Product, Process & Service Design

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Product, Process, and Service DesignProduct, Process, and Service Design

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Product/Service DesignProduct/Service DesignProduct/Service DesignProduct/Service Design

When a product/service is designed:When a product/service is designed: The detailed characteristics of the product/service are The detailed characteristics of the product/service are

established.established. The characteristics of the product/service directly The characteristics of the product/service directly

affects how the product/service can be produced/ affects how the product/service can be produced/ delivered.delivered.

How the product/service is produced/delivered How the product/service is produced/delivered determines the design of the production/delivery determines the design of the production/delivery system.system.

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Product/Service DesignProduct/Service DesignProduct/Service DesignProduct/Service Design

Product/service design directly affects:Product/service design directly affects: Product/service qualityProduct/service quality Production/delivery costProduction/delivery cost Customer satisfactionCustomer satisfaction

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Product/Service Design and DevelopmentProduct/Service Design and DevelopmentProduct/Service Design and DevelopmentProduct/Service Design and Development

Sources of Product InnovationSources of Product Innovation Developing New Products/ServicesDeveloping New Products/Services Getting Them to Market FasterGetting Them to Market Faster Improving Current Products/ServicesImproving Current Products/Services Designing for Ease of ProductionDesigning for Ease of Production Designing for QualityDesigning for Quality Designing and Developing New ServicesDesigning and Developing New Services

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Stages of a Product’s Life CycleStages of a Product’s Life CycleStages of a Product’s Life CycleStages of a Product’s Life Cycle

Introduction Growth Maturity DeclineIntroduction Growth Maturity Decline

B&W TVB&W TV

AutomobileAutomobile

Video RecorderVideo Recorder

CD PlayerCD PlayerColor CopierColor Copier

Cell PhoneCell Phone

Internet RadioInternet Radio

Fax MachineFax MachineDot-MatrixDot-Matrix PrinterPrinter

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Stage Operations Emphasis

Introductory Research Product development Process modification & enhancement Supplier development

Growth Capacity determination/enhancement

Maturity High volume production with innovation Cost control Reduction in options Paring down of product line

Decline Termination of production if necessary

Operations Emphasis in Product Life CycleOperations Emphasis in Product Life CycleOperations Emphasis in Product Life CycleOperations Emphasis in Product Life Cycle

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Sources of Product/Service InnovationSources of Product/Service InnovationSources of Product/Service InnovationSources of Product/Service Innovation

CustomersCustomers ManagersManagers MarketingMarketing OperationsOperations EngineeringEngineering Research and Development (R&D)Research and Development (R&D)

Basic researchBasic research Applied researchApplied research

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Steps in Developing New ProductsSteps in Developing New ProductsSteps in Developing New ProductsSteps in Developing New Products

1.1. Technical and economic feasibility studies Technical and economic feasibility studies

2.2. Prototype design Prototype design

3.3. Performance testing of prototype Performance testing of prototype

4.4. Market sensing/evaluation and economic evaluation Market sensing/evaluation and economic evaluation of the prototypeof the prototype

5.5. Design of production model Design of production model

6.6. Market/performance/process testing and economic Market/performance/process testing and economic evaluation of production modelevaluation of production model

7.7. Continuous modification of production model Continuous modification of production model

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1.1. Technical and Economic Feasibility Studies Technical and Economic Feasibility Studies Determine the advisability of establishing a project Determine the advisability of establishing a project

for developing the productfor developing the product If initial feasibility studies are favorable, engineers If initial feasibility studies are favorable, engineers

prepare an initial prototype designprepare an initial prototype design

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2.2. Prototype Design Prototype Design This design should exhibit the basic form, fit, and This design should exhibit the basic form, fit, and

function of the final productfunction of the final product It will not necessarily be identical to the It will not necessarily be identical to the

production modelproduction model

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3.3. Performance Testing of Prototype Performance Testing of Prototype Performance testing and redesign of the prototype Performance testing and redesign of the prototype

continues until this design-test-redesign process continues until this design-test-redesign process produces a satisfactorily performing prototypeproduces a satisfactorily performing prototype

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4.4. Market Sensing/Evaluation and Economic Market Sensing/Evaluation and Economic Evaluation of the PrototypeEvaluation of the Prototype Accomplished by demonstrations to potential Accomplished by demonstrations to potential

customers, market test, or market surveyscustomers, market test, or market surveys If the response to the prototype is favorable, If the response to the prototype is favorable,

economic evaluation of the prototype is economic evaluation of the prototype is performed to estimate production volume, costs, performed to estimate production volume, costs, and profitsand profits

If the economic evaluation is favorable, the If the economic evaluation is favorable, the project enters the production design phase.project enters the production design phase.

