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Product and Service Design

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1 Product and Service Design
Chapter 4 Product and Service Design

2 Trends in Product & Service Design
Customer satisfaction Designing products & services that are “user friendly” User friendly software Reducing time to introduce/produce new product or service PhD degree in 6 months The organization’s capabilities to produce or deliver the right item on time Compaq could not deliver enough laptops in mid 90s Environmental concerns Designing products that use less material Toyota Prius

3 Product and Service Design
Major factors in design strategy Cost Quality Time-to-market Customer satisfaction Competitive advantage Product and service design – or redesign – should be closely tied to an organization’s strategy

4 Activities of Product or Service Design
Translate customer wants and needs into product and service requirements Refine existing products and services Develop new products and services Formulate quality goals cost targets Construct and test prototypes Document specifications

5 Reasons for Product or Service Design
Economic Low demand, excessive warranty claims SUVs easily topple over and have high warranty claims Social and demographic Changing tastes, aging population SUVs for generation X people who age but want to stay dynamic Political, liability, or legal Safety issues, new regulations, government changes SUVs easily topple over and manufacturers are sued Competitive New products and services in the market, promotions SUV sales are increased with promotions. The profit margins on SUVs are huge so a lot of room for promotions Cost or availability Raw materials, components, labor Technological Components, production processes

6 Objectives of Product and Service Design
Main focus Customer satisfaction Secondary focus Function of product/service Cost/profit Quality Appearance Ease of production/assembly Ease of maintenance/service

7 Design For Operations Taking into account the capabilities of the organization in designing goods and services Location of facilities Suppliers Transportation fleet Current workforce Current technology Standing contracts All can all limit the implementation of a new design

8 Legal, Ethical, and Environmental Issues
IRS, FDA, OSHA Product liability: A manufacturer is liable for any injuries or damages caused by a faulty product. Uniform commercial code: Products carry an implication of merchantability and fitness Ethical Releasing products with defects Releasing Software with bugs Sending genetically altered food to nations suffering food shortages Environmental EPA

9 Designers Adhere to Guidelines
Produce designs that are consistent with the goals of the company Give customers the value they expect Make health and safety a primary concern Consider potential harm to the environment

10 Forthcoming Aspects of Product Design
Product Life Cycles Standardization Mass Customization Modular Design Robust Design Concurrent Engineering Computer-Aided Design

11 Other Issues in Product and Service Design
Product/service life cycles How much standardization Product/service reliability Range of operating conditions

12 Life Cycles of Products or Services
Time Introduction Growth Maturity Saturation Decline Demand cassettes Compact discs Design for low volume Flash memory

13 The degree of Standardization?
Extent to which there is an absence of variety in a product, service or process The degree of Standardization? Standardized products are immediately available to customers Calculators & car wash

14 Advantages of Standardization
Fewer parts to deal with in inventory & manufacturing Less costly to fill orders from inventory Reduced training costs and time More routine purchasing, handling, and inspection procedures Opportunities for long production runs, automation Need for fewer parts justifies increased expenditures on perfecting designs and improving quality control procedures.

15 Disadvantages of Standardization
Decreased variety results in less consumer appeal. Designs may be frozen with too many imperfections remaining. High cost of design changes increases resistance to improvements Who likes optimal Keyboards? Standard systems are more vulnerable to failure Epidemics: People with non-standard immune system stop the plagues. Computer security: Computers with non-standard software stop the dissemination of viruses.

16 Mass Customization Mass customization:
A strategy of producing standardized goods or services, but incorporating some degree of customization Modular design Delayed differentiation

17 Mass Customization I: Customize Services Around Standardized Products
Warranty for contact lenses: Source: B. Joseph Pine DEVELOPMENT PRODUCTION MARKETING DELIVERY Notes: Contact lenses with different warranty. On one extreme is the IBM system/360 mainframe where the system was customized for each customer. This is very expensive and soon disappeared. An effort was made to develop a standardized product that filled most of the needs at a lower cost. One may build many views of a database of cases and readings to satisfy marketing professionals, operations, new product etc. Here design of the data base becomes important since the kinds of views that are easily feasible will depend upon the way the data base has been designed. For example if articles can be sorted and searched based on key words that are assigned, it may be much easier to design different views. Personalized newspapers and web profiles which only show a certain view of the web. Here we have “postponed” differentiation to the point of delivery. Deliver customized services as well as standardized products and services Market customized services with standardized products or services Continue producing standardized products or services Continue developing standardized products or services

18 Mass Customization II: Create Customizable Products and Services
Gillette sensor adjusting to the contours of the face: DEVELOPMENT PRODUCTION MARKETING DELIVERY Deliver standard (but customizable) products or services Market customizable products or services Produce standard (but customizable) products or services Develop customizable products or services

