Operations Management Chapter 4

Strategic Process and Service Design

The essence of an organization is the goods and services it offers. Every aspect of the organization is structured around them. Product and service design — or redesign — should be closely tied to an organization’s strategy

What Does Product and Service Design Do?

1. Translate customer wants and needs into product and service requirements

2. Refine existing products and services

3. Develop new products and services

4. Formulate quality goals

5. Formulate cost targets

6. Construct and test prototypes

7. Document specifications

8. Translate product and service specifications into process specifications

9. Involve inter-functional collaboration

What are the first 2 Key Questions?

1. Is there demand for it?

   1. Market size

   2. Demand profile

2. Can we do it?

   1. Manufacturability

   2. Serviceability

Manufacturability

The capability of an organization to produce an item at an acceptable profit

Serviceability

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

What are the second 2 key questions?

1. What level of quality is appropriate?

   1. Customer expectations

   2. Competitor quality

   3. Fit with current offering

2. Does it make sense from an economic standpoint

   1. Liability issues, ethical considerations, sustainability issues, costs and profits

Reasons to Design or Re-Design

The driving forces for product and service design or redesign are market opportunities or threats

What specifically are the market opportunities or threats?

1. Economic

2. Social and demographic

3. Political, liability, or legal

4. Competitive

5. Cost or availability

6. Technological

Idea Generation

1. Supply-chain based

2. Competitor based

3. Research based

Supply-Chain based idea sources:

Customers, suppliers, distributors, employees, or maintenance and repair personnel

Competitor based ideas

By studying how a competitor operates and its products and services, many useful ideas can be generated

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 near-term expectation of commercial applications

Applied research

Has the objective of achieving commercial applications

Development

Converts the results of applied research into useful commercial applications

Product liability

The responsibility a manufacturer has for any injuries or damages caused by as faulty product 

What are some of the concomitant costs of product liability?

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

Uniform commercial code

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

Designers are often under pressure to…

Speed up the design process and cut costs

These pressures force trade-off decisions. What if a product has bugs?

Release the product and risk damage to your reputation and work out the buys and forego revenue

Sustainability

Using resources in ways that do not harm ecological systems that support human existence

Key aspects of designing for sustainability

Cradle-to-grave assessment (Life-Cycle assessment); End-of-life programs, and the 3-Rs

What are the 3-Rs?

Reduction of costs and materials used, re-using parts of returned products, and recycling

Cradle-to-Grave Assessment

aka Life-Cycle Assessment (LCA). This assessment of the environment impact of a product or service throughout its useful life. 

What does Cradle-to-Grave Assessment focus on?

Focuses on factors such as global warming, smog formation, oxygen depletion, and solid waste generation

Value Analysis

Examination of the function of parts and materials in an effort to reduce the cost and/or improve the performance of a product

What are some common questions used in value analysis?

1. Is the item necessary; does it have value; could it be eliminated?

2. Are there alternative sources for the item?

3. Could another material, part, or service be used instead?

4. Can two or more parts be combined?

5. Can specifications be less stringent to save time or money?

6. Do suppliers/providers have suggestions for improvements?

7. Can packaging be improved or made less costly?

Re-use: Remanufacturing

Refurbishing used products by replacing worn-out or defective components

Reasons to remanufacture

1. Products can be sold for about 50% of the cost of a new product

2. The process requires mostly unskilled and semi-skilled workers

3. In the global market, European lawmakers are increasingly requiring manufacturers to take back used products

Design for disassembly (DFD)

Designing a product to that used products can be easily taken apart

Recycle

Recovering materials for future use (applies to manufactured parts, also applies to materials used during production)

Why recycle?

Cost savings, environmental concerns, and environmental regulations

Design for recycling (DFR)

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

Standardization

Extent to which there is an absence of variety in a product, service, or process

Mass customization

A strategy of producing basically standardized goods or services, but incorporating some degree of customization in the final product or service

Facilitating techniques

Delayed differentiation and modular design

Mass customization

A strategy of producing basically standardized goods or services, but incorporating some degree of customization in the final product or service 

Mass customization facilitating techniques

Delayed differentiation and modular design

Delayed Differentiation (aka Postponement)

The process of producing, but not quite completing, a product or service until customer preferences are known. It is a postponement tactic (ex. produce a piece of furniture, but do not stain it; the customer chooses the stain)

Modular Design

A form of standardization in which component parts are grouped into modules that are easily replaced or interchanged

