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55 Design of Goods and ServicesDesign of Goods and Services
Heizer and Render Heizer and Render Principles of Operations Management, 8ePrinciples of Operations Management, 8e
PowerPoint slides by Jeff Heyl
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Regal Marine
Global market 3-dimensional CAD system
Reduced product development time Reduced problems with tooling Reduced problems in production
Assembly line production JIT
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The objective of the product decision is to The objective of the product decision is to develop and implement a product strategy develop and implement a product strategy
that meets the demands of the marketplace that meets the demands of the marketplace with a competitive advantagewith a competitive advantage
Product Decision
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The good or service the organization provides society
Top organizations typically focus on core products
Customers buy satisfaction, not just a physical good or particular service
Fundamental to an organization's strategy with implications throughout the operations function
Product Decision
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Product Strategy Options
Differentiation Shouldice Hospital
Low cost Taco Bell
Rapid response Toyota
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Product Life Cycles May be any length from a few hours to decades
The operations function must be able to introduce new products successfully
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Product Life Cycle
Introductory PhaseIntroductory Phase Fine tuning may warrant unusual expenses for
1. Research
2. Product development
3. Process modification and enhancement
4. Supplier development
Growth PhaseGrowth Phase Product design begins to stabilize
Effective forecasting of capacity becomes necessary
Adding or enhancing capacity may be necessary
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Product Life Cycle
Maturity PhaseMaturity Phase
Competitors now established
High volume, innovative production may be needed
Improved cost control, reduction in options, paring down of product line
Decline PhaseDecline Phase
Unless product makes a special contribution to the organization, must plan to terminate offering
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Product Life Cycle Costs
Costs incurred
Costs committed
Ease of change
Concept Detailed Manufacturing Distribution,design design service,
prototype and disposal
Per
cen
t o
f to
tal c
ost
100 –
80 –
60 –
40 –
20 –
0 –
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Product-by-Value Analysis
Lists products in descending order of their individual dollar contribution to the firm
Lists the total annual dollar contribution of the product
Helps management evaluate alternative strategies
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New Product Opportunities
1. Understanding the customer
2. Economic change
3. Sociological and demographic change
4. Technological change
5. Political/legal change
6. Market practice, professional standards, suppliers, distributors
Brainstorming
is a useful tool
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Disney Attendance
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Product Development System
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Quality Function Deployment
1. Identify customer wants
2. Identify how the good/service will satisfy customer wants
3. Relate customer wants to product hows
4. Identify relationships between the firm’s hows
5. Develop importance ratings
6. Evaluate competing products
7. Compare performance to desirable technical attributes
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QFD House of Quality
Relationshipmatrix
How to satisfycustomer wants
Interrelationships
Co
mp
etit
ive
asse
ssm
ent
Technicalevaluation
Target values
What the customer
wants
Customer importance
ratings
Weighted rating
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House of Quality Example
Your team has been charged with designing a new camera for Great Cameras, Inc.
The first action is to construct a House of Quality
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House of Quality Example
Customerimportance
rating(5 = highest)
Lightweight 3Easy to use 4Reliable 5Easy to hold steady 2Color correction 1
What the customer
wants
What the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rs
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House of Quality ExampleWhat the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rs
Lo
w e
lect
rici
ty r
equ
irem
ents
Alu
min
um
co
mp
on
ents
Au
to f
ocu
s
Au
to e
xpo
sure
Pai
nt
pal
let
Erg
on
om
ic d
esig
n
How to SatisfyCustomer Wants
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Lightweight 3Easy to use 4Reliable 5Easy to hold steady 2Color corrections 1
House of Quality ExampleWhat the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rs
High relationship
Medium relationship
Low relationship
Relationship matrix
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House of Quality
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House of Quality
Weighted rating
What the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rs
Lightweight 3Easy to use 4Reliable 5Easy to hold steady 2Color corrections 1
Our importance ratings 22 9 27 27 32 25
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Co
mp
any
A
Co
mp
any
B
G PG PF GG PP P
Lightweight 3Easy to use 4Reliable 5Easy to hold steady 2Color corrections 1
Our importance ratings 22 5
How well do competing products meet customer wants
What the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rs
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What the Customer
Wants
RelationshipMatrix
TechnicalAttributes and
Evaluation
How to SatisfyCustomer Wants
Interrelationships
An
alys
is o
fC
om
pet
ito
rsTarget values(Technical attributes)
Technical evaluation
Company A 0.7 60% yes 1 ok G
