Chapter 4: Goods and Services Selection

to provide goods or services to society

Why do organizations exist?

great products

What is the key to success?

core customers

Top organizations typically focus on what?

satisfaction

Customers buy ————, not just a physical good or particular service

the goods and services it offers

The essence of an organization is

closely tied to an organizations strategy

Product and service design - or redesign- should be

Product Life Cycle Management

A systematic approach to managing the series of changes a product goes through, from its conception to its end-of-life.

may be any length from a few days to decades

How long are product life cycles?

Operations Function

must be able to introduce new products successfully

the higher the percentage of sales from the last 5 years, the more likely the firm is to be a leader

What do we learn from this graph?

1. Traditionally

2. A champion

3. Team approach

4. Japanese “whole organization” approach

What are the 4 way of organizing for product development?

Traditionally

are distinct departments where duties and responsibilities are defined and it is difficult to foster forward thinking

A Champion

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

Team approach

Product development teams, design for manufacturability teams, and value engendering teams because they are cross functional and use representatives from all disciplines or functions

Japanese “whole organization” approach

no organizational divisions

1. differentiation

2. low cost

3. rapid response

What are the 3 Product Strategy Options?

Differentiation Example

Shouldice hospital

Low cost example

taco bell

Rapid response example

toyota

1. understanding the customer

2. economic change

3. sociological and demographic change

4. technological change

5. political and legal change

6. competition

7. cost/availability

What are the reasons corporations generate new products?

1. is there a demand for it

2. can we do it?

3. what level of quality is appropriate

4. does it make sense from an economic standpoint

What are the key questions of product and service design?

the potential market size and demand profile

What is considered in the question “is there a demand for it?”

Demand profile

will the demand be short or long term and will it grow slow or fast

Manufacturability and Serviceability

What is considered in the question “can we do it?”

Manufacturability

the capability of an organization to produce an item and an acceptable profit

Serviceability

the capability of an organization to provide a service at an acceptable cost or profit

customer expectations, competitor quality, fit with current offering

What is considered in the question “What level of quality is appropriate?”

liability issues, ethical considerations, sustainability issues, costs and profits

What is considered in the question “does it make sense from an economic standpoint?”

anywhere in the supply chain

Where does idea generation come from?

customers, suppliers, distributors, employees, maintenance and repair personnel

who can generate ideas?

Reverse engineering

dismantling and inspecting a competitor’s product to discover product improvements

Research and Development (R&D)

organized efforts to increase scientific knowledge or product innovation

Basic research

has the objective of advancing the state of knowledge about a subject without an near-term expectation of commercial applications

Applied research

has the objective of achieving commercial applications

Development

converts the result of applied research into useful commercial applications

Product liability

the responsibility a manufacturer has for any injuries or damages caused by as fault product

litigation, legal and insurance costs, settlement costs, costly product recalls, reputation effects

what are some of the concomitant costs of product liability?

Uniform Commercial Code

Under the ————, products carry an implication of merchantability and fitness

speed up the design process and cut costs

Designers are often under pressure to

Robust Design

A design that results in products or services that can function over a broad range of conditions

the less likely it will fail due to a change in environment in which it is used or performed

the more robust a product or service….

Standardization

extent to which product or service lacks variety and every customer or item processed receives the same service

Modular Design

a form of standardization in which component parts are grouped into modules that are easily placed or interchanged

• easier diagnosis and remedy of failures

• easier repair and replacement

• simplification of manufacturing and assembly

• training costs are low

• adds flexibility to both production and marketing

what are the advantages of modular design?

• limited number of possible product configurations

• limited ability to repair a faulty module; the entire module must often be scrapped

what are the disadvantages of modular design

Delayed Differentiation

the process of producing, but not quite completing, a product or service until customer preferences are known

produce a piece of furniture, but do not stain it; the customer chooses the stain

What is an example of delayed differentiation?

Concurrent Engineering

Bringing engineering design and manufacturing personnel together early in the design phase. The purpose is to achieve product designs that reflect customer wants as well as manufacturing capabilities

Component Commonality

When products have a high degree of similarity in features and components, a part can be used in multiple products

1. product quality

2. shorter design time

3. production cost reductions

4. database availability

5. new range of capabilities

Computer Aided Design Benefits of CAD/CAM

Cradle-to-Grave & End of Life

the assessment of the environmental impact of a product or service throughout its useful life

End-of-Life (EOL) Programs

deal with products (business and consumer) that have reached the end of their useful lives. The goal of such programs is to reduce the dumping or incineration of products (e.g electronics) which may pose hazards to the environment

Remanufacturing

refurbishing used products by replacing worn-out or defective components

Design for disassembly (DFD)

designing a product so that used products can be easily taken apart

Design for recycling (DFR)

product design that takes into account the ability to disassemble a used product to recover the recyclable parts

Bill of Material BOM

lists the components of a product

Operations Strategy

Effective product and service design can help the organization achieve competitive advantage