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Chapter 4: Product/Service Design 1
Chapter 4
Product/Service Design
Chapter 4: Product/Service Design 2
Introduction
Chapter 4: Product/Service Design 3
Progressive Corp.
Prior to 1988, carved our profitable niche serving high-risk drivers
In 1988 two major events occurred Allstate overtook it in high-risk niche California passed proposition 103
Round-the-clock immediate response program adopted
Chapter 4: Product/Service Design 4
Progressive Corp. continued
Special vans equipped with air-conditioning, comfortable chairs, desk, and two cell phones.
Often settlement check offered on spot80% of accident victims contacted within 9
hours of learning of accident70% of vehicles inspected within one dayTypically claim wrapped up with a week
Chapter 4: Product/Service Design 5
Thermos
In 1992 had 25% share of $1 billion barbecue grill market
Product becoming a commodityCEO believed consumers were too
intelligent to be tricked by clever advertising and slick packaging
Survival dependent on constant innovation, high quality, at right price
Chapter 4: Product/Service Design 6
Thermos continued
Interdisciplinary team with representatives from marketing, manufacturing, engineering, and finance to design new grill
Team used to reduce project completion time
As example, initially designers opted for tapered legs
Chapter 4: Product/Service Design 7
Thermos continued
Manufacturing noted that tapered legs would have to be custom made
Design changed to straight legsUnder previous system, manufacturing
would not have found out about legs until design completed
Chapter 4: Product/Service Design 8
Thermos continued
Team developed revolutionary electric grill
Technology used to give food barbecued taste
Burns cleaner than gas or charcoalGrill won four design awards in its first
year
Chapter 4: Product/Service Design 9
Caterpillar
Used virtual-reality system called CAVE (cave automatic virtual environment) to take large earthmoving equipment for test drive before it was actually built
Surround-screen and surround sound cube with 10-foot sides
Super-computer projects 3D graphics onto the walls
Chapter 4: Product/Service Design 10
Caterpillar continued
Inside CAVE, people can walk around and operate imaginary controls
System responds to movementsProvides many perspectivesBackhoe and wheel loader recently
introduced incorporate visibility and performance improvements based on data collected from virtual test-drives
Chapter 4: Product/Service Design 11
Themes Illustrate in Examples
Two examples related to design of products and one to the design of a service
Importance of product and service design to an organization’s competitiveness Progressive Thermos
Chapter 4: Product/Service Design 12
Themes continued
Technology In Progressive’s case, new technology
such as cellular phones made new service possible
In Caterpillar’s case, new technology used to enhance design process
Design Teams
Chapter 4: Product/Service Design 13
Impacts of Selection/Design Decisions
FitMaterialsLaborEquipmentProcessFinancing
Chapter 4: Product/Service Design 14
Three Stages inOutput Selection and Design
Selection stage Idea generation Screening and selection
Product and service design stage Preliminary design Prototype testing Final design
Process design
Chapter 4: Product/Service Design 15
Steps in Product-Service Selection and Design
Chapter 4: Product/Service Design 16
The Selection Stage
Chapter 4: Product/Service Design 17
Generation of Ideas
Employees with customer contact play a key role in generating new ideas
Can imitate proven new ideaPurchase new ideaMarketing “pull” versus technology
“push”Product versus process research
Chapter 4: Product/Service Design 18
The Development Effort
Chapter 4: Product/Service Design 19
Mortality Curve of Chemical Product Ideas from Research to Commercialization
20
Service Gap Identifier
Chapter 4: Product/Service Design 21
Product-Process Innovations Over Time
Chapter 4: Product/Service Design 22
Screening and Selection
Assessing technical feasibility Determining up-front capital needs Evaluation may include calculation of
payback period, return on investment, or net present value
Chapter 4: Product/Service Design 23
Analysis of Organizational Fit
Experience with particular outputExperience with production system
required for the outputExperience in providing an output to the
same target recipientsExperience with the distribution system
for the output
Chapter 4: Product/Service Design 24
Typical Checklist for Organizational Fit
Chapter 4: Product/Service Design 25
The Aggregate Project Plan
