SCM 265 - Chapter 5: Design of Goods and Services

Flashcards covering Chapter 5: Design of Goods and Services from SCM 265, including product strategy, the product life cycle, product development cycles, value analysis/engineering, and production documentation.

How is a "product" defined in operations and supply chain management?

A product is a need-satisfying offering of an organization (which may be a good or a service), representing the satisfaction that customers purchase.

What external and internal changes drive the generation of new product opportunities?

Customer "leaders", economic changes, demographic shifts, political factors, technological advancements, and supplier innovations.

What are the three main product strategy options?

1. Product differentiation
2. Low cost
3. Rapid response

How do internal product strategies differ from external product strategies?

Internal strategies focus on the migration and enhancement of existing products, whereas external strategies involve alliances (exclusive contracts), joint ventures (typically $50\%$ ownership), and acquisitions.

According to the Marvel acquisition case study, what were the acquisition cost, production costs for 28 movies, and total MCU box office revenue?

The acquisition cost was \t$4\text{ billion}, production costs for 28 movies were \t$5.6\text{ billion} (totaling \t$9.6\text{bn}), and total MCU box office revenue reached \t$26.4\text{bn}.

What are the four sequential stages of the Product Life Cycle (PLC)?

1. Introduction
2. Growth
3. Maturity
4. Decline

What operational efforts characterize the Introduction stage of the Product Life Cycle?

Fine-tuning through research, product development, process modification, and supplier development (e.g., nPower Personal Energy Generator).

What operational conditions characterize the Growth stage of the Product Life Cycle?

Product design begins to stabilize, effective forecasting is necessary, and operational capacity may need to be added (e.g., electric vehicles).

What operational conditions characterize the Maturity stage of the Product Life Cycle?

Competitors are firmly established, production operates at high volume, and improved cost control is required (e.g., LCD screens).

What strategic decision must be made regarding a product in the Decline stage of its life cycle?

Unless the product makes a special contribution to the organization, management must plan to terminate the offering (e.g., DVDs).

How did innovation impact the product life cycles of home movie viewing formats and retail channels over time?

Movie delivery evolved through Mom & Pop Video Stores, Video Chains (Blockbuster Video), Mail Order (Netflix), Kiosks (Redbox), and Comcast On-Demand.

What is the relationship between cash flow, cost, and profit across the Product Life Cycle?

The Introduction and early Growth stages experience net cash losses due to high costs of development and manufacturing; peak profit and sales revenue occur during the Maturity stage before falling during Decline.

What are the stages of the Product Development Cycle?

Concept, Feasibility, Requirements, Functional Specs, Product Specs (Manufacturability), Design Review, Test Market, Intro to Market, and Evaluation.

How has the organizational approach to product development shifted from historical methods to modern practices?

Historically, organizations relied on distinct, siloed departments; modern product development utilizes a cross-functional team approach incorporating Marketing, Manufacturing, Purchasing, Quality, Field Service, and Suppliers.

Who developed Value Analysis/Engineering in the 1940s, and what is the distinction between Value Engineering and Value Analysis?

Developed by Lawrence Miles; Value Engineering is used to maximize value prior to developing a new product, while Value Analysis improves product value (through product enhancement or cost reduction) after a product is established.

What are the primary objectives of Value Engineering?

To improve product design, production, maintainability, and use by achieving cost reduction, reduced complexity, standardized subcomponents, improved functionality, enhanced process design/safety, better service, and higher reliability.

What engineering concept is depicted in this image illustrating progressive redesign from $3.50$ to $2.00$ to $0.80$?

Cost reduction of a bracket via Value Engineering.

What is Time-based Competition?

A competitive strategy recognizing that product life cycles are becoming shorter; firms that develop and introduce new products faster gain a competitive advantage over slower developers.

What four core elements are used to define a product?

1. Function/Specifications (what it does)
2. Engineering Drawing (dimensions, tolerances, materials, finishes)
3. Bill of Material (BOM) (components and quantities)
4. Make or Buy decisions (in-house vs. outsourced)

What is a Bill of Material (BOM)?

A comprehensive listing of all components, raw materials, subassemblies, and the exact quantity of each required to manufacture one unit of a finished product.

What type of engineering document is shown in this figure?

An Assembly Drawing (showing an exploded view of parts and how they fit together).

What type of manufacturing document is shown in this figure?

A Routing Sheet (listing operation descriptions, operation codes, standard times per piece and per lot, and required machine resources).

What is a Work Order?

A document that authorizes production, specifying the quantity to make, assigning labor, and authorizing the release/pulling of inventory items.

What is an Engineering Change Notice (ECN)?

A formal document used to authorize, record, and track any changes made to engineering drawings, Bills of Material (BOMs), or product specifications.