19 Mass Customization III: Provide Quick Response Throughout Supply Chain
Skiing parkas manufactured abroad vs in USA DEVELOPMENT PRODUCTION MARKETING DELIVERY Reduce Delivery Cycle Times Reduce selection and order processing cycle times Reduce Production cycle time Reduce development cycle time

20 Mass Customization IV: Provide Point of Delivery Customization
Paint mixing: DEVELOPMENT PRODUCTION MARKETING DELIVERY Point of delivery customization Notes: Paint mixing Mention HP in this case. Lenscrafters for glasses. This method works when there are a few inherently individual characteristics in an otherwise standardized product. The rest is produced centrally in advance. All build-to-order computer manufacturers Dell, Micron, Compaq is moving to it, essentially do this form of customization. In this form of customization, modularity plays an important role. Deliver standardize portion Market customized products or services Produce standardized portion centrally Develop products where point of delivery customization is feasible

21 Delayed Differentiation
Delayed differentiation is a postponement tactic Producing but not quite completing a product or service until customer preferences or specifications are known Postponing the completion until customer specification are known Examples: Wheeled loaders

22 Postponement Case Study: Hewlett & Packard
H&P produces printers for Europe market. Product manuals (different languages), labels and power supplies (plugs are different for UK, Continental EU and US) were used to be packaged along with printers in US. HP postpones commitment of a printer to a certain geographic market by producing universal printers and then applying power supplies and labels (the parts that differentiate printers for local markets) at the last stage once demand is more certain Packaging was postponed to local distribution centers in each European country. Packaging is closer to demand (in location and time) so H&P can respond faster and redistribute the supply: Ireland has 1600 with demand 1100 Portugal has 800 with demand 1000 Send 200 from Ireland to Portugal For more read: H.L. Lee and C. Billington, "Evolution of Supply Chain Management Models and Practice at Hewlett-Packard Company," Interfaces, 25, 5, 1995:

23 Delayed Differentiation=Postponement
Postponement is delaying customization step as much as possible. Producing but not quite completing a product or service until customer preferences or specifications are known. (Salad) + (Dressings ={1000 Islands, Vinaigrette, …}) Need: Indistinguishable products before customization Customization step is high value added Unpredictable, negatively correlated demand for finished products Flexible processes to allow for postponement

24 Modular Design Modular design is a form of standardization in which component parts are subdivided into modules that are easily replaced or interchanged. It allows: easier diagnosis and remedy of failures easier repair and replacement simplification of manufacturing and assembly Disadvantage: variety decreases

25 Modular Design Modular design is a form of standardization in which component parts are subdivided into modules that are easily replaced or interchanged. A bad example: Earlier Ford SUVs shared the lower body with Ford cars Due to standardization, it allows: easier diagnosis and remedy of failures easier repair and replacement simplification of manufacturing and assembly

26 Types of Modularity for Mass Customization
Component Sharing Modularity, Dell Cut-to-Fit Modularity, Gutters that do not require seams Bus Modularity, E-books + = Mix Modularity, Paints Sectional Modularity, LEGO

27 Mass Customization V: Modularize Components to Customize End Products
Computer industry, Dell computers: DEVELOPMENT PRODUCTION MARKETING DELIVERY Notes: Computer industry Deliver customized product Market customized products or services Produce modularized components Develop modularized products

28 Reliability Reliability: The ability of a product, part, or system to perform its intended function under a prescribed set of conditions Failure: Situation in which a product, part, or system does not perform as intended Normal operating conditions: The set of conditions under which an item’s reliability is specified A regular car is not to be driven at 200 mph A bed is not to be used as a trampoline

29 Improving Reliability
Good component design improve system reliability Production/assembly techniques Testing To figure out defectives / weak units Dell tests each computer’s electric circuitry after the assembly Redundancy/backup Exactly why your car has a spare tire Preventive maintenance procedures Medical check-ups to discover potential diseases User education System design

30 Robust Design Design that can function over a broad range of conditions Taguchi’s Approach: Design a robust product Insensitive to environmental factors either in manufacturing or in use. Columbia parkas with fleece inside For skiing and rainy weather: Take out the fleece use the outer shell For dry cold air: Wear the fleece without the outer shell For a snow storm: Wear the fleece with the shell When you put on weight: Ease the belts for a relaxed fit When you are sweating: Open air ducts for breathing your body Central feature is Parameter Design. How to set design parameters? Design of experiments – a Statistics concept Determines: factors that are controllable and those not controllable their optimal levels relative for good product performance

31 Phases in Product Development Process
Idea generation Feasibility analysis (Demand, cost/profit, capacity) Product specifications (customer requirement) Process specifications (produce in economic way) Prototype development Design review Market test Product introduction (promotion) Follow-up evaluation

