PGDM-Product Design, Make-Buy,VA+VE Etc

8/22/2019 PGDM-Product Design, Make-Buy,VA+VE Etc.

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Product Design


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WHAT IS PRODUCT

A produc t , is any th ing that can

be o ffered to a market to sat is fy

a wan t or a need(Kotler)


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WHAT IS PRODUCT?

PhysicalGoods :Cars, Medicines

Services: Banking, Insurance, Internet

Persons: Sachin Tendulkar, Abhishek

Bachchan

Places: Kashmir, Singapore

Properties: The Konark Kinara

Organizations: RSS, Reliance

Information: Cancer / HIV / Polio

Awareness

Ideas:Loss Prevention


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What Is NewProduct?

A product is consideredto be a newwhen it is:

new to the world,

to the market, to the producer,

to the seller, or

some combination of

these.


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Categories of New Products

New-To-The-World

New Product Lines

Product Line Additions

Improvements/Revisions

Repositioned Products

Lower-Priced Products

SixCategories

of

New

Products


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New-Product Strategy

Idea Generation

Idea Screening

Business Analysis

DevelopmentTest Marketing

Commercialization

New Product

New-Product Development Process


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Successful New-Product

Development Process

ProductSuccess

Factors

Long-Term Commitment

New Product Strategy

Capitalize on Experience

Establish an Environment


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ORGANISATIONAL COMPETITVENESS THROUGH

PRODUCT DESIGN

Cost Proportion:A high proportion, almost 70 to 80 per cent, of a

products production cost could be determined at

the design stage


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Life Cycle Costs

A good design could reduce variouscosts such as that of :

Materials

Manufacturing Process

Quality

Use & Maintenance by the Customer

Depreciation

Environmental (for society at large)


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Competitiveness

Four Ways to Achieve Competitiveness

Through Quality

Through Time

Through Cost

Through Flexibility


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A Good Product Design Offers

Competitiveness Through Quality

Quality of:

Performance

Features and Aesthetics Reliability and Durability

Serviceability and Safety

User Friendliness and Customizability

Environment - Friendliness


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TIME-BASED COMPETITION IN DESIGN

Time To Design & Develop Is Vital.

Because, Changes Keep Occurring In:

business environment

target market

technology

competitive position of the firm

Speed Up Product Development Through: Concurrent Engineering

Cross-functional Teams for product

development


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Product Design

Modular Design

Computer Aided

Design (CAD)

Concurrent

Engineering

Product Life

Cycle

Standardization

Manufacturability Reverse Engineering

Research &

Development

Concepts

in

Product

Design

Robust Design

Concepts in Product Design


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DESIGN FOR MANUFACTURABILITY (DFM)

Product designed in such a way that the

processes to manufacture are

easier

quicker

less expensive


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Over the Wall syndrome

Product Design cannot be thrown over the

wall towards manufacturing people to

produce it.

Engineering changes afterthe design are

very expensive and wasteful of time andeffort.


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DFM Principles for Assemblies

Minimize the number of parts

Standardize designs

Minimize the number of operations Modify the parts for ease of assembly

Use modules

Minimize new-ness

Use Poka Yokeor fool-proofing


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DFM Principles for Components

Standardize the features

Use Product Families concept

Avoid complex contours

Make use of tolerances

Make parts

self-aligning

with symmetry

easy to handle

easy to assemble


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DESIGN FOR EXCELLENCE (DFX)

DFM is only one aspect of excellence in

design.

Excellence should be in various functions

and aspects of business.

Even DFM has to be for the entire ProductFamily.

Look beyond ones own organization, to

other firms in the value chain. Look beyond the present, to the future

efficiencies.

Design should be for overall Excellence.


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Product Design for Service Industry

Service Design a service product or a service

offering - defines the service company itself, notjust the lifetime costs.

