Product Decision and Analysis/ Product DevelopmentN.K.Agarwal

Major Classification of ProductsConsumer and Industrial ProductsConsumer products are those which are destined to be used by the ultimate consumers or households without any further processing / personal useSoaps, toothpastes, wrist watches etcIndustrial products are those which are destined to be used by buyers as inputs in producing other products and for further commercial processing / business useMachine tools, computers, trucks etc.However some products could be a consumer product as well as industrial productOil when used by the housewife is a consumer product but when purchased by a hair oil or soap manufacturer can be industrial product

Major Classification of ProductsDurable and Non-durable ProductsDurable products are those tangible products which normally survive many usesMachinery, cars, scooters etcNon-durable products are those tangible products which normally survive a few uses or consumed in one use itself Toffees, lubricating oils, etcConvenience, Shopping and Specialty ProductsConsumer products have been divided into three categoriesConvenience productsThose consumer products which a customer usually purchases frequently, immediately and within the minimum effortSoaps, toothpaste, bread etc

Major Classification of ProductsShopping productsThose consumer products which the customer in the process of selection and purchase characteristically compares on such criteria as suitability, quality, price etcRefrigerator, suiting, etcSpecialty productsThose consumer products with unique brands identification for which significant group of people are habitual & willing to make a special purchasing effortIce cream, special eating items, fancy goods etc

Classification of productFurther classification is done based on nature of the productCustom built products Products especially designed to specifications and needs of customers. Example: an aircraft, construction etc.Not available from inventoryEmphasis on uniqueness, on-time delivery, quality etc.Cost / price is a secondary considerationStrategy: obtain high profit margin

Standardised productProducts available off-the-shelf from inventoryReady availability and cost are important. Examples: standard shapes in steel and aluminum, sugar etc. Very little Product differences between producers and limited options available in the product

Purchase decisions based on dependability of supply & lower cost

Classification of product

Between these two extremes there are products that are sensitive to Variety,Flexibility, Cost, and Reliability of supplyQuality of products in such cases is important but not as much as in custom built products Multiple sizes and type of products availableFrom inventory or by orderSome products are available in low volumes whereas others like automobiles, TVs are available in high volumes

,

Classification of product

Majority of products available fall in this middle categoryMost consumer products are available from inventoryProducer goods are available by order, and May be subject to special design modifications to meet customers needs Although the basic designs are quite standardClasssification of product

Design of a ProductDefined as determining its shape, specifications and pattern of the productTypes of designProduct design may be divided into four groupsFunctionalDeveloping an idea: a sketch of the product gives an idea of its overall shape and parts necessary to accomplish the task Drafting specifications: to draft the correct dimensions of the productExperimental Model: proposed and tested thoroughly starting actual production

Design of a ProductAesthetic designThe product design must appeal to the customers eyes and induce them to buy the productProduction designFunctional design has to be translated to Production design without sacrificing the functional efficiencyDesign of jigs and fixtures needed in production should be done simultaneously Packaging designDesign of package and labels must be aesthetically pleasing Must be sturdy so that the product does not get damagedSpecial packing for export consignmentsShould attract the customer and meet his requirement

Product DevelopmentDevising the product to meet market or customer requirementTwo aspects are involvedIntroduction of new products confirming the demands of customerImprovement in existing product in order to satisfy the needs of the customerNeed for product developmentImmediate objectives includeStimulation of sales functionOffer of new look; quality advantage to publicUtilisation of existing equipment and skilled menFulfillment of immediate requirement of the customer

Product DevelopmentUltimate objectives includeMonopolisation of the marketMaking possible its manufacture on quality basisPersuasion of the person to only branded productReduction of the cost of production by creating demand and producing on large scaleSupply of goods at lower price

Product DevelopmentFactors responsible for product developmentAre the customers satisfied with the size, colour etc and other characteristics of the product?Reduction in price for the consumerChances and scope for the product protectionHow does it affect other products in line?Durability of the productChances of increasing demand due to improvement in qualityEase of handling during transportation or in useScope for using waste during production for some other by product of the utilityConvenience to stockNew product to have an edge over existing competitive products