32 Idea Generation Supply chain based Competitor based Research based
Ideas Competitor based Research based

33 Sources of Ideas for Products and Services
Internal Employees Marketing department R&D department External Customers, sometimes misleading Competitors Reverse engineering is the dismantling and inspecting of a competitor’s product to discover product improvements. Benchmarking is comparing and contrasting product and process characteristics against those of competitors Both can be classified as environmental scanning activity Suppliers & Customers, Ford helps its suppliers in designing components

34 Research & Development (R&D)
Organized efforts to increase scientific knowledge or product innovation & may involve: Basic Research advances Universities, IBM research centers Applied Research Motorola, Alcatel Development All companies

35 Manufacturability Manufacturability is the ease of fabrication and/or assembly which is important for the following aspects: Cost Productivity Quality

36 Design for Manufacturing
Beyond the overall objective to achieve customer satisfaction while making a reasonable profit is: Design for Manufacturing (DFM) : The designers’ consideration of the organization’s manufacturing capabilities when designing a product. The more general term design for operations encompasses transportation, services as well as manufacturing

37 “Over the Wall” Approach vs Concurrent Engineering
Design Mfg New Product

38 Concurrent Engineering
Concurrent engineering: Bringing engineering design and manufacturing personnel together early in the design phase. Manufacturing personnel helps to identify production capabilities, selecting suitable materials and process, the conflicts during production can be reduced. Early consideration of technical feasibility. Shortening the product development process.

39 Product design Design for manufacturing (DFM)
Design for assembly (DFA) number of parts, methods, sequence. Design for recycling (DFR) Remanufacturing Design for disassembly (DFD)

40 Computer-Aided Design
Computer-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 Simplifies communication of a design. Design teams at various locations can work together. provides possibility of engineering and cost analysis on proposed designs Transonic Systems Inc. manufactures customized medical devices; pomps, blood vessel, blood pressure measurement equipment. Design to manufacturing was long, problematic, designers and manufacturing engineers could not work on designs simultaneously, some of the previous designs were lost (talking of knowledge management). Savior: CAD

41 Recycling-Remanufacturing
Recycling: recovering materials for future use Recycling reasons Cost savings Environment concerns Environment regulations Remanufacturing: replacing worn out parts in used products Kodak cameras Design for disassembly is considering ease of disassembly while designing a product Reverse supply chains

42 Quality Function Deployment
Voice of the customer House of quality QFD: An approach that integrates the “voice of the customer” into the product and service development process.

43 The House of Quality Relationship Correlation matrix Design
requirements Customer require- ments Competitive assessment Relationship Specifications or target values

44 Quality Function Deployment
A structured and disciplined process that provides a means to identify and carry the voice of the customer through each stage of product or service development and implementation QFD is for: Communication Documentation Analysis Prioritization QFD is a structured and disciplined process that takes time. QFD uses customer input to develop, implement, and improve a product/service. QFD improves communication in the following ways: The organization acts to understand its external customer. Vertical departments are involved in the design and development of products and services. QFD provides a team structure, which improves communication among team members. The QFD team and management communicate in a structured, documented fashion. The QFD matrices provide a detailed project tracking system that incorporates the QFD team’s consensus thinking process. The matrices provide a structured approach to analyze & prioritize input breakthroughs

45 House of Quality Example for a Car Door
Customer Requirements Importance to Cust. Easy to close Stays open on a hill Easy to open Doesn’t leak in rain No road noise Importance weighting Engineering Characteristics Energy needed to close door Check force on level ground to open door Water resistance 63 45 27 6 7 5 3 2 X Correlation: Strong positive Positive Negative Strong negative * Competitive evaluation X = Us A = Comp. A B = Comp. B (5 is best) AB X AB XAB A X B X A B Relationships: Strong = 9 Medium = 3 Small = 1 Target values Reduce energy level to 7.5 ft/lb Reduce force to 9 lb. to 7.5 ft/lb. current level Maintain Technical evaluation 4 1 A BA BXA Door seal resistance Accoust. Trans. Window

46 The QFD and Kano Model Japanese QFD Results The Kano Model
Design time reduced by ¼ to ½ Problems with initial quality decreased Comparison and analysis of competitive products became possible Communication between divisions improved The Kano Model Product Characteristics: Must have = Order qualifiers Expected = Order qualifiers, winners Excitement = Order winners Make sure that you have the order qualifiers Determine the level of order winners with a cost/benefit analysis

47 Service Design Service is an act Service delivery system
Facilities Processes Skills Explicit services Core of the service: Hair styling Implicit services Excitement characteristics: Courtesy Many services are bundled with products Maintenance services Conecpt of selling solutions: Products and Services E.g. IBM

48 Phases in Service Design
Conceptualize Identify service components Determine performance specifications Translate performance specifications into design specifications Translate design specifications into delivery specifications

