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5-1
Operations Operations ManagementManagement
Design of Goods and ServicesDesign of Goods and ServicesChapter 5Chapter 5
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OutlineOutline Product Strategy.
Selection.
Product Development Stages.
Design Issues.
Documents.
Service Design.
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Find new products to design, develop and market.
Develop and implement a product strategy that: Meets demands of the marketplace. Provides a competitive advantage.
Differentiation. Low cost. Rapid response.
GoalsGoals
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Product strategy includes:
Selection - What good or service should be offered.
Development - From product concept to introduction.
Design (and redesign) - To define and redefine product.
Product StrategyProduct Strategy
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Deciding which products (goods and services) to provide.
Product includes: Physical good or service, including features,
quality, durability, reliability, etc. Brand. Packaging. Service & Warranty.
Product SelectionProduct Selection
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Product Life CycleProduct Life Cycle
Growth
Decline
Time
IntroductionMaturity
Sale
s
Sales Revenue
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Product Life Cycle, Sales, Cost, Product Life Cycle, Sales, Cost, and Cash Flowand Cash Flow
Sale
s, C
ost &
Pro
fit
.
Introduction Maturity DeclineGrowth
Cost ofDevelopment
& Manufacture Sales Revenue
TimeCash flowLoss
Profit
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Product Life CycleProduct Life CycleIntroductionIntroduction
Initial designs. Product development. Process modification and enhancement. Supplier development.
Increasing costs and revenues. Generally cost>revenue, so negative cash flow!
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Idea GenerationIdea Generation
Provides basis for entry into market.
Sources of ideas. Market need (60-80%). Engineering & operations (20%). Technology; competitors; inventions; employees.
Very few ideas become marketable products & few marketed products are successful!
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Need Very Many Ideas for Need Very Many Ideas for Successful New ProductsSuccessful New Products
0
500
1000
1500
2000
Development Stage
Number
1000
Market requirement
Design review,Testing, Introduction
25
Ideas
1750
Product specification
100
Functional specifications
One success!
500
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Assess Abilty to Offer ProductAssess Abilty to Offer Product
Can the firm provide the product/service?
Should the firm provide the product/service?
Make vs. Buy A firm may be able to purchase the product as a
“standard item” from another manufacturer.
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Product Development StagesProduct Development Stages
1. Customer Requirements.
2. Functional Specification.
3. Product Specifications.
4. Design Review.
5. Test Market.
6. Transition to Production.
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1. Customer Requirements1. Customer Requirements
Identifies & positions key product benefits. Example: Quiet, fast, low cost color printer.
Identifies detailed list of product attributes desired by customer.
Use customer focus groups or interviews.
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2. Functional Specification2. Functional Specification Defines product in terms of how the product
would meet desired attributes.
Identifies product’s engineering characteristics.
Example: Printer noise (dB), pages per minute.
Prioritizes engineering characteristics.
May rate product compared to competition.
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Determines how product will be made.
Gives product’s physical specifications.
Example: Dimensions, material, amount of insulation, technology, etc.
Defined by engineering drawing.
Done often on computer.
Computer-Aided Design (CAD).
3. Product Specifications 3. Product Specifications
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Review design from multiple perspectives.
Evaluate in terms of:
Customer requirements.
Ability to produce product or deliver service.
Revise design if needed.
4. Design Review 4. Design Review
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Quality Function Deployment - QFDQuality Function Deployment - QFD Technique to help:
Identify customer requirements. Translate these into functional specifications and
product specifications. Also helps focus quality efforts.
Involves creating 4 tabular ‘Matrices’ or ‘Houses’. Breakdown product design into increasing levels of
detail.
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House of Quality SequenceHouse of Quality Sequence
DesignCharacteristics
Cus
tom
erR
equi
rem
ents
House1
Production Process
Spec
ific
Com
pone
nts
House3
SpecificComponents
Des
ign
Cha
ract
eris
tics
House2
QualityPlan
Prod
uctio
n Pr
oces
s House4
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5. & 6. Test Marketing & Transition 5. & 6. Test Marketing & Transition to Productionto Production
Test market product to assess design and market.
Transition to production. Use a trial period to work the bugs out and revise
product and process design.
Refine supplier selections.
Transfer responsibility from design group to production group.
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Design IssuesDesign Issues
Concurrent design.
Manufacturability & Value Engineering.
Modular Design.
Robust Design.
