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Product and Service Design

McGraw-Hill/Irwin

Copyright 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning ObjectivesExplain the strategic importance of product and service design. List some key reasons for design or redesign. Identify the main objectives of product and service design. Discuss the importance of standardization. Discuss the importance of legal, ethical, and environmental issues in product and service design.4-2

Learning ObjectivesBriefly describe the phases in product design and development. Describe some of the main sources of design ideas. Name several key issues in manufacturing design. Name several key issues in service design. Name the phases in service design. List the characteristics of well-designed service systems. Name some of the challenges of service design.4-3

Product and Service DesignMajor factors in design strategyCost Quality Time-to-market Customer satisfaction Competitive advantageProduct and service design or redesign should be closely tied to an organizations strategy

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Product or Service Design Activities1. Translate customer wants and needs into product and service requirements(marketing ,operations)

2. Refine existing products and services (marketing) 3. Develop new products and services(marketing ,operations)

4. Formulate quality goals (marketing ,operations) 5. Formulate cost targets (accounting, finance ,operations) 6. Construct and test prototypes (marketing ,operations, engineering)

7. Document specifications 4-5

Value Analysis1. Select an item that has a high annual dollar volume. This can be material, a purchased item, or a service. 2. Identify the function of the item. 3. Obtain answers to these kinds of questions: Is the item necessary; does it have value; can it be eliminated? Are there alternative sources for the item? Can the item be provided internally? What are the advantages/disadvantages of the present arrangement? Could another material, part, or service be used instead?4-6

Value AnalysisCan specifications be less stringent to save cost or time? Can two or more parts be combined? Can more/less processing be done on the item to save cost or time? Do suppliers/providers have suggestions for improvements? Do employees have suggestions for improvements? Can packaging be improved or made less costly? 4. Analyze the answers obtained as well as answers to other questions that arise, and make recommendations.4-7

Reasons for Product or Service Design--Market Opportunity and Threat caused by the changes of :Economic--low demand, excessive warranty claims, the need to reduce costs

Social and demographic --aging baby boomers, population shifts

Political, liability , or legal--government changes, safety issues, new regulations

Competitive new or changed products, new ad/promotion Cost or availability-- row materials, components, labor Technological in product components, processes

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Objectives of Product and Service DesignMain focusCustomer satisfaction --Understand what the customer wants

Secondary focusFunction of product/service Cost/profit Quality Appearance Ease of production/assembly Ease of maintenance/service4-9

Designing For OperationsTaking into account the capabilities of the organization in designing goods and services. Failure to take this into account can:Reduce productivity Reduce quality Increase costs

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Legal, Ethical, and Environmental IssuesLegalEnvironment, Health and Safety Product liability -- A manufacturer is liable () for any injuries ordamages caused by a faulty product.

Uniform commercial code() --Products carry an implication of merchantabilityandfitness(a product must be usable for its intended purposes).

EthicalReleasing products with defects

EnvironmentalEnvironmental Protection Agency4-11

Designers Adhere to Guidelines1. Produce designs that are consistent with the goals of the company (e.g. forhigh quality goal, dont cut corners to save cost)

2. Give customers the value they expect 3. Make health and safety a primary concern 4. Consider potential harm to the environment

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Other Issues in Product and Service DesignProduct/service life cycles How much standardization Mass customization Product/service reliability Robust design Degree of newness Cultural differences

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Life Cycles of Products or ServicesFigure 4.1Saturation Maturity

Demand

Decline Growth

Introduction

TimeSome products do not exhibit life cycles: pencils; nails; forks Basic need and rate of tech change affect the length of life cycles Some service life cycles are related to the life cycle of product4-14

StandardizationStandardization--Extent to which there is an absence of variety in a product, service or process Standardized products: computers; Standardized services: automatic car wash; Standardized processes: produce standardized goods/parts.

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Advantages of Standardization1. Standardized products are immediately available to customers 2. Fewer parts to deal with in inventory & manufacturing 3. Design costs are generally lower 4. Reduced training costs and time 5. More routine purchasing, handling, and inspection procedures4-16

Advantages of Standardization(Contd)

6. Orders fillable from inventory 7. Opportunities for long production runs and automation 8. Need for fewer parts justifies increased expenditures on perfecting designs and improving quality control procedures

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Disadvantages of StandardizationDesigns may be frozen with too many imperfections remaining. High cost of design changes increases resistance to improvements. Decreased variety results in less consumer appeal .

