1. Chapter 3, Part 1 Product Design
Operations Management by
R. Dan Reid & Nada R. Sanders
2nd Edition © Wiley 2005
PowerPoint Presentation by R.B. Clough - UNH
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2. Designing Goods and Services
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.
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3. 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
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4. Functional Design of Goods
Fitness for use: performs basic functions as intended
Durability: how long the product lasts
Reliability: consistent performance
Maintainability: ease and cost of repairs
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5. 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?
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6. Designing Services
Physical elements: facility, equipment and furnishings, inventories
Sensory and aesthetic aspects
Psychological benefits
Quality standards
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7. Steps in Product Design Step 1: Idea Development
Identify a need and a product to fill that need.
Ideas can come from customers, marketing, research and development, suppliers, or analysis of competitive products
Product benchmarking: comparing your product with those of competitors
Reverse engineering: disassembling a product to analyze its design features
Your product design should not infringe on a competitor's patents.
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8. Steps in Product Design Step 2: Product Screening
Marketing issues
Current and future size of target market(s)
Market share
Pricing
Effect on the firm's competitive position
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9. Steps in Product Design Step 2: Product Screening
Operations issues
Product technology
Process technology
Is new equipment needed? Can we build it or buy it?
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?
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10. Steps in Product Design Step 2: Product Screening (2)
Financial analysis: what you need to know
Profit margin
Ability to finance any needed investment
Breakeven point: the volume at which costs = revenue
Return on assets
Return on sales
Return on investment
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11. Step 2: Product Screening (3) Financial Analysis (continued) Break-Even Analysis
Compute quantity of goods that must be sold to break-even
Compute total revenue at an assumed selling price
Compute fixed cost and variable cost for several quantities
Plot the total revenue line and the total cost line
Intersection is break-even
Sensitivity analysis can be done to examine changes in all of the assumptions made
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12. Steps in Product Design Step 2: Product Screening (4)
Financial analysis: check assumptions
Identify all costs and all cost savings.
If the firm does not introduce this product, will it lose market share? How much?
Cost and revenue estimates are not exact. Perform the calculations using different sets of assumptions (called sensitivity analysis or case analysis).
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13. Steps in Product Design Step 3: Preliminary Design and Testing
Develop technical specifications for the product
Develop and test prototypes
Computer-assisted design (CAD) lets engineers test a virtual model of the product
Physical prototypes are also used
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14. Steps in Product Design Step 3: Preliminary Design & Testing (2)
Computer-aided design (CAD): use of computer software to design products
Similar software is used to make animated films
Computer-aided engineering (CAE): use of computer software to evaluate and improve product designs
Specialized CAD/CAE software is used by architects and landscape architects
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15. Steps in Product Design Step 3: Preliminary Design & Testing (3)
Advantages of CAD and CAE
Products can be designed, tested, and brought to market faster
Reduces design and testing costs
Lets the firm test more designs  better products
Lets designers in different places and different companies work together
Can be linked with computer-aided process planning (CAPP) and computer-aided manufacturing (CAM)
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16. CAPP and CAM
Computer-aided process planning (CAPP): software that uses product specifications generated by CAD and CAE to develop manufacturing instructions for CAM
Computer-aided manufacturing (CAM): the use of computer software to control manufacturing equipment
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17. Product specification Equipment selection Layout Job design
Steps in Product Design Step 4: Final Design & Transition to Production
Product specification
Equipment selection
Layout
Job design
Employee selection and training
Supplier selection
Some steps will not be needed for minor product variations
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18. 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
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19. Design for Manufacture (2)
Example of reducing the number of parts, operations, and tools.
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20. Design for Manufacture (3)
Modular design: Design products to be assembled from standard components.
Use standard parts to reduce design costs and purchasing costs.
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21. 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.
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22. Advantages of Concurrent Engineering
Increases the chances of a successful product.
Shortens time to market.
Takes advantage of supplier expertise.
Reduces design costs.
Reduces the need to make expensive changes in the product and the process later.
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23. The End
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