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5.5. Design of Production Model Design of Production Model The initial design of the production model will not The initial design of the production model will not

be the final design; the model will evolvebe the final design; the model will evolve

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6.6. Market/Performance/Process Testing and Economic Market/Performance/Process Testing and Economic Evaluation of Production ModelEvaluation of Production Model The production model should exhibit:The production model should exhibit:

low costlow cost reliable qualityreliable quality superior performancesuperior performance the ability to be produced in the desired the ability to be produced in the desired

quantities on the intended equipmentquantities on the intended equipment

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7.7. Continuous Modification of Production Model Continuous Modification of Production Model Production designs are continuously modified to:Production designs are continuously modified to:

Adapt to changing market conditionsAdapt to changing market conditions Adapt to changing production technologyAdapt to changing production technology Allow for manufacturing improvementsAllow for manufacturing improvements

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Tools to Improve Speed to MarketTools to Improve Speed to MarketTools to Improve Speed to MarketTools to Improve Speed to Market

Autonomous Design and Development TeamsAutonomous Design and Development Teams Teams are given decision-making responsibility Teams are given decision-making responsibility

and more freedom to design and introduce new and more freedom to design and introduce new products/servicesproducts/services

Time-to-market has been slashed dramaticallyTime-to-market has been slashed dramatically Enormous sums of money have been savedEnormous sums of money have been saved Teams do not have to deal with the bureaucratic Teams do not have to deal with the bureaucratic

red tape ordinarily required to obtain approvalsred tape ordinarily required to obtain approvals

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Computer-Aided Design/Computer-Aided Computer-Aided Design/Computer-Aided Manufacturing (CAD/CAM)Manufacturing (CAD/CAM) Engineers, using CAD/CAM, can generate many Engineers, using CAD/CAM, can generate many

views of parts, rotate images, magnify views, and views of parts, rotate images, magnify views, and check for interference between partscheck for interference between parts

Part designs can be stored in a data base for use on Part designs can be stored in a data base for use on other productsother products

When it is time for manufacturing, the product When it is time for manufacturing, the product design is retrieved, translated into a language that design is retrieved, translated into a language that production machinery understands, and then the production machinery understands, and then the production system can be automatically set up.production system can be automatically set up.

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SimultaneousSimultaneous(Concurrent)(Concurrent)EngineeringEngineering

Economic and TechnicalEconomic and TechnicalFeasibility StudiesFeasibility Studies

Product/Product/Service IdeasService Ideas

Production Process DesignProduction Process DesignProduct/Service DesignProduct/Service Design

Produce and MarketProduce and MarketNew Product/ServiceNew Product/Service

ContinuousInteraction

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Improving the DesignImproving the Designof Existing Products/Servicesof Existing Products/Services

Improving the DesignImproving the Designof Existing Products/Servicesof Existing Products/Services

Focus is improving performance, quality, and costFocus is improving performance, quality, and cost Objective is maintaining or improving market share Objective is maintaining or improving market share

of maturing products/servicesof maturing products/services Little changes can be significantLittle changes can be significant Small, steady (continuous) improvements can add up Small, steady (continuous) improvements can add up

to huge long-term improvementsto huge long-term improvements Value analysisValue analysis is practiced, meaning design features is practiced, meaning design features

are examined in terms of their cost/benefit (value).are examined in terms of their cost/benefit (value).

