Design of Goods and Services

Goods and Services Selection

• Organizations exist to provide goods or services to society

• Great products are the key to success

• Top organizations typically focus on core products

• Customers buy satisfaction, not just a physical good or particular service

• Fundamental to an organization's strategy with implications throughout the operations function

• Goods or services are the basis for an organization's existence

• Limited and predicable life cycles requires constantly looking for, designing, and developing new products

• New products generate substantial revenue

Product Decision

The objective of the product decision is to develop and implement a product strategy that meets the demands of the marketplace with a competitive advantage

Product Strategy Options

• Differentiation

  • Shouldice Hospital

• Low cost

  • Taco Bell

• Rapid response

  • Toyota

Product Life Cycles

• May be any length from a few days to decades

• The operations function must be able to introduce new products successfully

Product Life Cycle and Strategy - Introductory Phase

• Fine tuning may warrant unusual expenses for

  1. Research

  2. Product development

  3. Process modification and enhancement

  4. Supplier development

Product Life Cycle and Strategy - Growth Phase

• Product design begins to stabilize

• Effective forecasting of capacity becomes necessary

• Adding or enhancing capacity may be necessary

Product Life Cycle and Strategy - Maturity Phase

• Competitors now established

• High volume, innovative production may be needed

• Improved cost control, reduction in options, paring down of product line

Product Life Cycle and Strategy - Decline Phase

• Unless product makes a special contribution to the organization, must plan to terminate offering

Generating New Products

1. Understanding the customer

2. Economic change

3. Sociological and demographic change

4. Technological change

5. Political and legal change

6. Market practice, professional standards, suppliers, distributors

Product Development Stages

Quality Function Deployment

1. Identify customer wants

2. Identify how the good/service will satisfy customer wants

3. Relate customer wants to product hows

4. Identify relationships between the firm’s hows

5. Develop customer importance ratings

6. Evaluate competing products

7. Compare performance to desirable technical attributes

Organizing for Product Development - Traditionally

• distinct departments

  • Duties and responsibilities are defined

  • Difficult to foster forward thinking

Organizing for Product Development - Champion

• Product manager drives the product through the product development system and related organizations 

Organizing for Product Development - Team Approach

• Cross functional – representatives from all disciplines or functions

• Product development teams, design for manufacturability teams, value engineering teams

Organizing for Product Development - Japanese “whole organization” approach

No organizational divisions

Manufacturability and Value Engineering

• Benefits:

  1. Reduced complexity of the product

  2. Reduction of environmental impact

  3. Additional standardization of components

  4. Improvement of functional aspects of the product

  5. Improved job design and job safety

  6. Improved maintainability (serviceability) of the product

  7. Robust design

Cost Reduction of a Bracket via Value Engineering

Issues for Product Design

• Robust design

• Modular design

• Computer-aided design (CAD)

• Computer-aided manufacturing (CAM)

• Virtual reality technology

• Value analysis

• Sustainability and Life Cycle Assessment (LCA)

Robust Design

• Product is designed so that small variations in production or assembly do not adversely affect the product

• Typically results in lower cost and higher quality

Modular Design

• Products designed in easily segmented components

• Adds flexibility to both production and marketing

• Improved ability to satisfy customer requirements

Computer Aided Design (CAD)

• Using computers to design products and prepare engineering documentation

• Shorter development cycles, improved accuracy, lower cost

• Information and designs can be deployed worldwide

Extensions of CAD

• Design for Manufacturing and Assembly (DFMA)

  • Solve manufacturing problems during the design stage

• 3-D Object Modeling

  • Small prototype development

• CAD through the internet

• International data exchange through STEP

Computer-Aided Manufacturing (CAM)

• Utilizing specialized computers and program to control manufacturing equipment

• Often driven by the CAD system (CAD/CAM)

Benefits of CAD/CAM

1. Product quality

2. Shorter design time

3. Production cost reductions

4. Database availability

5. New range of capabilities

Virtual Reality Technology

• Computer technology used to develop an interactive, 3-D model of a product from the basic CAD data

• Allows people to ‘see’ the finished design before a physical model is built

• Very effective in large-scale designs such as plant layout

Value Analysis

• Focuses on design improvement during production

• Seeks improvements leading either to a better product or a product which can be produced more economically with less environmental impact

Sustainability and Life Cycle Assessment (LCA)

• Sustainability means meeting the needs of the present without compromising the ability of future generations to meet their needs

• LCA is a formal evaluation of the environmental impact of a product