Product StandardisationFixation of standard dimensions for the product with a view to having large production of only limited number of varietiesObject is to measure, to identify, to compare, to describe product process, activities and performance in an organisationIt helps in controlling function of the organisationAdvantages Facilitates large scale productionEliminates the wastage in designing and purchasingHelps in introducing mechanisation

Product StandardisationHelps in assisting the controlling function of the production systemGives incentives to management for producing new stylesLoan on standard commodities easierService and maintenance costs reducedHigher productivity Easier purchasing and sellingDisadvantagesStandardisation promotes rigidityNot suitable for small entrepreneursExcessive standardisation has deleterious effects

Simplification Elimination of superfluous varieties, sizes, dimensions etc.Advantages : To ProducersReduction in the manufacturing costsUse of specialised plantsReduction in inventoriesIncrease in efficiencyBetter market controlIncreased profitUse of skilled labourReduction of cost after salesSaving in storage costsMakes supervision and production planning easier

Simplification Advantages: to ConsumerQuality products at cheaper ratesGreater repair and service facilitiesSteady supply of productsDisadvantages Effects of seasonal fluctuationsLow competitive position is especially in complementary products

Project team establishedProject team establishedMarketing needs definedConceptual cost estimateTech specs completedFirst model completedFirst model testingDesign review meetingHazard analysisAgency approval planConstruct field test modelConduct field testReview lab & field test resultsPrelim mfg cost estimateDesign review meetingSubmit tooling decisionRelease design to mfg & enggConduct mfg commitment mtgOrder purchased partsProduction of lot 1Lab test of lot 1Release lot 1 for saleStartEndTypical Planning schedule for new product development

Product Life CycleDemand for a product generally tends to follow a predictable pattern called the Product Life Cycle (PLC)PLC is defined as An attempt to recognise different distinct stages in the sales history of the product, andA generalised model of sales and profit trends for a product class or category over a period of timeThe various stages through which a product passes areIntroduction Growth MaturitySaturationDecline

Product Life CycleIntroductionFirst stage which begins with launching of a product Product entry into the market requires a large investment which gradually comes down as sales pick upSales at this stage are fairly low and the competitors are already there in the fieldGrowthBoth sales and profit begins to rise and arrangement of distribution is likely to get completed at the end of this stage

Product Life CycleMaturityManufacturers introduce new models or adopt new techniques for production of products with a view to retaining their position in the marketStage marked by stiff competition and the rate of growth could be quite low Decline ( Decay)Last stage during which the sales decline and profits reduce down as the new competitors appear in the market with newer and better productsCustomers start using them

INTRODUCTIONGROWTHMATURITYDECLINESTAGES OF DEVELOPMENTSALES VOLUMEPRODUCT LIFE CYCLESATURATION

Process focused systemsProduction systems for custom built products Should be flexible, andAble to accommodate requirements As per customer specificationsTypical machine shop can have a number of types of machines to do various jobsNature of demand on the production system results in intermittent demand on the production systems facilitiesThis physical arrangement of departments by generic types is Job Shop

Product focused systemsHigh volume, standardised products call for continuous use of facilities as in a flow shopSpecial processing equipment and dedicated production systems justifiedMechanisation & automation to achieve standardisation & low cost are the main features

Production systemsIn between these two extremes are systems that deal withLow-volume multiple products,Or/and relatively high volume multiple productsThe former usually involves a process- focused system Products are produced in batches to give some economies of scale in comparison to the job shop system The high volume multi-product situation employs a mixed production strategy That combines both the process- focused and product- focused systems

Production systemsParts fabrication in manufacturing is often organised on a batch-intermittent basis Parts produced in economical batches & resulting investment provides an important production strategyFinal assembly is organised on a line or continuous basisNature of assembly makes possible continuous lines dedicated to certain products

Production - To - OrderOffers Product design flexibility to customers, Minimise risk of inventories,Closer quality control ,etc.