Service Design decides on the attributes it will

cater to and also those it will notaccording to thebusiness it has defined for self.

e.g. As a design, Wal-Mart will not offer what Saks

Fifth Avenue offers. OR Tiffanys Room will not offer

what the other restaurants even in the 5 star hotelswould offer.

Reliability is very important in Service Design.

Because, services are fragile; rework is not

possible. Service design should keep this in view.


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Product Design for Service Industry contd.

Service Design has few parallels to DFM. Service

is designed primarily with the customer in view.

Customer is right there in the service operations.

He is not merelythe consumerof the service;

He can be integral to the productionof the service.

Perhaps, there is a need forDesign for Customer

Participation (DCP).

Therefore, Service Product Design has to be

accompanied simul taneouslywith The Design of

Service Process.


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Any Questions??


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Value Analysis (VA) / Value

Engineering (VE)


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Origin & Definition of Value Analysis

Value Analysis is an organized effort to provide required functionsof a product at lowest overall cost

consistent with achieving the requiredquality, performance and market acceptance

VALUE A NALYSIS IS NOT A CHEAPENING PROCESS. RELIAB ILITY & PERFORMANCE ARE NOT

SACRIFICED FOR THE SAKE OF CUTTING COST

Value Analysis was developed in the late 1940s by Lawrence D. Miles. He

worked in the Purchase Department of General Electric Company in the

USA

Value Analysis was a response to the question: How had companies

managed to innovate during World War II despite of rationed materials

and war time shortages

Miles presented a model on the idea that All cost is for function.Customers buy functions experienced through products and services

A funct ionis something that a product or service doesfor someone

who uses it

Miles named his approach as Value Analysis and laterValue Engineering.

Today, it is also called Value Management

Origins of Value Analysis, Value Engineering, or Value Management

Definition of Value Analysis


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VALUE ANALYSIS / VALUE ENGINEERING

Value Analysis (VA) & Value Engineering(VE) - also called Value Methodologyor

Value Management- is a powerful problem-

solving tool that can reduce costs whilemaintaining or improving performance and

quality requirements.

It is a function-oriented, systematic teamapproach to providing valuein a product or

in a service.


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The value methodology helps organizations

compete more effectively in local, national

and international markets by:

- Decreasing Costs

- Increasing Profits

- Improving Quality

- Expanding Market Share

- Saving Time

- Solving Problems

Using resources more effectively

VALUE METHODOLOGY


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VALUE ANALYSIS - VA

VA is a step-by-step approach to identify the

funct ionsof a product, process, system

or service;

to establish a monetary value for that function

then provide the desired function at an

overall minimum cost without affecting any of

the existing parameters like Quality, Safety,

Maintainability, Productivity, and other

Performance Characteristics.


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Value Engineering

Value Engineering is where the value

of all the components used in the

construction of a product from designto final delivery stage are completely

analysed and pursued.


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Difference Between Value Analysis & Value

Engineering

VALUE ANALYSIS VALUE ENGINEERING

Indicates application on the

product that is into

manufactur ing.

Indicates application on

the produc t at i ts design

stage.

All factors come together

including workers,subcontractors, engineers

to make a team w ith total

exper ience and know ledge

It is always done by a

speci fic productdesig n(eng ineers) team.


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Difference Between Value Analysis & Value

Engineering

VALUE ANALYSIS VALUE ENGINEERING

It may change the

presentstage of the

product or operation

the changes are

executed at the initial

stages (design) only.

It is worked out

mostly with helpofknowledgeand

experience

It requires speci f ic

techn ical know ledge.


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What Is Overal l Cos t?

Overal l Cos tsmeans different to different people. For a producer

overall cost is the summation of all the elements

of the cost required to produce a product orservice such as labour, material, overhead, etc.

For a consumer

overall cost is the monetary sum (= price) forwhich the products or services are purchased in

the market.


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Value

* Valueis what is perceived by

the user

Key Question??

