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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
POM - J. GalvánPOM - J. Galván 22
Learning ObjectivesLearning Objectives
How should products/services be How should products/services be designed systematically?designed systematically?
POM - J. GalvánPOM - J. Galván 33
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
POM - J. GalvánPOM - J. Galván 44
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?
POM - J. GalvánPOM - J. Galván 55
Product Strategy OptionsProduct Strategy Options• Product differentiationProduct differentiation• Low costLow cost• Rapid responseRapid response
POM - J. GalvánPOM - J. Galván 66
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
POM - J. GalvánPOM - J. Galván 77
Product
ProductIdea
Package
PhysicalGood
FeaturesQualityLevel
Service(Warranty)
Brand(Name)
Product ComponentsProduct Components
POM - J. GalvánPOM - J. Galván 88
Product Life CycleProduct Life Cycle
IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline
POM - J. GalvánPOM - J. Galván 99
Product Life CycleProduct Life CycleIntroductionIntroduction
Fine tuningFine tuning• researchresearch• product developmentproduct development• process modification and enhancementprocess modification and enhancement• supplier developmentsupplier development
POM - J. GalvánPOM - J. Galván 1010
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
POM - J. GalvánPOM - J. Galván 1111
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
POM - J. GalvánPOM - J. Galván 1212
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
POM - J. GalvánPOM - J. Galván 1313
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
POM - J. GalvánPOM - J. Galván 1414
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
POM - J. GalvánPOM - J. Galván 1515
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
POM - J. GalvánPOM - J. Galván 1616
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
POM - J. GalvánPOM - J. Galván 1717
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
POM - J. GalvánPOM - J. Galván 1818
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
POM - J. GalvánPOM - J. Galván 1919
House of QualityHouse of Quality
Customer Requirements
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
POM - J. GalvánPOM - J. Galván 2020
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’
House of QualityHouse of Quality
Customer Requirements
Customer Requirements
Product Characteristics
Functional Specification StageFunctional Specification Stage
POM - J. GalvánPOM - J. Galván 2121
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)
House of QualityHouse of Quality
ProductCharacteristics
ProductCharacteristics
Component Specifications
Product Specification StageProduct Specification Stage
POM - J. GalvánPOM - J. Galván 2222
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
POM - J. GalvánPOM - J. Galván 2323
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
POM - J. GalvánPOM - J. Galván 2424
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
POM - J. GalvánPOM - J. Galván 2525
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
POM - J. GalvánPOM - J. Galván 2626
Gate ValveGate Valve
POM - J. GalvánPOM - J. Galván 2727
““Exploded” Drawing of the Gate Exploded” Drawing of the Gate
ValveValve
POM - J. GalvánPOM - J. Galván 2828
Engineering Drawing of the Gate Engineering Drawing of the Gate
ValveValveProvide part specifications and dimensions in sufficient detail for manufacturing
POM - J. GalvánPOM - J. Galván 2929
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
POM - J. GalvánPOM - J. Galván 3030
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.
POM - J. GalvánPOM - J. Galván 3131
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
POM - J. GalvánPOM - J. Galván 3232
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
POM - J. GalvánPOM - J. Galván 3333
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
POM - J. GalvánPOM - J. Galván 3434
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
POM - J. GalvánPOM - J. Galván 3535
Production DocumentsProduction Documents
Assembly Assembly DrawingsDrawings
Assembly chartAssembly chart Route sheetRoute sheet Work orderWork order
POM - J. GalvánPOM - J. Galván 3636
Shows exploded view of productShows exploded view of product
Head Neck
Handle
End Cap
Assembly DrawingAssembly Drawing
POM - J. GalvánPOM - J. Galván 3737
1
2
3
SA1 A1
A2
Tuna Fish
Mayonaise
Bread
Tuna
Assy
FG
Sandwich
Assembly ChartAssembly Chart
POM - J. GalvánPOM - J. Galván 3838
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.
POM - J. GalvánPOM - J. Galván 3939
Assembly Chart IIAssembly Chart II
POM - J. GalvánPOM - J. Galván 4040
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)
POM - J. GalvánPOM - J. Galván 4242
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.
POM - J. GalvánPOM - J. Galván 4343
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.
POM - J. GalvánPOM - J. Galván 4444
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.
POM - J. GalvánPOM - J. Galván 4545
Work OrderWork Order
Dept Oper DateWork Order
Approved: JM
Manufacturing
© 1984-1994 T/Maker Co.
Authorizes producing a given item, usually to a schedule
POM - J. GalvánPOM - J. Galván 4646
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
POM - J. GalvánPOM - J. Galván 4747
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
POM - J. GalvánPOM - J. Galván 4848
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
POM - J. GalvánPOM - J. Galván 4949
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
POM - J. GalvánPOM - J. Galván 5050
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
POM - J. GalvánPOM - J. Galván 5151
McDonald’s manualsMcDonald’s manuals
POM - J. GalvánPOM - J. Galván 5252
McDonald’s manualsMcDonald’s manuals
POM - J. GalvánPOM - J. Galván 5353
What do you need to implement What do you need to implement this reception message?this reception message?
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