacity may be

necessarynecessary


Product Life CycleProduct Life CycleMaturityMaturity

Competitors now establishedCompetitors now established High volume, innovative production High volume, innovative production

may be neededmay be needed Improved cost control, reduction in Improved cost control, reduction in

options, paring down of product lineoptions, paring down of product line


Product Life CycleProduct Life CycleDeclineDecline

Unless product makes a special Unless product makes a special contribution, must plan to terminate contribution, must plan to terminate offeringoffering


Product Life Cycle, Sales, Cost, Product Life Cycle, Sales, Cost, and Profitand Profit

Sal

es,

Co

st &

Pro

fit

.

Introduction Maturity DeclineGrowth

Loss

Cost ofDevelopment

& Manufacture Sales Revenue

Net Revenue

Time


0%

10%

20%

30%

40%

50%

Position of Firm in ItsIndustry

IndustryLeaderTop Third

Middle Third

Bottom Third

Percent of Sales From New Percent of Sales From New ProductProduct


Products in Various Stages of Products in Various Stages of Life CycleLife Cycle

Growth Decline

Time

Sales

Virtual Reality

RollerBlades

Jet Ski

Boeing 727

Introduction Maturity


0

500

1000

1500

2000

Development Stage

Number

1000

Market requirement Design review,Testing, Introduction

25

Ideas

1750

Product specification100

Functional specification

500

Few SuccessesFew Successes


Product Development StagesProduct Development Stages

Idea generationIdea generation Assessment of firm’s ability to carry Assessment of firm’s ability to carry

outout Customer RequirementsCustomer Requirements Functional SpecificationFunctional Specification Product SpecificationsProduct Specifications Design ReviewDesign Review Test MarketTest Market Introduction to MarketIntroduction to Market EvaluationEvaluation

Scope of design for manufacturability and value engineering teams

Scope of product development team


Idea Generation StageIdea Generation Stage

Provides basis for entry into marketProvides basis for entry into market Sources of ideasSources of ideas

• Market need (60-80%); engineering & Market need (60-80%); engineering & operations (20%); technology; operations (20%); technology; competitors; inventions; employeescompetitors; inventions; employees

Follows from marketing strategyFollows from marketing strategy• Identifies, defines, & selects best market Identifies, defines, & selects best market

opportunitiesopportunities


House of QualityHouse of Quality

Customer Requirements


Product Characteristics

Customer Requirements StageCustomer Requirements Stage

¨ Identifies & positions key product benefits¨ Stated in core benefits proposition (CBP)¨ Example: Long lasting with more power

(Sears’ Die Hard Battery)

¨ Identifies detailed list of product attributes desired by customer ¨ Focus groups or

1-on-1 interviews


Defines product in terms of how the product would meet Defines product in terms of how the product would meet desired attributesdesired attributes

Identifies product’s engineering characteristicsIdentifies product’s engineering characteristics• Example: printer noise (dB)Example: printer noise (dB)

Prioritizes engineering characteristicsPrioritizes engineering characteristics May rate product compared May rate product compared

to competitors’to competitors’




Product Characteristics

Functional Specification StageFunctional Specification Stage


Determines how product will be madeDetermines how product will be made Gives product’s physical specificationsGives product’s physical specifications

• Example: Dimensions, material etc.Example: Dimensions, material etc. Defined by engineering Defined by engineering

drawingdrawing Done often on computerDone often on computer

• Computer-AidedComputer-Aided

Design (CAD)Design (CAD)


ProductCharacteristics

ProductCharacteristics

Component Specifications

Product Specification StageProduct Specification Stage


Manufacturability andManufacturability and Value Engineering Value Engineering

Benefits:Benefits:• reduced complexity of productsreduced complexity of products• additional standardization of productsadditional standardization of products• improved functional aspects of productimproved functional aspects of product• improved job design and job safetyimproved job design and job safety• improved maintainability of the productimproved maintainability of the product• robust designrobust design