How To Increase The Value


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FUNCTION OF VA/VE

FUNCTIONHERE MEANS NEED


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Value of A Function Can Be Increased by

Four Methods

1. Decrease the cost whileensuring the same level

of performance.

2. Enhance the performance

at the same cost.

3. Decrease the cost and

increase the performance

4. Increase both performanceand cost ensuring that

performance increases

more than the increment in

the cost.

V = P / C

V = P / C

V = P / C

V = P / C


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THE VARIOUS TYPES OF FUNCTION

Use Function and Aesthetic Function

Primary Function and SecondaryFunction

Higher Orderand Secondary Function


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USE FUNCTIONAND AESTHETIC FUNCTION

Use Funct ionPerform s some act ion , exp resses in

act ive tone(For example: Wristwatch : Hour or Minute Hands)

Aesthet ic Funct ion

Pleases cu stomer, exp ressed in passive

or non -measu rable tone(For example: Wristwatch :Matching Strap)


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PRIMARY FUNCTION AND SECONDARY

FUNCTION

Primary Funct ion

Basic pu rpose for wh ich a product

exists(For Example: Wristwatch : To Show Time)

Secondary Funct ion

Arises ou t of speci f ic design chosen tofu l f il the pr imary fun ct ion(For Example:Wristwatch : To Show Date & Day / Phases of the Moon )


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HIGHER ORDER AND SECONDARY FUNCTION

Higher Order Func t ion-Reason of sat isfy ing the basic funct ion

(For example: Wristwatch: To Show Time)

Lower Order Funct ion -

Means of achieving the basic funct ion(For example: Wristwatch: To Have Strap)


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VALUE ANALYSIS TESTS

Does its use contribute value?

Is its cost proportional to its usefulness?

Does it need all its features?

Is there anything better for the intended use?

Can a usable part be made by a lower costmethod?


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VALUE ANALYSIS TESTS Can a standard product be found which will

be usable?

Is it made on proper tooling, considering

quantities used?

Do materials, reasonable labour, overhead,

and profit total its cost?

Will another dependable supplier provide itfor less?

Is anyone buying it for less?


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Value Analysis Is Characterized By Four

Key Elements

Function-Cost-Analysis

Structured Approach with

10 Steps (VA/VE Job Plan)

Focused Team Effort

Creativity

0 1 2 3 4 5 6 7 8 9


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A Function Description Which Is Neutral In Regard To Solutions

Will Increase The Room For Creativity And New Solutions

If You Want To Solve A Problem Detach Yourself From The Problem First !!

Put Sheets Together

hold sheets ofpaper together

Situation As-is

Level of Functions

Level ofTransformation

Level of Solutions

Paper Clip

Situation To-be

to stick, to glue, to rivet,

to staple, to clamp, toturn down corners,

to put in a hose,

What does it do ?

by accident

Proces

sof

Abstraction

What exactly does it do? In what way else?

Folder Clamp

?

clip Sheets

Put Sheets Together


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Value Engineering

Workshop

Value Engineering


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VE In Session


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Maruti Udyog Limited

Maruti Suzuki, the major passenger car

company, has undertaken measures along

with its vendors to save costs through VA

initiatives. The company has introduced a

scheme to encourage vendors to reducetheir costs and share the benefits. The

Chairman of Maruti Suzuki said, With the

help of Value Analysis, we have savedaround ` 42.50 crore in 2006-06 fiscal; ` 58

crore in 2006-07 and `75 crore in 2007-08


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Any Question??


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MAKE OR BUY DECISION

INTRODUCTION


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INTRODUCTION

Every organization has to decide whether to

produce a product or offer service internally orpurchase from outside source (Outsourcing)

Theoretically, every item / service is a candidate for

internal manufacture and every item currently

produced internally is a candidate for outsourcing.

Majority of the Make/Buy Decisions are price-

related.

However, many non-price factors requireconsideration

Make/Buy Decisions are complex, time consuming

and require senior management involvement


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MAKE / BUY DECISIONS WHEN?