49 Service Blueprinting Service blueprinting: A method used in service design to describe and analyze a proposed service A useful tool for conceptualizing a service delivery system Major Steps in Service Blueprinting Establish boundaries Identify steps involved Prepare a flowchart, see the next page, source in justice-flowchart.pdf Identify potential failure points Establish a time frame Analyze profitability


51 Characteristics of Well Designed Service Systems
You be the judge for the justice system How do you rate the system in terms of 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Consistent with the organization mission User friendly: Do we understand it? Robust: Can it function under various conditions? Easy to sustain: Requires to much effort? Cost effective: Does it cost too much? Value to customers: Who are the customers? Effective linkages between back-office operations Single unifying theme: What does the justice system do? Ensure reliability and high quality Consistency. Up-to-date: Does it evolve?

52 Challenges of Service Design
Variable requirements Criminals and the cases are different Difficult to describe How do you describe a criminal action? We need the court system. Descriptions are not exact because they are based on words. This is exactly why lawyers make a living; or perhaps more. High customer contact Service cannot be inventoried Service – customer encounter

53 Differences Between Product and Service Design
Most often product and services are provided together. Products vs. Services are Tangible – intangible Services created and delivered at the same time Services cannot be inventoried Services highly visible to customers Services have low barrier to entry Location important to service Ambiance Convenience

54 Service Variability & Customer Influence Service Design
Figure 4-3 High Moderate Low None Telephone Purchase Dept. Store Purchase Customized Clothing Internet Purchase Variability in Service Require-ments Degree of Contact with Customer Where are medical services, internet law consultants?

55 Operations Strategy Shorten time-to-market
Package products and services Sell “solutions” not products Increase emphasis on component commonality Use multiple-use platforms Consider tactics for mass customization Look for continual improvement

56 Summary: Product design
Remanufacturing-recycling Robust design Design for manufacturing (DFM) Design for assembly (DFA) Design for disassembly (DFD) Design for recycling (DFR) Reliability

57 2. Product failures can be easier to remedy with modular design.
Practice Questions True/ False: 1.One of the main advantages of standardization is that it increases the potential variety of products. 2. Product failures can be easier to remedy with modular design. 3. Quality function deployment (QFD) is based on a set of standards which relate customer requirements to company capabilities. 1.Answer: False Page: 127 2.Answer: True Page: 129 3.Answer: False Page: 143

58 4. The term standardization is closely associated with:
Practice Question Multiple-Choice: 4. The term standardization is closely associated with: A) customization B) high cost C) longer lead times D) variety E) interchangeability Answer: E Page: 127

59 4. A formal way to document customer requirements is:
Practice Question 4. A formal way to document customer requirements is: A) consumer surveys B) quality function deployment (QFD) C) focus groups D) Delphi technique E) sales/marketing matrix Answer: B Page: 142

60 Practice Question 6. The stage in a product or service life cycle where some firms adopt a defensive research posture is: A) incubation B) growth C) maturity D) saturation E) decline Answer: E Page: 126

61 Reliability Reliability: The ability of a product, part, or system to perform its intended function under a prescribed set of conditions Failure: Situation in which a product, part, or system does not perform as intended Normal operating conditions: The set of conditions under which an item’s reliability is specified Reliability is a Probability, that the product or system will: Function when activated Function for a given length of time Independent events Redundancy; Why to have spare tires on the car?

62 Parallel vs Serial Components
A product is composed of several components. Suppose components fail/work independently. If all components must function for the product to function, components are serial. Example: Laptop and projector. A B Water flowing from left to right analogy. P(System works)=P(A works) P(B works) If at least one component must function for the product to function, components are parallel. Example: Two batteries of a laptop. P(System fails)=P(A fails) P(B fails) A B

63 Example: Reliability Diagram
Determine the reliability of the system shown .90 .92 .98 .90 .95 Compare this diagram to that of Example S-1

64 Example The system can be reduced to a series of three components By collapsing parallel components 0.98 1-(0.10)(0.10) 1-(0.05)(0.08) 0.98 x 0.99 x 0.996

65 Failure Rate: Personal life expectancy – Strike life expectancy
Figure 4S-1 Few (random) failures Infant mortality Failures due to wear-out Time, T

66 Exponential Distribution for Life X
Time Reliability=P(x>T)=1-F(T) pdf f(x) cdf F(T)=P(X<T)

67 Use Exponential Distribution to Model Lifetime
Exponential distribution is a simple density used to model lifetimes Its failure rate is constant So does not apply to human life. Insurers use more complicated densities. The reliability of each part in a system Reliability=P(Part works at T)=1-F(T) Once reliabilities are computed for all parts, combine parts according to whether serial or parallel

68 Improving Reliability
Component design Production/assembly techniques Testing Redundancy/backup Preventive maintenance procedures User education System design How much of reliability is good? Cost-benefit analysis.

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