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.