When the organization introduces newproducts.

The fluctuating demand for the company's

products. When the organization carries out value

analysis or cost reduction programs.

Deteriorating quality and delivery commitmentof the supplier if presently the item is bought.

The scarcity of funds for investment in

additional plant and equipment.

FACTORS INFLUENCING MAKE/BUY DECISIONS


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FACTORS INFLUENCING MAKE/BUY DECISIONS

Factor MakeDecision BuyDecisionVolume of Production

(Quantity) Higher Lower

Cost Analysis

Material, Direct Labour , Set-

up, Depreciation, Admn,

Overheads, Interests, Taxes,

Inv. Carrying, Scrap

Spoilage, Rework, etc.

Purchase Price,

Transportation, Sales Tax,

Octroi, Procurement, Inv.

Carrying, Incoming

Inspection, etc.

Utilization of

Production CapacityLarge Prod. Capacity Small Production Capacity

Integration of Prod.

SystemVertical Integration Horizontal Integration

Manpower Skilled, Competent Scarce

Secrecy & Protection of

Patent ActYes No

Fixed Cost Lower Higher

Competent Vendors - -

Quality & Reliability of

Vendors - -

FUNCTIONAL ASPECTS INFLUENCING MAKE/BUY


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Financial Aspects

Long-term Investment

Technological Aspects

Access to latest technology

Feasibility and Terms & Conditions for Technology transfer

Scrapping of Old / Outdated Plant & Machinery

Product Life Cycle

Marketing Aspects

Fierce Competition Quality Make Decision

(Future) Higher Market Share Make Decision

Purchasing Aspects Availability, Delivery, Acceptable Price, Acceptable Quality, Competency &

Reliability of Vendors, Financial Condition of Vendors etc.

Intangible Aspects

Environmental Factors, Labour Union Acceptance, Support to

Ancilliarization, Growth of SSIs

FUNCTIONAL ASPECTS INFLUENCING MAKE/BUY

DECISIONS


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NON-ECONOMIC FACTORS IN MAKE/BUY DECISIONS

Availability of Infrastructure and SkilledPersonnel

Availability of Alternate Source of Supply

Employee Preferences and Stability Concerns Need to Maintain Trade Secrets

Desire to Expand in to New Product Line

Desire for Forward and backward Integration Long-lasting and Mutually Beneficial

Relationships with Vendors


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ILLUSTRATION

Demand for the component is at the rate of 6000

per year and this demand is going to continue for

next three years. The company has two options. It

can get the component manufactured from outside

or it can manufacture in house. It costs the Co. `2.80 per unit to buy the component. The in-house

manufacture will incur a fixed cost to the extent of `

10,000 and variable cost of ` 1.50 per unit.

Give the Decision Rule for Make or Buy

SOLUTION ILLUSTRATION


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SOLUTION : ILLUSTRATION(CONTD.)

Letx be the number of units

The Total Cost incurred in buy ingthe component is Total Cost (Y1) = ` 2.80*x

Total Cost in makingthe component in-house is

Total Cost (Y2) = 10,000 + 1.50*x

At BEP, both alternatives result in equal total costs At BEP, Y1 = Y2 2.80*x = 10,000 + 1.50*x orx = 7693 units

Decision Rule

If the quantity is 7693 units, bo th make and buy are equal lyeconomical

If the quantity is less than 7693 units, then it is economical to

buy

If the quantity is more than 7693 units, then it is economical to

make


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BREAK-EVEN CHART

Fixed Cost

` 10,000

Volume / QuantityBEP

Volume/Quantity

Cost(In

Rs.)

BEP

Valu

e`

Zone ofCheaper to Bu y

Zone ofCheaper to Bu y

Fixed Cost = ` 10,000


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Any Question??


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Thank you

Documents

PGDM-Product Design, Make-Buy,VA+VE Etc