Company B 0.6 50% yes 2 ok F
Us 0.5 75% yes 2 ok G
0.5
A
75%
2’ t
o ∞
2 ci
rcu
its
Fai
lure
1 p
er 1
0,00
0
Pan
el r
anki
ng
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Completed House of Quality
Lightweight 3
Easy to use 4
Reliable 5
Easy to hold steady 2
Color correction 1
Our importance ratings
Lo
w e
lect
rici
ty r
equ
irem
ents
Alu
min
um
co
mp
on
ents
Au
to f
ocu
s
Au
to e
xpo
sure
Pai
nt
pal
let
Erg
on
om
ic d
esig
n
Co
mp
any
A
Co
mp
any
B
G P
G P
F G
G P
P P
Target values(Technical attributes)
Technical evaluation
Company A 0.7 60% yes 1 ok G
Company B 0.6 50% yes 2 ok F
Us 0.5 75% yes 2 ok G
0.5
A
75
%
2’
to ∞
2 c
irc
uit
s
Fa
ilu
re 1
pe
r 1
0,0
00
Pa
ne
l ra
nk
ing
22 9 27 27 32 25
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House of Quality Sequence
Figure 5.4
Deploying resources through the organization in response to customer requirements
Pro
du
ctio
n
pro
cess
Quality plan
House 4
Sp
ecif
ic
com
po
nen
ts
Production process
House 3
Des
ign
ch
arac
teri
stic
s
Specific components
House 2
Cu
sto
mer
re
qu
irem
ents
Design characteristics
House 1
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Organizing for Product Development Historically – distinct departments
Duties and responsibilities are defined Difficult to foster forward thinking
A Champion Product manager drives the product through the
product development system and related organizations
Team approach Cross functional – representatives from all
disciplines or functions Product development teams, design for
manufacturability teams, value engineering teams Japanese “whole organization” approach
No organizational divisions
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Manufacturability and Value Engineering
Benefits:1. Reduced complexity of products
2. Reduction of environmental impact
3. Additional standardization of products
4. Improved functional aspects of product
5. Improved job design and job safety
6. Improved maintainability (serviceability) of the product
7. Robust design
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Issues for Product Development
Robust design Modular design Computer-aided design (CAD) Computer-aided manufacturing (CAM) Virtual reality technology Value analysis Environmentally friendly design
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Issues for Product Development
Robust Design Product is designed so that small variations in
production or assembly do not adversely affect the product
Typically results in lower cost and higher quality
Modular Design
Products designed in easily segmented components
Adds flexibility to both production and marketing
Improved ability to satisfy customer requirements
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Using computers to design products and prepare engineering documentation
Shorter development cycles, improved accuracy, lower cost
Information and designs can be deployed worldwide
Issues for Product Development Computer Aided Design (CAD)
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Design for Manufacturing and Assembly (DFMA) Solve manufacturing problems during the
design stage 3-D Object Modeling
Small prototype development
CAD through the internet
International data exchange through STEP
Issues for Product Development
Extensions of CAD
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Computer-Aided Manufacturing (CAM) Utilizing specialized computers and program to
control manufacturing equipment
Often driven by the CAD system (CAD/CAM)
Benefits of CAD/CAM Product quality
Shorter design time
Production cost reductions
Database availability
New range of capabilities
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Issues for Product Development Virtual Reality Technology
Computer technology used to develop an interactive, 3-D model of a product from the basic CAD data
Allows people to ‘see’ the finished design before a physical model is built
Very effective in large-scale designs such as plant layout
Value Analysis Focuses on design improvement during production Seeks improvements leading either to a better product or
a product which can be produced more economically with less environmental impact
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Ethics, Environmentally Friendly Designs, and Sustainability
It is possible to enhance productivity and deliver goods and services in an environmentally and ethically responsible manner
In OM, sustainability means ecological stability
Conservation and renewal of resources through the entire product life cycle
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Ethics, Environmentally Friendly Designs, and Sustainability
Design
Polyester film and shoes
Production
Prevention in production and packaging
Destruction
Recycling in automobiles
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The Ethical Approach
View product design from a systems perspective Inputs, processes, outputs
Costs to the firm/costs to society
Consider the entire life cycle of the product
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The Ethical Approach Goals
1. Developing safe end environmentally sound practices
2. Minimizing waste of resources
3. Reducing environmental liabilities
4. Increasing cost-effectiveness of complying with environmental regulations
5. Begin recognized as a good corporate citizen
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Guidelines for Environmentally Friendly Designs
1. Make products recyclable
2. Use recycled materials
3. Use less harmful ingredients
4. Use lighter components
5. Use less energy
6. Use less material
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Laws and Industry StandardsFor Design …For Design … Food and Drug Administration
Consumer Products Safety Commission
National Highway Safety Administration
Children’s Product Safety Act
Occupational Safety and Health Administration
Environmental Protection Agency
Professional ergonomic standards
State and local laws dealing with employment standards, discrimination, etc.
