Designing Goods and Services

Chapter 3, Part 1

Operations and Operations Strategy

Designing an Operations System

Managing an Operations System

Done

We are here

Overview of Management 326

Designing an Operations System

Projectmanagement

:A design

tool

• Product design• Process design• Quality system• Lean systems

• Capacity planning• Facility location• Facility layout• Work design

Done

This week: Product and process design

Lecture Outline

Product design concepts Strategy and product design Operations issues in product design

Designing goods Form design and functional design Examples

Lecture Outline (2)

Techniques for designing goods Design for the environment Benchmarking and reverse

engineering Technical specifications for goods Design for manufacture Concurrent engineering

Lands' End adapted concurrent engineering to services

Lecture Outline (3)

Designing services Service package Classifying services Approaches to service design

Strategy and Product Design

The core product may be a good or a service Product design should support the business

strategy Product design should meet the needs of a

target market. Product design should give the company a

competitive advantage.

Operations Issues in Product Design

Product design and technology Process technology Would we need a new or modified

facility? Can the firm make this product with

consistent quality at a price that customers are willing to pay?

Does our labor force have the needed skills?

Designing Goods

Form design: Sensory aspects of the product (aesthetics) Size, color, shape, sound "Look and feel" – "smoothness", quality

impression Functional design: how the product

performs

Form Design: How the Product Looks

Functional Design of Goods

Fitness for use: performs as intended

Durability: how long the product lasts

Reliability: consistent performance

Maintainability: ease and cost of repairs

Steelcase Wide Chair

Adapt old technology to a new market

Berkline Chairlift ReclinersRegular and Large Versions

• Adapt a product for a new market• Adapt technology from another industry

Rectangular Watermelons

Toyota Prius, Version 2

•New Product Technology• New Process Technology

Learning from Other Companies

Benchmarking: comparing your operations with those of a "best in class" firm Product benchmark Process benchmark Cost benchmark

In services, the product and the process often overlap. You may benchmark the product and the

process at the same time.

Learning from Other Companies (2)

Reverse engineering: taking your competitor's products apart and figuring out how it is made Physical products Software

Market research on competitor's products

Design for the Environment: Materials

Make the product recyclable. Make the product from recycled

materials. Use renewable materials. Make products from safer materials

Example: lead-free paint Use less material in the product and

packaging.

Design for the Environment

Recyclable Parts in a BMW

Design for the Environment: Energy

Make products that require less energy.

Make products that use alternative energy sources – wind, solar, etc. Wind power Solar power

Make products that use renewable energy sources Example: Ethanol from corn

Technical Specifications for Goods

Dimensions Examples: length, diameter Target value: ideal or desired

value for a dimension Tolerance: how much can the

actual dimension vary from the target value without affecting performance or aesthetics?

Design for Manufacture

Value engineering: Eliminate product features that add cost but do not add value to the customer.

Reduce the number of parts. Reduces the cost of ordering, purchasing,

and storing parts. Reduces the space required to hold

inventory Reduces the number of tools and

operations required Reduces the time required to make the

product

Design for Manufacture (2)

Example of reducing the number of parts, operations, and tools.

Design for Manufacture (3)

Modular design: Design products to be assembled from standard components. Example: Dell buys standard video cards,

processors, power supplies, hard drives, etc., and assembles computers

Use standard parts to reduce design costs and purchasing costs. Examples: Manufacturers use standard

screws.

Concurrent Engineering

Design the product and the process at the same time.

Use a design team that includes marketing, operations, engineering, operations, and suppliers. Stay in touch with customers during the

design process. Requires good project

management and coordination among all groups involved.

Advantages of Concurrent Engineering:

Marketing

Increases the chances of a successful product.

Shortens time to market. Supplier expertise can help design a

product that meets customer needs

Advantages of Concurrent Engineering:

Finance and Operations

Reduces design costs. Reduces the need to make expensive

changes in the product and the process later.

The product can be made consistently, in a quality manner, at a price that customers will pay.

Product Design Teams at Lands' End

Buyer Quality specialist Inventory manager Copywriter Catalog artist Administrative support

Designing Services – Service Package

Physical elements: facility, equipment and furnishings, inventories

Sensory and aesthetic aspects Psychological benefits Quality standards

Classifying Services (1)

Pure services High, face-to-face customer contact Low standardization Examples: medical care, law offices,

accounting firms, universities, schools, health clubs

Employees must have technical job skills and customer relations skills

Facility must be adapted to customer needs. Meet customer needs and be as cost-

effective as possible.

Classifying Services (2)

Quasi-manufacturing services: Contact with customers is limited to

telephone, mail, or Internet Examples: Internet retailers, distribution

centers Employees who have phone contact with

customers need both technical job skills and customer service skills

Other employees need technical job skills. Manage for efficiency. Design facility for efficiency.

Classifying Services (3)

Mixed services: "Front office": high customer contact.

May have low standardization Manage like a pure service.

"Back office": Little customer contact. Manage for efficiency but meet customer

service deadlines. Examples: car repair shop, retail

banks.

Approaches to Service Design

Design for efficiency: High standardization Limited variety Automation High-volume services purchase at low cost.

Customer involvement in producing the service Self-service salad bar

High customer attention: pure services, high-end hotels and retailers