Chapter 4 Product and Service Design 1 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 2 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 3 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 4 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 5 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 6 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 7 Legal, Ethical, and Environmental Issues • Legal – 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 8 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 9 Forthcoming Aspects of Product Design • Product Life Cycles • Standardization • Mass Customization • Modular Design • Robust Design • Concurrent Engineering • Computer-Aided Design 10 Other Issues in Product and Service Design • Product/service life cycles • How much standardization • Product/service reliability • Range of operating conditions 11 Life Cycles of Products or Services Saturation Deman d Maturity Design for low volume cassettes Decline Growth Compact discs Introduction Flash memory Time 12 Standardization • 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 13 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. 14 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. 15 Mass Customization Mass customization: – A strategy of producing standardized goods or services, but incorporating some degree of customization – Modular design – Delayed differentiation 16 Mass Customization I: Customize Services Around Standardized Products Warranty for contact lenses: DEVELOPMENT Source: B. Joseph Pine PRODUCTION MARKETING 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 17 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 18 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 19 Mass Customization IV: Provide Point of Delivery Customization Paint mixing: DEVELOPMENT PRODUCTION MARKETING DELIVERY Point of delivery customization Deliver standardize portion Market customized products or services Produce standardized portion centrally Develop products where point of delivery customization is feasible 20 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 21 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: 42-63. 22 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 23 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 24 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 25 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 26 Mass Customization V: Modularize Components to Customize End Products Computer industry, Dell computers: DEVELOPMENT PRODUCTION MARKETING DELIVERY Deliver customized product Market customized products or services Produce modularized components Develop modularized products 27 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 28 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 29 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 30 Phases in Product Development Process 1. 2. 3. 4. 5. 6. 7. 8. 9. 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 31 Idea Generation Supply chain based Ideas Competitor based Research based 32 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 33 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 34 Manufacturability • Manufacturability is the ease of fabrication and/or assembly which is important for the following aspects: – Cost – Productivity – Quality 35 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 36 “Over the Wall” Approach vs Concurrent Engineering New Product Mfg Design 37 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. 38 Product design • Design for manufacturing (DFM) • Design for assembly (DFA) number of parts, methods, sequence. • Design for recycling (DFR) • Remanufacturing • Design for disassembly (DFD) 39 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 40 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 41 Quality Function Deployment • 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. 42 The House of Quality Correlation matrix Design requirements Customer requirements Relationship matrix Competitive assessment Specifications or target values 43 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 breakthroughs 44 House of Quality Example for a Car Door Correlation: X X X 3 Doesn’t leak in rain 3 No road noise 2 Water resistance Accoust. Trans. Window Check force on level ground Energy needed to open door 5 AB A XB X A 63 Reduce energy level to 7.5 ft/lb Importance weighting Target values Technical evaluation (5 is best) X = Us A = Comp. A B = Comp. B (5 is best) 1 2 3 4 XAB 5 4 3 2 1 B A X 63 BA X 45 B A X 27 B X A 6 BXA 27 Maintain current level Easy to open Competitive evaluation X AB Maintain current level 5 Reduce energy to 7.5 ft/lb. Stays open on a hill * X Reduce force to 9 lb. 7 Maintain current level Easy to close Door seal resistance Customer Requirements Energy needed to close door Engineering Characteristics X X X Strong positive Positive Negative Strong negative B Relationships: Strong = 9 Medium = 3 Small = 1 BA X 45 The QFD and Kano Model Japanese QFD Results – – – – 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 1. Make sure that you have the order qualifiers 2. Determine the level of order winners with a cost/benefit analysis 46 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 47 Phases in Service Design 1.Conceptualize 2.Identify service components 3.Determine performance specifications 4.Translate performance specifications into design specifications 5.Translate design specifications into delivery specifications 48 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 • • 1. 2. 3. 4. 5. 6. 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 49 50 Characteristics of Well Designed Service Systems 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? 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. 51 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 52 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 53 Service Variability & Customer Influence Service Design Figure 4-3 Variability in Service Requirements High Customized Clothing Moderate Dept. Store Purchase Low None Telephone Purchase Internet Purchase None Low Moderate High Degree of Contact with Customer Where are medical services, internet law consultants? 54 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 55 Summary: Product design • • • • • • • Remanufacturing-recycling Robust design Design for manufacturing (DFM) Design for assembly (DFA) Design for disassembly (DFD) Design for recycling (DFR) Reliability 56 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 57 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 58 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 59 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 60 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? 61 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 62 Example: Reliability Diagram Determine the reliability of the system shown .90 .92 .90 .95 .98 Compare this diagram to that of Example S-1 63 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 64 Failure Rate: Personal life expectancy – Strike life expectancy Figure 4S-1 Infant mortality Few (random) failures Failures due to wear-out Time, T 65 Exponential Distribution for Life X X ~ Expo( ), f ( x) e x , E ( X ) 1 / MTBF , P( X T ) eT pdf f(x) Reliability=P(x>T)=1-F(T) cdf F(T)=P(X<T) T Time 66 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 67 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. 68
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