Issues for Product DevelopmentIssues for Product Development Robust designRobust design

• Product is designed so that small variations in production or Product is designed so that small variations in production or assembly do not adversely affect the productassembly do not adversely affect the product

Time-based competitionTime-based competition• Product life cycles are becoming shorterProduct life cycles are becoming shorter

Modular designModular design• Products designed in easily segmented componentsProducts designed in easily segmented components

Computer-aided designComputer-aided design• Designing products at a computer terminal or work stationDesigning products at a computer terminal or work station

Value analysisValue analysis• Seeks improvements leading either to a better product or a Seeks improvements leading either to a better product or a

product which can be more economically producedproduct which can be more economically produced Product-by-value analysisProduct-by-value analysis

• Lists products in descending order of their individual dollar Lists products in descending order of their individual dollar contribution to the firmcontribution to the firm


Engineering drawingEngineering drawing• Shows dimensions, Shows dimensions,

tolerances, & materialstolerances, & materials• Shows codes for Shows codes for Group Group

TechnologyTechnology Bill of MaterialBill of Material

• Lists components, Lists components, quantities & where usedquantities & where used

• Shows product structureShows product structure

Product DocumentsProduct Documents


What documents are needed for What documents are needed for production?production?

Depends on the production Depends on the production technology/machinery availabletechnology/machinery available

Adapted to the manufacturing Adapted to the manufacturing process implementedprocess implemented

What, who, when, how should be What, who, when, how should be done with our machinesdone with our machines


Gate ValveGate Valve


““Exploded” Drawing of the Gate Exploded” Drawing of the Gate

ValveValve


Engineering Drawing of the Gate Engineering Drawing of the Gate

ValveValveProvide part specifications and dimensions in sufficient detail for manufacturing


Parts List of the Gate ValveParts List of the Gate Valve

The parts list provides a

listing of the component

parts of a product. In

addition to make or buy

decisions, a parts list

includes part number, part

name, number of parts

per product, and drawing

references


Bill of Materials for the Gate ValveBill of Materials for the Gate Valve

Bill of materials is also

referred to as a structured

parts list since it includes

all of the information

typically included in the

parts list, as well as

information concerning

the structure of the

product.


Make-or-Buy DecisionsMake-or-Buy Decisions

Decide whether or not you want (or Decide whether or not you want (or need) to produce an itemneed) to produce an item

May be able to purchase the item as May be able to purchase the item as a “standard item” from another a “standard item” from another manufacturermanufacturer


Parts grouped into familiesParts grouped into families• Similar, more standardized Similar, more standardized

partsparts Uses coding systemUses coding system

• Describes processing & physical Describes processing & physical characteristicscharacteristics

Part families produced Part families produced in manufacturing cellsin manufacturing cells• Mini-assembly linesMini-assembly lines

Group Technology Group Technology CharacteristicsCharacteristics


112mm112mm

60mm60mm

4mm x 45° chamfer4mm x 45° chamfer

80mm80mm Product Code: 1 5 3 1

Part function (round rod) Material (steel) Max. length (50 < L < 150) Primary machine (lathe)

Round Rod

Group Technology Code ExampleGroup Technology Code Example


Improved product designImproved product design Reduced purchasesReduced purchases Reduced work-in-process inventoryReduced work-in-process inventory Improved routing & machine loadingImproved routing & machine loading Reduced setup & production timesReduced setup & production times Simplified production planning & Simplified production planning &

controlcontrol

Group Technology BenefitsGroup Technology Benefits


Production DocumentsProduction Documents

Assembly Assembly DrawingsDrawings

Assembly chartAssembly chart Route sheetRoute sheet Work orderWork order


Shows exploded view of productShows exploded view of product

Head Neck

Handle

End Cap

Assembly DrawingAssembly Drawing


1

2

3

SA1 A1

A2

Tuna Fish

Mayonaise

Bread

Tuna

Assy

FG

Sandwich

Assembly ChartAssembly Chart


Assembly Chart IAssembly Chart I

It is an analog model of the It is an analog model of the

assembly process. Circles with assembly process. Circles with

a single link denote basic a single link denote basic

components, circles with components, circles with

several links denote assembly several links denote assembly

operations/subassemblies, and operations/subassemblies, and

squares represent inspection squares represent inspection

operations. operations.