Vehicle Recycling Partnership
Increasingly rigid laws worldwide
For Manufacture/Assembly …For Manufacture/Assembly …
For Disassembly/Disposal …For Disassembly/Disposal …
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Time-Based Competition
Product life cycles are becoming shorter and the rate of technological change is increasing
Developing new products faster can result in a competitive advantage
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Product Development Continuum
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Acquiring Technology By Purchasing a Firm
Speeds development
Issues concern the fit between the acquired organization and product and the host
Through Joint Ventures Both organizations learn
Risks are shared
Through Alliances Cooperative agreements between independent
organizations
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Defining A Product
First definition is in terms of functions
Rigorous specifications are developed during the design phase
Manufactured products will have an engineering drawing
Bill of material (BOM) lists the components of a product
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Engineering drawing Shows dimensions, tolerances, and
materials Shows codes for Group Technology
Bill of Material Lists components, quantities and where
used Shows product structure
Defining A Product: Product Documents
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Engineering Drawings
Figure 5.8
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Bills of MaterialBills of Material
Hard Rock Cafe’s Hickory BBQ Bacon Cheeseburger
DESCRIPTION QTY
Bun 1Hamburger patty 8 oz.Cheddar cheese 2 slicesBacon 2 stripsBBQ onions 1/2 cupHickory BBQ sauce 1 oz.Burger set Lettuce 1 leaf Tomato 1 slice Red onion 4 rings Pickle 1 sliceFrench fries 5 oz.Seasoned salt 1 tsp.11-inch plate 1HRC flag 1
Figure 5.9 (b)
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Parts grouped into families with similar characteristics
Coding system describes processing and physical characteristics
Part families can be produced in dedicated manufacturing cells
Group Technology
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1. Improved design
2. Reduced raw material and purchases
3. Simplified production planning and control
4. Improved layout, routing, and machine loading
5. Reduced tooling setup time, work-in-process, and production time
Group Technology Benefits
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Documents for Production
Assembly drawing Assembly chart Route sheet Work order Engineering change notices (ECNs)
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Documents: Assembly Drawing
Shows exploded view of product
Details relative locations to show how to assemble the product
Figure 5.11 (a)
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Documents: Assembly Chart
1
2
3
4
5
6
7
8
9
10
11
R 209 Angle
R 207 Angle
Bolts w/nuts (2)
R 209 Angle
R 207 Angle
Bolt w/nut
R 404 Roller
Lock washer
Part number tag
Box w/packing material
Bolts w/nuts (2)
SA1
SA2
A1
A2
A3
A4
A5
Leftbracket
assembly
Rightbracket
assembly
Poka-yoke inspection
Figure 5.11 (b)
Identifies the point of production where components flow into subassemblies and ultimately into the final product
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Documents: Route Sheet
Lists the operations and times required to produce a component
Setup OperationProcess Machine Operations Time Time/Unit
1 Auto Insert 2 Insert Component 1.5 .4 Set 562 Manual Insert Component .5 2.3
Insert 1 Set 12C3 Wave Solder Solder all 1.5 4.1
components to board
4 Test 4 Circuit integrity .25 .5test 4GY
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Documents: Work Order
Instructions to produce a given quantity of a particular item, usually to a schedule
Work Order
Item Quantity Start Date Due Date
Production DeliveryDept Location
157C 125 5/2/08 5/4/08
F32 Dept K11
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Documents: Engineering Change Notice (ECN)
A correction or modification to a product’s definition or documentation Engineering drawings
Bill of material
Quite common with long product life cycles, long manufacturing lead times, or
rapidly changing technologies
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Documents: Configuration Management
The need to manage ECNs has led to the development of configuration management systems
A product’s planned and changing components are accurately identified and control and accountability for change are identified and maintained
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Product Life-Cycle Management (PLM)
Integrated software that brings together most, if not all, elements of product design and manufacture Product design
CAD/CAM, DFMA
Product routing
Materials
Assembly
Environmental
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Service Design Service typically includes direct interaction with the
customer
Increased opportunity for customization
Reduced productivity
Cost and quality are still determined at the design stage
Delay customization
Modularization
Reduce customer interaction, often through automation
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Moments of Truth
Concept created by Jan Carlzon of Scandinavian Airways
Critical moments between the customer and the organization that determine customer satisfaction
There may be many of these moments
These are opportunities to gain or lose business
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Moments-of-Truth Computer Company Hotline
Figure 5.13
• The technician was sincerely concerned and apologetic about my problem
• He asked intelligent questions that allowed me to feel confident in his abilities
• The technician offered various times to have work done to suit my schedule
• Ways to avoid future problems were suggested
Experience Enhancers
Best
• Only one local number needs to be dialed
• I never get a busy signal
• I get a human being to answer my call quickly and he or she is pleasant and responsive to my problem
• A timely resolution to my problem is offered
• The technician is able to explain to me what I can expect to happen next
Standard Expectations
Better
• I had to call more than once to get through
• A recording spoke to me rather than a person
• While on hold, I get silence, and wonder if I am disconnected
• The technician sounded like he was reading a form of routine questions
• The technician sounded uninterested
• I felt the technician rushed me
Experience Detractors
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Documents for Services
High levels of customer interaction necessitates different documentation
Often explicit job instructions for moments-of-truth
Scripts and storyboards are other techniques
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First Bank Corp. Drive-up Teller Service Guidelines
Be especially discreet when talking to the customer through the microphone.