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Designing for Mass Customization Mass customization:A strategy of producing standardized goods or services, but incorporating some degree of customization 1. Delayed differentiation 2. Modular design

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Delayed Differentiation Delayed differentiation is a postponement tacticProducing but not quite completing a product or service until customer preferences or specifications are known E.g,1. making furniture without applying stain 2. manufactures of mens clothing with unfinished legs

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Modular DesignModular design is a form of standardization in which component parts are subdivided into modules that are easily replaced or interchanged. (e.g.Dell computer, construction industry) Advantage : easier diagnosis and remedy of failures easier repair and replacement simplification of manufacturing and assembly Disadvantage: less number of possible configurations Higher cost to replace a faulty part4-21

Reliability Reliability: The ability of a product, part, or system to perform its intendedfunction under a prescribedset of conditions Failure: Situation in which a product, part, orsystem does not perform as intended (smoke alarm)

Normal operating conditions: The set ofconditions under which an items reliability is specified4-22

Improving Reliability Improve Componentdesign Improve Production/assembly techniques Improve Testing Use Redundancy/backup Improve Preventive maintenance procedures Improve User education Improve System design4-23

Reliability

Cost

Robust DesignRobust Design: Design that results in products or services that can function over a broad range of conditions E.g., rubber boots have a design that is more robust than that of leather boots.

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Taguchi ()Approach Robust DesignDesign a robust productInsensitive to environmental factors either in manufacturing or in use.

Central feature is ParameterDesign. Determines :factors that are controllableand those not controllable their optimallevels relative to major product advances

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Degree of Newness1. Modification of an existing product/service 2. Expansionof an existing product/service 3. Cloneof a competitors product/service 4. New product/service

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Degree of Design ChangeTable 4.3 Type of Design Change Modification Expansion Clone New Newness of the organization Low Low High High Newness to the market Low Low Low High

It is important to carefully assess the risks and potential benefits of any design, taking into account clearly identified customer wants.4-27

Cultural DifferencesMultinational companies must take into account cultural differences related to the product design.

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Global Product DesignVirtual teamsUses combined efforts of a team of designers working in different countries Provides a range of comparative advantages over traditional teams such as:Engaging the best human resources around the world Possibly operating on a 24-hr basis Global customer needs assessment Global design can increase marketability

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Phases in Product Development Process1. Idea generation 2. 3. 4. 5. 6. 7. 8. Feasibility analysis Product specifications Process specifications Prototype development Design review Market test Product introduction

9. Follow-upevaluation4-30

Phases in Product Development Process1.Idea GenerationSupply chain based

Ideas

Competitor based Research based

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Phases in Product Development Process1.Idea GenerationCompetitorbased

Reverse engineering is the dismantlingand inspecting of a competitors product to discoverproduct improvements. E.g., Foard Motor Company

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Phases in Product Development Process1.Idea GenerationResearch& Development (R&D)High Cost

Organized efforts to increase scientific knowledge or product innovation & may involve:Basic Research advances knowledge about a subject without near-term expectationsof commercial applications. Applied Research achieves commercial applications. Development converts results of applied research into commercial applications.4-33

Phases in Product Development Process2.Feasibility analysisMarket analysis (demand) Economic analysis (development cost and product cost, profit potential) Technical analysis ( capacity requirements and availability, skills needed) Does it fit the mission? Collaboration among marketing, finance, accounting , engineering, and operations.4-34

Phases in Product Development Process3.Product Specifications Detailed descriptions of what is needed to meet (or exceed) customer wants. Collaboration between legal, marketing and operations.

4.Process Specifications Specifications for the process that will be needed to produce the product based on the product specifications. Factors to be considered: cost, availability of resources, profit potential, and quality. Collaboration between accounting and operations.4-35

Phases in Product Development Process5.Prototype Development Any problem with the product or process specification? 6. Design Review Necessary changes or abandon Collaboration among marketing, finance, engineering, design, and operations.

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Phases in Product Development Process7.Market Test Extent of consumer acceptance Handle by marketing 8. Product Introduction Promote the product Handle by marketing 9.Follow-up Evaluation Determine if changes are needed, and refine forecasts. Handle by marketing4-37

ManufacturabilityManufacturability is the ease of fabricationand/or assembly which is important for:Cost Productivity Quality

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Designing for ManufacturingBeyond the overall objective to achieve customer satisfaction while making a reasonable profit is: Design for Manufacturing(DFM) The designers consideration of the organizations manufacturing capabilities when designing a product. The more general term design for operations encompassesservices as well as manufacturing4-39

Designing for ManufacturingConcurrent Engineering Computer-Aided Design Recycling Remanufacturing Component Commonality

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Concurrent Engineering

Concurrent engineering is the bringing together of engineering design and manufacturing personnel early in the design phase. Purpose: achieve product designs reflecting customer wants and manufacturing capabilities4-41

Advantages of Concurrent Engineering1.Manufacturing personnel are able to identify production capabilities and capacities.(selecting materials and processes; cost and quality considerations)

2.Early opportunities for design or procurement of critical tooling with long lead times.(shorten development process)

3.Early consideration of the technical feasibility of the design. 4.Problem resolution instead of Conflict resolution4-42

Disadvantages of Concurrent EngineeringLong-standing existing boundaries between design and manufacturing can be difficult to overcome. There must be extra communication and flexibility if the process is to work.Managers should plan to devote special attention if this approach is to work4-43