Assembly Chart IIAssembly Chart II


Route SheetRoute Sheet

Lists all operationsLists all operationsRoute Sheet for Bracket

Sequence Machine Operation SetupTime

OperationTime/Unit

1 Shear # 3 Shear tolength

5 .030

2 Shear # 3 Shear 45°corners

8 .050

3 Drillpress

Drill bothholes

15 3.000

4 Brakepress

Bend 90° 10 .025

Information GatheringInformation Gathering

Information about process :Information about process :

- Route sheet (equipment and operation - Route sheet (equipment and operation

times)times)

- Precedence Diagram (prerequisite assembly - Precedence Diagram (prerequisite assembly

steps before new assembly step)steps before new assembly step)

- Operation process chart (processing - Operation process chart (processing

operations, assembly operations, and inspections)operations, assembly operations, and inspections)


Route Sheet for one Component of the Route Sheet for one Component of the

Gate ValveGate Valve

Route sheet summarizes

whether a part will be

purchased or produced,

how the production of a

part will be achieved,

what equipment will be

used, and how long it take

to perform each

operation.


Precedence Diagram for Assembling the Precedence Diagram for Assembling the

Gate ValveGate ValveA precedence diagram establishes the prerequisite assembly steps that must be completed before performing a given assembly step.


Operations Process Operations Process

ChartChart

By superimposing the route By superimposing the route

sheets and the assembly chart, sheets and the assembly chart,

a chart results that gives an a chart results that gives an

overview of the flow within the overview of the flow within the

facility. This chart is the facility. This chart is the

operations process chart. operations process chart.


Work OrderWork Order

Dept Oper DateWork Order

Approved: JM

Manufacturing

© 1984-1994 T/Maker Co.

Authorizes producing a given item, usually to a schedule


Engineering Change Notice Engineering Change Notice (ECN)(ECN)

A correction or modification of an A correction or modification of an engineering drawing or bill of engineering drawing or bill of materialmaterial


Configuration ManagementConfiguration Management

A system by which a product’s A system by which a product’s planned and changing components planned and changing components are accurately identified and for are accurately identified and for which control and accountability of which control and accountability of change are maintainedchange are maintained


Application of Decision Trees to Application of Decision Trees to Product DesignProduct Design

Particularly useful when there are a series of Particularly useful when there are a series of decisions and outcomes which lead to other decisions and outcomes which lead to other decisions and outcomes.decisions and outcomes.

Considerations:Considerations:• Include all possible alternatives and states Include all possible alternatives and states

of nature - including “doing nothing”of nature - including “doing nothing”• Enter payoffs at end of branchEnter payoffs at end of branch• Approach determining expected values by Approach determining expected values by

“pruning” tree“pruning” tree


Transition to ProductionTransition to Production First issue: knowing when to move to First issue: knowing when to move to

production!production! Second: must view product development Second: must view product development

as evolutionary, not responsibility of as evolutionary, not responsibility of single individual/departmentsingle individual/department

Third: expect to need a trial production Third: expect to need a trial production period to work the bugs outperiod to work the bugs out

Fourth: recognize that responsibility Fourth: recognize that responsibility must also transitionmust also transition


Documents in the design of Documents in the design of servicesservices

Are they needed?Are they needed? Whenever rules must be applied in Whenever rules must be applied in

many different sites (e.g. many different sites (e.g. Mcdonald’s)Mcdonald’s)

Whenever procedures must be Whenever procedures must be followed to fullfil requirementsfollowed to fullfil requirements


McDonald’s manualsMcDonald’s manuals


What do you need to implement What do you need to implement this reception message?this reception message?

6_design of Goods & Services

Documents

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