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Designing for Ease of ProductionDesigning for Ease of ProductionDesigning for Ease of ProductionDesigning for Ease of Production

Ease of ProductionEase of Production ((ManufacturabilityManufacturability)) SpecificationsSpecifications - Precise information about the - Precise information about the

characteristics of the productcharacteristics of the product TolerancesTolerances - Minimum & maximum limits on a - Minimum & maximum limits on a

dimension that allows the item to function as dimension that allows the item to function as designeddesigned

StandardizationStandardization - Reduce variety among a group of - Reduce variety among a group of products or partsproducts or parts

SimplificationSimplification - Reduce or eliminate the complexity - Reduce or eliminate the complexity of a part or product of a part or product

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Designing for QualityDesigning for QualityDesigning for QualityDesigning for Quality

Crucial element of product design is its impact on Crucial element of product design is its impact on qualityquality

Quality is determined by the customer’s perception of Quality is determined by the customer’s perception of the degree of excellence of the product/service’s the degree of excellence of the product/service’s characteristicscharacteristics

Chapter 7 covers the principles of designing Chapter 7 covers the principles of designing products/services for qualityproducts/services for quality

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Designing and Developing New ServicesDesigning and Developing New ServicesDesigning and Developing New ServicesDesigning and Developing New Services

Three general dimensions of service design are:Three general dimensions of service design are: Degree of Standardization of the ServiceDegree of Standardization of the Service

Custom-fashioned for particular customers or Custom-fashioned for particular customers or basically the same for all customers?basically the same for all customers?

Degree of Customer Contact in Delivering the ServiceDegree of Customer Contact in Delivering the Service High level of contact (dress boutique) or low level High level of contact (dress boutique) or low level

(fast-food restaurant)?(fast-food restaurant)? Mix of Physical Goods and Intangible ServicesMix of Physical Goods and Intangible Services

Mix dominated by physical goods (tailor’s shop) or Mix dominated by physical goods (tailor’s shop) or by intangible services (university)?by intangible services (university)?

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Differences Between New Service and New Product Differences Between New Service and New Product DevelopmentDevelopment Unless services are dominated by physical goods, Unless services are dominated by physical goods,

their development usually does not require their development usually does not require engineering, testing, and prototype building.engineering, testing, and prototype building.

Because many service businesses involve Because many service businesses involve intangible services, market sensing tends to be intangible services, market sensing tends to be more by surveys rather than by market tests and more by surveys rather than by market tests and demonstrations.demonstrations.

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The service system design matrixThe service system design matrix

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ProcessProcessPlanning and DesignPlanning and Design

ProcessProcessPlanning and DesignPlanning and Design

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Inputs:Inputs:• Product/Service InformationProduct/Service Information• Production System InformationProduction System Information• Operations StrategyOperations Strategy

Process Planning & Design:Process Planning & Design:• Process-Type SelectionProcess-Type Selection• Vertical Integration StudiesVertical Integration Studies• Process/Product StudiesProcess/Product Studies• Equipment StudiesEquipment Studies• Production Procedures StudiesProduction Procedures Studies• Facilities StudiesFacilities Studies

Outputs:Outputs:• Process Technology Process Technology • FacilitiesFacilities• Personnel EstimatesPersonnel Estimates

Process Planning and Design System Process Planning and Design System Process Planning and Design System Process Planning and Design System

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Major Factors Affecting Process DesignsMajor Factors Affecting Process DesignsMajor Factors Affecting Process DesignsMajor Factors Affecting Process Designs

Nature of product/service demandNature of product/service demand Degree of vertical integrationDegree of vertical integration Production flexibilityProduction flexibility Degree of automationDegree of automation Product/Service qualityProduct/Service quality

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Nature of Product/Service DemandNature of Product/Service DemandNature of Product/Service DemandNature of Product/Service Demand

Production processes must have adequate capacity to Production processes must have adequate capacity to produce the volume of the products/services that produce the volume of the products/services that customers need.customers need.

Provisions must be made for expanding or Provisions must be made for expanding or contracting capacity to keep pace with demand contracting capacity to keep pace with demand patterns.patterns.

Some types of processes are more easily expanded Some types of processes are more easily expanded and contracted than others.and contracted than others.

Product/service price affects demand, so pricing Product/service price affects demand, so pricing decisions and the choice of processes must be decisions and the choice of processes must be synchronized.synchronized.

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Degree of Vertical IntegrationDegree of Vertical IntegrationDegree of Vertical IntegrationDegree of Vertical Integration

Vertical integrationVertical integration is the amount of the production is the amount of the production and distribution chain that is brought under the and distribution chain that is brought under the ownership of a company.ownership of a company.

This determines how many production processes need This determines how many production processes need to be planned and designed.to be planned and designed.

Decision of integration is based on cost, availability Decision of integration is based on cost, availability of capital, quality, technological capability, and more.of capital, quality, technological capability, and more.