Advantages of Modular Design

1. Easier diagnosis and remedy of failures

2. Easier repair and replacement

3. Simplification of manufacturing and assembly

4. Training costs are relatively low

Disadvantages to modular design

1. Limited number of possible product configurations

2. Limited ability to repair a faulty module; the entire module must often be scrapped

Reliability

The ability of a product, part, or system to perform its intended function under a prescribed set of conditions

Failure

A situation in which a product, part, or system does not perform as intended

Reliabilities are…

Always specified with respect to certain conditions

Normal operating conditions

the set of conditions under which an item’s reliability is specified

How is reliability expressed

As a probability the system will function for a given amount of time

Robust Design

A design that results in products or services that can function over a broad range of conditions. Pertains to product as well as process design

Degree of Newness: Product or service design changes

1. Modification of an existing product or service

2. Expansion of an existing product line or service offering

3. Clone of a competitor’s product or service 

4. New product or service

What does the degree of change affect?

The newness of the product or service to the market and to the organization

Quality Function Deployment (QFD)

An approach that integrates the “voice of the customer” into both product and service deployment

Kano Model: Basic Quality

Refers to customer requirements that have only limited effect on customer satisfaction if present, but lead to dissatisfaction if absent

Kano Model: Performance Quality

Refers to customer requirements that generate satisfaction or dissatisfaction in proportion to their level of functionality and appeal

Kano Model: Excitement Quality

Refers to a feature or attribute that was unexpected by the customer and causes excitement

Concurrent Engineering

Bringing engineering design and manufacturing personnel together early in the design phase

What is the purpose of concurrent engineering?

The purpose is to achieve product designs that reflect customer wants as well as manufacturing capabilities

Computer-Aided Design (CAD)

Product design using computer graphics

Computer-Aided Design Advantages

1. Increases productivity of designers, 3 to 10 times

2. Creates a database for manufacturing information and product specifications

3. Provides possibility of engineering and cost analysis on proposed designs

Production Requirements

Equipment, Skills, Types of materials, Schedules, Technologies, and Special Abilities

Manufacturability DFMA (Design for Manufacturing/Assembly)

1. Ease of fabrication and/or assembly

   1. Design for manufacturability

   2. Design for assembly

2. It has important implications for

   1. Cost

   2. Productivity

   3. Quality

Component Commonality

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

The benefits of component commonality

1. Savings in design time

2. Standard training for assembly and installation

3. Opportunities to buy in bulk from suppliers

4. Commonality of parts for repair

5. Fewer inventory items must be handled

Service Design

Begins with a choice of service strategy, which determines the nature and focus of the service, and the target market

Key issues in service design

1. Degree of variation in service requirements

2. Degree of customer contact and involvement

Differences between Service and Product Design

1. Products are generally tangible, services intangible

2. Services are created and delivered at the same time

3. Services cannot be inventoried

4. Services are highly visible to customers

5. Some services have low barriers to entry and exit

6. Location is often important to service design, with convenience as a major factor

7. Service systems range from those with little or no customer contact to those that have a very high degree of customer contact

8. Demand variability alternately creates waiting lines or idle service resources

 Characteristics of The Well-Designed Service System

1. Being consistent with the organization mission

2. Being user-friendly

3. Being robust if variability is a factor

4. Being easy to sustain

5. Being cost-effective

6. Having value that is obvious to the customer

7. Having effective linkages between back- and front-of-the-house operations

8. Having a single, unifying theme

9. Having design features and checks that will ensure service that is reliable and of high quality

Operations Strategy

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

What are examples of effective product and service design?

1. Packaging products and ancillary services to increase sales

2. Using multiple-use platforms

3. Implementing tactics that will achieve the benefits of high volume while satisfying customer needs for variety

4. Continually monitoring products and services for small improvement opportunities

5. Reducing the time it takes to get a new or redesigned product or service to the market

Successful Service Design

1. Define the service package in detail

2. Focus on the operation from the customer’s perspective

3. Consider the image that the service package will present both to
   customers and to prospective customer

4. Recognize that designers’ familiarity with the system may give them a quite different perspective than that of the customer, and
   take steps to overcome this

5. Make sure that managers are involved and will support the
   design once it is implemented

6.  Define quality for both tangibles and intangibles

7. Make sure that recruitment, training, and reward policies are
   consistent with service expectations

8. Establish procedures to handle both predictable and
   unpredictable events
   9. Establish system to monitor, maintain, and improve service