Provide written instructions for customers who must fill out forms you provide.
Mark lines to be completed or attach a note with instructions. Always say “please” and “thank you” when speaking through
the microphone. Establish eye contact with the customer if the distance allows it. If a transaction requires that the customer park the car and
come into the lobby, apologize for the inconvenience.
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Application of Decision Trees to Product Design
Particularly useful when there are a series of decisions and outcomes which lead to other decisions and outcomes
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Application of Decision Trees to Product Design
1. Include all possible alternatives and states of nature - including “doing nothing”
2. Enter payoffs at end of branch
3. Determine the expected value of each branch and “prune” the tree to find the alternative with the best expected value
ProceduresProcedures
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(.6)
Low sales
(.4)
High sales
(.6) Low sales
(.4)
High sales
Decision Tree Example
Purchase CAD
Hire and train engineers
Do nothing
Figure 5.14
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(.6) Low sales
(.4)
High sales
Decision Tree Example
Purchase CAD
(.6)
Low sales
(.4)
High sales
Hire and train engineers
Do nothing
Figure 5.14
$2,500,000 Revenue- 1,000,000 Mfg cost ($40 x 25,000)
- 500,000 CAD cost$1,000,000 Net
$800,000 Revenue- 320,000 Mfg cost ($40 x 8,000)- 500,000 CAD cost- $20,000 Net loss
EMV (purchase CAD system) = (.4)($1,000,000) + (.6)(- $20,000)
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(.6) Low sales
(.4)
High sales
Decision Tree Example
Purchase CAD
(.6)
Low sales
(.4)
High sales
Hire and train engineers
Do nothing
Figure 5.14
$2,500,000 Revenue- 1,000,000 Mfg cost ($40 x 25,000)
- 500,000 CAD cost$1,000,000 Net
$800,000 Revenue- 320,000 Mfg cost ($40 x 8,000)- 500,000 CAD cost- $20,000 Net loss
EMV (purchase CAD system) = (.4)($1,000,000) + (.6)(- $20,000)
= $388,000
$388,000
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(.6)
Low sales
(.4)
High sales
(.6) Low sales
(.4)
High sales
Decision Tree Example
Purchase CAD$388,000
Hire and train engineers$365,000
Do nothing $0
$0 Net
$800,000 Revenue- 400,000 Mfg cost ($50 x 8,000)- 375,000 Hire and train cost
$25,000 Net
$2,500,000 Revenue- 1,250,000 Mfg cost ($50 x 25,000)
- 375,000 Hire and train cost$875,000 Net
$2,500,000 Revenue- 1,000,000 Mfg cost ($40 x 25,000)
- 500,000 CAD cost$1,000,000 Net
$800,000 Revenue- 320,000 Mfg cost ($40 x 8,000)- 500,000 CAD cost- $20,000 Net loss
Figure 5.14
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Transition to Production
Know when to move to production Product development can be viewed as
evolutionary and never complete Product must move from design to production
in a timely manner
Most products have a trial production period to insure producibility
Develop tooling, quality control, training Ensures successful production
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Transition to Production
Responsibility must also transition as the product moves through its life cycle
Line management takes over from design
Three common approaches to managing transition
Project managers Product development teams Integrate product development and
manufacturing organizations
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