Strategic outsourcingStrategic outsourcing (lower degree of integration) is (lower degree of integration) is the outsourcing of processes in order to react quicker the outsourcing of processes in order to react quicker to changes in customer needs, competitor actions, and to changes in customer needs, competitor actions, and technology.technology.

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Production FlexibilityProduction FlexibilityProduction FlexibilityProduction Flexibility

Product flexibilityProduct flexibility -- ability of the production (or -- ability of the production (or delivery) system to quickly change from producing delivery) system to quickly change from producing (delivering) one product (or service) to another.(delivering) one product (or service) to another.

Volume flexibilityVolume flexibility -- ability to quickly increase or -- ability to quickly increase or reduce the volume of product( or service) produced reduce the volume of product( or service) produced (or delivered).(or delivered).

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Degree of AutomationDegree of AutomationDegree of AutomationDegree of Automation

Advantages of automationAdvantages of automation Improves product qualityImproves product quality Improves product flexibilityImproves product flexibility Reduces labor and related costsReduces labor and related costs

Disadvantages of automationDisadvantages of automation Equipment can be very expensiveEquipment can be very expensive Integration into existing operations can be difficultIntegration into existing operations can be difficult

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Product design considerations must include the processProduct design considerations must include the process Intermittent processes:Intermittent processes:

Processes used to produce a variety of products with Processes used to produce a variety of products with different processing requirements in lower volumes. different processing requirements in lower volumes. (such as healthcare facility)(such as healthcare facility)

Repetitive processes:Repetitive processes: Processes used to produce one or a few standardized Processes used to produce one or a few standardized

products in high volume. (such as a cafeteria, or car products in high volume. (such as a cafeteria, or car wash)wash)

Process SelectionProcess SelectionProcess SelectionProcess Selection

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Product-Process GridProduct-Process GridProduct-Process GridProduct-Process Grid

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Process types can be:Process types can be: Project process – make a one-at-a-time product exactly Project process – make a one-at-a-time product exactly

to customer specificationsto customer specifications Batch process – small quantities of product in groups or Batch process – small quantities of product in groups or

batches based on customer orders or specificationsbatches based on customer orders or specifications Line process – large quantities of a standard productLine process – large quantities of a standard product Continuous process – very high volumes of a fully Continuous process – very high volumes of a fully

standard productstandard product Process types exist on a continuumProcess types exist on a continuum

Process TypesProcess TypesProcess TypesProcess Types

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Intermittent VS. Repetitive Facility Intermittent VS. Repetitive Facility LayoutsLayouts

Intermittent VS. Repetitive Facility Intermittent VS. Repetitive Facility LayoutsLayouts

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Product design and process selection are directly Product design and process selection are directly linkedlinked

Type of product selected defines type of operation Type of product selected defines type of operation requiredrequired

Type of operation available defines broader Type of operation available defines broader organizational aspects such asorganizational aspects such as

Equipment requiredEquipment required Facility arrangementFacility arrangement Organizational structureOrganizational structure

Linking Product Design & Process Linking Product Design & Process SelectionSelection

Linking Product Design & Process Linking Product Design & Process SelectionSelection

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Impact of Product Life Cycle:Impact of Product Life Cycle:

Intermittent and repetitive operations Intermittent and repetitive operations typically focus on producing products in typically focus on producing products in different stages of the product life cycle. different stages of the product life cycle. Intermittent is best for early in product life; Intermittent is best for early in product life; repetitive is better for later when demand is repetitive is better for later when demand is more predicable.more predicable.

Linking Product Design & Process Linking Product Design & Process Selection con’tSelection con’t

Linking Product Design & Process Linking Product Design & Process Selection con’tSelection con’t

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Impact of Competitive Priorities: Intermittent Impact of Competitive Priorities: Intermittent operations are typically less competitive on operations are typically less competitive on cost than repetitive operations. (Think “off the cost than repetitive operations. (Think “off the rack” vs. custom tailored clothing.)rack” vs. custom tailored clothing.)