Computer-aided design.
Environmentally friendly design.
Time-based competition.
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Traditional DesignTraditional Design
Design is a separate activity. Nearly independent of production, engineering, etc.
Design Production
Traditional
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Design & Production& other units
Concurrent DesignConcurrent Design
Design product using cross-functional teams. Production, engineering, marketing, customers, etc.
Design Production
Traditional Concurrent design
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Manufacturability andManufacturability and Value Engineering Value Engineering
Key is to SIMPLIFY. Minimize parts. Use common components in different products. Use standard off-the-shelf components. Simplify and mistake-proof assembly. Use modules to add variety. Design for robustness.
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Modular & Robust DesignModular & Robust Design
Modular design. Design in easily segmented components.
Modules add flexibility to both production and marketing.
Design for robustness. Design so small variations in production or
assembly do not adversely affect the product.
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Designing products at acomputer work station. Design engineer uses
computer to draw product.
Often used with CAM (Computer Aided Manufacturing).
Computer Aided Design (CAD)Computer Aided Design (CAD)
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Environmentally Friendly DesignEnvironmentally Friendly Design
Make products recyclable.
Use recycled materials.
Use less harmful (toxic) ingredients.
Use lighter components. Less weight lowers transportation cost.
Use less energy and material.
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Time-based CompetitionTime-based Competition
Product life cycles are becoming shorter.
Faster developers of new products gain on slower developers and obtain a competitive advantage. First to market is often the market leader.
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Engineering drawing. Shows dimensions, tolerances, &
materials.
Bill of Material. Lists components, quantities &
where used. Shows product structure.
Product DocumentsProduct Documents
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1-5/8
13/163/8
13/16
13/16diameter
13/32diameter
1/4 R
12-1/2
5/16
2-1/4
45°
BracketScale: FULL
Drawn: J. Thomas A- 435-038
1-5/8
13/163/8
13/16
13/16diameter
13/32diameter
1/4 R
12-1/2
5/16
2-1/4
45°
BracketScale: FULL
Drawn: J. Thomas A- 435-038
Engineering Drawing ExampleEngineering Drawing Example
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Bill of MaterialP/N: 1000 Name: Bicycle
P/N Desc Qty Units Level1001 Handle Bars 1 Each 11002 Frame Assy 1 Each 1
1003 Wheels 2 Each 2 1004 Frame 1 Each 2
Bill of MaterialP/N: 1000 Name: Bicycle
P/N Desc Qty Units Level1001 Handle Bars 1 Each 11002 Frame Assy 1 Each 1
1003 Wheels 2 Each 2 1004 Frame 1 Each 2
Bill of Material ExampleBill of Material Example
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Production DocumentsProduction Documents
Assembly drawings. Assembly chart. Route sheet. Work order.
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Assembly Drawing and Assembly Assembly Drawing and Assembly ChartChart
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Route SheetRoute Sheet
Lists all operations.Route 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
Route Sheet for BracketSequence Machine Operation Setup
TimeOperationTime/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
5-34
Work OrderWork Order
Dept Oper DateWork Order
Approved: JM
Manufacturing
Authorizes producing a given item, usually to a schedule.
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Service Design PrinciplesService Design Principles
SIMPLIFY! Minimize number of steps. Minimize repetition. Reduce waiting time for customer.
Use modularity to create variety. Example: Hospital, University certificate programs.
Design for robustness. Accommodate large variation, since all people are
different.
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Service Design PrinciplesService Design Principles
Consider range of services offered. Customized vs standard services (Medical clinics). Full service vs. self service (Gasoline station).
Manage expectations. Gourmet restaurant vs. fast food.
Schedule staff to match demand. Use appointments. Provide distractions to ease waiting.
5-37
Decision Trees for Product DesignDecision Trees for Product Design
Useful with a series of decisions and outcomes.
Example: Select design of product of service from several options. Different costs. Different benefits: Benefits depend on future
(unknown) market.
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Decision Tree for DesignDecision Tree for Design
Coffee only
Coffee & Dessert
High Demand (0.7)
Low Demand (0.3)
High pm
Demand
(0.6)
Low pm Demand (0.4)
Add dessert
Do nothing
Do nothing
Do not offer dessert
Dessert popular (0.7)
Dessert Unpopular (0.3)
$5.5
-$0.5
$3.5
-$2.0
$6.0
$1.0
-$3.0
1
3
2