Production - To - StockOffers benefits of Better service in terms of availability, To reduce variable costs, and To increase market share by making items available off-the-shelf when customer wants to buy

Production strategyEXAMPLES OF 2-DIMENSIONS OF POSITIONING

Sheet1

EXAMPLES OF 2 DIMENSIONS OF POSITIONING

FINISHED GOODS INVENTORY POLICY

TO STOCKTO ORDER

TYPES OF SYSTEMSPRODUCT FOCUSEDPRODUCT FOCUSED / TO STOCKPRODUCT FOCUSED / TO ORDER

PROCESS FOCUSEDTO STOCKPROCESS FOCUSED / TO ORDER

Sheet2

Sheet3

Sheet1

EXAMPLES OF 2 DIMENSIONS OF POSITIONING

FINISHED GOODS INVENTORY POLICY

TO STOCKTO ORDER

TYPES OF SYSTEMSPRODUCT FOCUSEDPRODUCT FOCUSED / TO STOCKPRODUCT FOCUSED / TO ORDER

PROCESS FOCUSEDTO STOCKPROCESS FOCUSED / TO ORDER

Sheet2

Sheet3

Sheet1

EXAMPLES OF 2 DIMENSIONS OF POSITIONING

FINISHED GOODS INVENTORY POLICY

TO STOCKTO ORDER

TYPES OF SYSTEMSPRODUCT FOCUSEDPRODUCT FOCUSED / TO STOCKPRODUCT FOCUSED / TO ORDER

PROCESS FOCUSEDPROCESS FOCUSED / TO STOCKPROCESS FOCUSED / TO ORDER

Sheet2

Sheet3

Product DesignProduct design should meet the expectations of the customersVarious aspects need to be considered before finalising a product design for manufacturingProduct has to go through different phases during its life starting from introduction to growth before maturity and then the demand declinesProduct innovation is required to maintain the market share

References Production and Operations Management: R.C. ManochaProduction & operations management: Aswathappa / BhatModern production / operations management: Buffa / SarinOperations Management : Schroeder R.G.

Thank You

PRODUCT LIFE CYCLEFOR A PRODUCT, AS IT DEVELOPS THROUGH ITS LIFE CYCLE, THE PRODUCTION SYSTEM GOES THROUGH A LIFE CYCLE OF ITS OWN A PROCESS FOCUSSED, TO-ORDER JOB SHOP SYSTEM (IN THE INITIAL STAGE) INTERMEDIATE STAGE OF PROCESS FOCUSSED, TO ORDER BATCH PRODUCTIONPRODUCT FOCUSSED , TO STOCK BATCH PRODUCTION, AND ULTIMATELYA PRODUCT FOCUSSED TO-STOCK CONTINUOUS PRODUCTION SYSTEM WHEN THE PRODUCT IS DEMANDED IN LARGE VOLUMES

INTRODUCTIONGROWTHMATURITYDECLINEPROCESS FOCUSSED,TO ORDER, JOB SHOPPROCESS FOCUSSED,TO ORDER, BATCHPRODUCT FOCUSSED,TO STOCK, BATCHPRODUCT FOCUSSED, TO STOCK, CONTINUOUSSTAGES OF DEVELOPMENTSALES VOLUMEPRODUCT LIFE CYCLE AND PRODUCTIVE SYSTEM TYPES

LOW VOL-LOW STANDARDISATION, ONE OF A KINDLOW VOL-MULTIPLE PRODUCTSHIGHER VOL-FEW MAJOR PRODUCTSHIGHER VOL-HIGH STANDARDISATION,COMMODITY PRODUCTSJOB SHOPJOB SHOP- BATCH PROCESSASSEMBLY LINECONTINUOUS /FLOW SHOPPRODUCT CYCLEPROCESS LINEPRODUCT- PROCESS MATRIXNONENONE