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Organizational Decisions appropriate for different types of operationsOrganizational Decisions appropriate for different types of operations

Linking Design & Process Selection: SummaryLinking Design & Process Selection: SummaryLinking Design & Process Selection: SummaryLinking Design & Process Selection: Summary

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Process Design in ServicesProcess Design in ServicesProcess Design in ServicesProcess Design in Services

Some of the factors important in process design for Some of the factors important in process design for products are also important in services:products are also important in services: Nature (level and pattern) of customer demandNature (level and pattern) of customer demand Degree of vertical integrationDegree of vertical integration Production flexibilityProduction flexibility Degree of automationDegree of automation Service qualityService quality

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Three schemes for producing and delivering servicesThree schemes for producing and delivering services Quasi-Manufacturing Quasi-Manufacturing Customer-as-Participant Customer-as-Participant Customer-as-ProductCustomer-as-Product

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Quasi-ManufacturingQuasi-Manufacturing Physical goods are dominant over intangible Physical goods are dominant over intangible

serviceservice Production of goods takes place along a production Production of goods takes place along a production

lineline Operations can be highly automatedOperations can be highly automated Almost no customer interactionAlmost no customer interaction Little regard for customer relationsLittle regard for customer relations Example – bank’s checking encoding operationExample – bank’s checking encoding operation

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Customer-as-ParticipantCustomer-as-Participant Physical goods may be a significant part of the Physical goods may be a significant part of the

serviceservice Services may be either standardized or customServices may be either standardized or custom High degree of customer involvement in the High degree of customer involvement in the

processprocess Examples: ATM, self-service gas stationExamples: ATM, self-service gas station

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Customer-as-ProductCustomer-as-Product Service is providedService is provided through personal attention to through personal attention to

the customerthe customer Customized service Customized service onon the customer the customer High degree of customer contactHigh degree of customer contact There is a perception of high qualityThere is a perception of high quality Customer becomes the central focus of the process Customer becomes the central focus of the process

designdesign Examples: medical clinic, hair salonExamples: medical clinic, hair salon

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Process Design Depends Process Design Depends on Product Diversity and Batch Sizeon Product Diversity and Batch Size

Process Design Depends Process Design Depends on Product Diversity and Batch Sizeon Product Diversity and Batch Size

Sm

all

B

atch

Siz

e

L

arge

Few Number of Product Designs Many

ProductProductFocused,Focused,DedicatedDedicatedSystemsSystems

ProductProductFocused,Focused,

BatchBatchSystemSystem

Process-Focused,Process-Focused, Job ShopJob Shop

CellularCellularManufacturingManufacturing

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Capital RequirementsCapital RequirementsCapital RequirementsCapital Requirements

The amount of capital required tends to differ for The amount of capital required tends to differ for each type of production processeach type of production process

Generally, the capital required is greatest for product-Generally, the capital required is greatest for product-focused, dedicated systemsfocused, dedicated systems

Generally, the capital required is lowest for process-Generally, the capital required is lowest for process-focused, job shopsfocused, job shops

The amount of capital available and the cost of capital The amount of capital available and the cost of capital are important considerationsare important considerations

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Economic AnalysisEconomic AnalysisEconomic AnalysisEconomic Analysis

Cost Functions of Processing AlternativesCost Functions of Processing Alternatives Fixed CostsFixed Costs

Annual cost when production volume is zeroAnnual cost when production volume is zero Initial cost of buildings, equipment, and other Initial cost of buildings, equipment, and other

fixed assetsfixed assets Variable CostsVariable Costs

Costs that vary with production volumesCosts that vary with production volumes Labor, material, and variable overheadLabor, material, and variable overhead

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Deciding Among Processing AlternativesDeciding Among Processing AlternativesDeciding Among Processing AlternativesDeciding Among Processing Alternatives

Assembly ChartsAssembly Charts (Gozinto Charts) (Gozinto Charts) Macro-view of how materials are unitedMacro-view of how materials are united Starting point to understand factory layout needs, Starting point to understand factory layout needs,

equipment needs, training needsequipment needs, training needs Process ChartsProcess Charts

Details of how to build product at each processDetails of how to build product at each process Includes materials needed, types of processes Includes materials needed, types of processes

product flows through, time it takes to process product flows through, time it takes to process product through each step of flowproduct through each step of flow

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Always remember the key principle that the quality of your life is the quality of your communication. This means the way you communicate with others and, more importantly, the way you communicate with yourself. What you focus on is what you get. If you look for the positive this is what you get. This is a fundamental law of Nature.

Product, Process & Service Design

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