Project Portfolio Derivative projects Breakthrough projects Platform projects R&D projects
Chapter 4: Product/Service Design 26
The Aggregate Project Plan
Chapter 4: Product/Service Design 27
An Example AggregateProject Plan
Chapter 4: Product/Service Design 28
Using the AggregateProject Plan
Identify gaps in portfolioEvaluate resource requirementsEmployee development
Chapter 4: Product/Service Design 29
The Product/Service Design Stage
Chapter 4: Product/Service Design 30
The Product Design Stage
Preliminary DesignPrototype TestingFinal Design
Chapter 4: Product/Service Design 31
Preliminary Design
Tradeoff AnalysisStandardizationModularityComputer-Aided Design
Chapter 4: Product/Service Design 32
Tradeoff Analysis Factors to Consider Function Cost Size and shape Appearance Quality Reliability
Environmental impact
Producability Timing Accessibility Recipient input
requirements
Chapter 4: Product/Service Design 33
Using QFD to link customers’ attributes to technical, component, and operation requirements
Chapter 4: Product/Service Design 34
The House of Qualityfor a Car Door
Chapter 4: Product/Service Design 35
Advantages of Standardization
Minimizes number of parts needed to stock
Minimizes number of equipment setupsSimplified operations proceduresQuantity discounts due to larger
purchasesMinimized service and repair problems
Chapter 4: Product/Service Design 36
Disadvantages of Standardization
Possible lower quality because standard parts used rather than specially made parts
Inflexible production
Chapter 4: Product/Service Design 37
Modularity
computer
5 hard drive sizes
5 choices for RAM
5 choices for CPU
4 modem choices
5 x 5 x 5 x 4 = 500 possible computer configurations with only 19 different parts
Chapter 4: Product/Service Design 38
Computer-Aided Design
Develop drawings on computer screen Can retrieve old designs and changes as
necessary rather than creating new designs from scratch
Computer-aided engineering (CAE)Computer-aided process planning
(CAPP)Computer-aided manufacturing (CAM)
Chapter 4: Product/Service Design 39
Prototype Testing
Design concept developed in preliminary stage tested
Physical modelsComputer simulationRapid prototyping (RP)Actual product or serviceAccept, extend, modify, or reject
preliminary design
Chapter 4: Product/Service Design 40
Final Design
Simplification and value analysisSafety and human factorsReliabilityManufacturability
Chapter 4: Product/Service Design 41
Methods to Speed New Output Introduction
Contract R&DProduct/process teamsOverlap development stagesCombine/eliminate stages Incremental emphasisMore extensive applicationUse new technologies
Chapter 4: Product/Service Design 42
Commercialization
Chapter 4: Product/Service Design 43
Commercialization
Process of moving an idea for a new product or service from concept to market
Chapter 4: Product/Service Design 44
History of the Typewriter
Mechanical typewriter dominated market for 25 years
Then the electromechanical typewriter dominated market for 15 years
Electric typewriter dominated for the next 7 years
First generation microprocessor based machines dominated for next 5 years
Chapter 4: Product/Service Design 45
Characteristics of Companies with Superior CommercializationCapabilities Commercialize two to three times as many
new products and processes as their competitors
Two to three times as many technologies incorporated into products
Get product to market in half timeCompete in twice as many product and
geographic markets
Chapter 4: Product/Service Design 46
Example: Assume following applies to laser printer industry Market growing 20% annuallyPrices declining 12% annuallyFive year life cycle
As a project leader, would you choose between incurring a 30% cost overrun to finish project on schedule or miss deadline by six months?
Chapter 4: Product/Service Design 47
Laser Printer example continued
Incurring the 30% cost overrun will reduce cumulative profits by 2.3%
Launching printer six months late will reduce cumulative profits by 33%
Chapter 4: Product/Service Design 48
To Improve Commercialization Capability Must Measure It
Time to marketRange of marketsNumber of marketsBreadth of technologies
Chapter 4: Product/Service Design 49
Improving Commercialization Capability
Make it a prioritySet goals and benchmarksBuild cross-functional teamsPromote hands-on management to
speed actions and decisions
Chapter 4: Product/Service Design 50
Disruptive Technologies
Disruptive technologiesSustaining technologies
Chapter 4: Product/Service Design 51
Performance Trajectories: Traditional Versus Online Distance Education Learning Programs