Computer-Aided DesignComputer-Aided Design (CAD) is product design using computer graphics.increases productivity of designers, 3 to 10 times creates a database for manufacturing information on product specifications provides possibility of engineering and cost analysis on proposed designs

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Production RequirementsDesign for manufacturing (DFM) --production capability (equipment, skills, materials, tech., special abilities) Design for assembly (DFA) --the number of parts in an assembly, the assembly methods and sequence Manufacturability --ease of fabrication and/or assembly is important for cost, productivity and quality4-45

RecyclingRecycling: recovering materials for future use Recycling reasonsCost savings Environment concerns Environment regulations

Design for Recycling (DFR) -- ability to disassemble a used product to recover the recyclable parts4-46

RemanufacturingRemanufacturing: Refurbishing used products by replacing worn-out or defective components. (automobile, printer, camera, telephone)Remanufactured products can be sold for 50% of the cost of a new producer Remanufacturing can use unskilled labor Some governments require manufacturers to take back used products

Design for Disassembly (DFD): Designing products so that they can be easily taken apart.4-47

Component CommonalityMultiple products or product families that have a high degree of similarity can share components Automakers using internal partsEnginesand transmissions Water pumps Etc.

BenefitsSaved the design time Reduced training for assemble and installation Reduced repair time and costs4-48

Quality Function DeploymentQuality Function DeploymentVoice of the customer House of quality

QFD: An approach that integrates the voice of the customer into the product and service development process.

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The House of QualityFigure 4.3Correlation matrix Design requirements

Customer requirements

Relationship matrix

Competitive assessment

Specifications or target values

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Figure 4.4

House of Quality Example

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The KanoModelFigure 4.5Kano Model Kano Model

Customer Satisfaction Customer Satisfaction

Excitement characteristics Expected characteristics Must-have characteristicsCustomer Needs Customer Needs Excitement Excitement Expected Expected Must Have Must Have

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Projects1.Make analysis of the service quality for a restaurant (such as Red Point Restaurant MUST) using QFD approach, point out the main technical requirements on which the restaurant should focus the greatest effort in order to increase the level of the service quality. 2. Identify the design characteristics in each category of the Kano model (must-have, expected and excitement characteristics) for a restaurant.4-53

Service DesignService is an Act Provided by Service Delivery SystemFacilities Processes Skills

Many services are bundled with products

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Service DesignService design involves1. The physical resources needed 2. The goods that are purchased or consumed by the customer 3. Explicitservices 4. Implicitservices

Service Package

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Service DesignServiceSomething that is done to or for a customer

Service delivery systemThe facilities, processes, and skills needed to provide a service

Product bundleThe combination of goods and services provided to a customer

Service packageThe physical resources needed to perform the service4-56

Differences Between Product and Service Design1. Tangible intangible 2. Services created and delivered at the same time 3. Services cannot be inventoried 4. Services highly visibleto customers 5. Services have low barrierto entry 6. Location important to service 7. Range of service systems (degree of custom contact) 8. Demand variability (waiting lines or idle service resources) 4-57

Service Demand VariabilityDemand variability creates waiting lines and idle service resources Service design perspectives: Cost and efficiency perspective Customer perspective Customer participation makes quality and demand variability hard to manage Attempts to achieve high efficiency may depersonalize service and change customers perception of quality4-58

Service BlueprintingService blueprintingA method used in service design to describe and analyze a proposed service

A useful tool for conceptualizinga service delivery system

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Service Blueprinting Example1

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Service Blueprinting Example2

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Major Steps in Service Blueprinting1. Establish boundaries 2. Identify sequence of customer interactions Prepare a flowchart

3. Develop time estimates 4. Identify potentialfailure points

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Characteristics of Well Designed Service Systems1. 2. 3. 4. 5. 6. 7. 8. 9. Consistent with the organization mission User friendly Robust Easy to sustain Cost-effective Value to customers Effective linkages between back operations Single unifying theme Ensure reliability and high quality4-63

Challenges of Service Design1. 2. 3. 4. Variable requirements Difficult to describe some services High customer contact Service customer encounter

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Operations StrategyProduct and service design is a fertile area for achieving competitive advantage Increase emphasis on component commonality Package products and services Use multiple-use platforms Consider tactics for mass customization Look for continual improvement Shorten time to market4-65

Shorten Time to Market1. Use standardized components 2. Use technology 3. Use concurrent engineering

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Class ExerciseP161 --- Problem4.

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Projects1.Make analysis of the service quality for a restaurant (such as Red Point Restaurant MUST) using QFD approach, point out the main technical requirements on which the restaurant should focus the greatest effort in order to increase the level of the service quality. 2. Identify the design characteristics in each category of the Kano model (must-have, expected and excitement characteristics) for a restaurant.4-68