Operations Management – Product Design (Lecture 5)

Product Decision & Strategy

  • Objective: create product strategy that meets market demand and yields competitive advantage

  • Competitive alternatives: • Differentiation • Low-cost • Rapid response

  • Innovation leadership and continuous new‐product introduction critical (e.g., Apple, Grab)

Product Life Cycle (PLC)

  • Phases: • Introduction • Growth • Maturity • Decline

  • \text{Profit} = \text{Sales revenue} - \text{Cost} peaks in Maturity, declines later

  • Key ops focus per phase:
    • Intro: R&D, process & supplier development, high risk
    • Growth: stabilize design, forecast & add capacity
    • Maturity: cost control, high-volume efficiency, option reduction
    • Decline: plan phase-out unless niche value exists

  • Costs committed early; ease of change drops sharply after concept/detailed design

Product-by-Value Analysis

  • Rank products by individual and total annual dollar contribution

  • Guides resource allocation, marketing focus, and phase-out decisions

Generating & Developing New Products

  • Idea drivers: customer needs, economic, sociological, technological, political, industry standards, suppliers

  • Development stages (concept → feasibility → design → prototype → test market → introduction)

  • Product development continuum:
    • Internal (migrations, enhancements, new products)
    • Shared (alliances, joint ventures)
    • External (acquisitions) – trade-off: \text{Speed} \uparrow ,\; \text{Cost/Risk} \uparrow

Quality Function Deployment (QFD)

  • Steps: identify customer WHATs → translate to technical HOWs → relate & weight → set targets → compare competitors → finalize specs

  • House of Quality: matrix linking customer importance to engineering targets; supports cross-functional alignment

Organizing for Product Development

  • Structures: Traditional (functional), Champion, Team (cross-functional), Japanese “whole organisation,” Concurrent Engineering

  • Goal: faster development, better coordination, lower risk

Design Issues & Tools

  • Robust design: performance insensitive to variations

  • Modular design: standard modules enable customization & serviceability

  • CAD/CAM & VR: precise design, automated manufacture, virtual review

  • Value engineering/analysis: remove cost without hurting function; benefits include complexity reduction, standardization, maintainability

  • Sustainability & Life-Cycle Assessment: minimize environmental impact across product life

Manufacturability Essentials

  • Engineering drawing: dimensions, tolerances, materials

  • Bill of Materials (BOM): complete parts list & quantities

  • Make-or-buy decision: in-house vs. supplier sourcing

  • Product Life-Cycle Management (PLM) software links design → production → service data

Service Design Principles

  • Intangibility & customer interaction drive productivity constraints

  • Guidelines: limit options, delay customization, modularise, automate, manage “moments of truth”

Process-Chain-Network (PCN) Analysis

  • Three regions:
    • Direct interaction (firm–customer contact)
    • Surrogate interaction (one acts on other’s resources indirectly)
    • Independent processing (separate actions)

  • Design goal: place activities in regions that optimize efficiency and customer value