3–1

Operations andSupply Chain Management

CHASE | SHANKAR | JACOBS

14e

3–2

DESIGN OFPRODUCTS AND SERVICES

Chapter ThreeCopyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

3–3

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Learning Objectives

• LO3–1: Know the issues associated with product design and the typical processes used by companies.

• LO3–2: Illustrate how different criteria can impact the design of a product.

• LO3–3: Contrast how service products can have different design criteria compared to manufactured products.

• LO3–4: Evaluate the economic impact of a new product on a company.

• LO3–5: Illustrate how product development is measured in a company.

3–4

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.The Product Design Process

• Companies continuously bring new products to market

• Product design is integral to success• Product design differs significantly

depending on the industry• Companies often outsource major functions

– Contract manufacturer: an organization capable of manufacturing and/or purchasing all the components needed to produce a finished product

3–5

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Core Competency• Core competency: the one thing a

company can do better than its competitors

• A core competency has three characteristics:– It provides potential access to a wide

variety of markets

– It increases perceived customer benefits

– It is hard for competitors to imitate

3–6

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.Examples of Successes in Design

• Sun Microsystems designs the SPARC chips used in its high-performance workstations but subcontracts the fabrication of those chips to specialized chip makers (while maintaining ownership of the intellectual property).

• A pharmaceutical company may purchase information on genetic targets from a genomics company, contract with a specialist in combinatorial chemistry for rapid synthesis and screening of candidate compounds, and even utilize a contract research organization to conduct clinical trials but retain ownership of the intellectual property (patents, experimental data, trademarks, etc.) of the drug that eventually comes to market.

3–7

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.Examples of Successes in Design

• Dell has developed a set of highly specialized systems that support its make-to-order operating strategy. Dell has created a set of proprietary logistical processes that range from the design of its web page through its information systems infrastructure (a process that has proved difficult for others to imitate). Dell owns the data about what people are buying and in which combinations. It also has been vertically integrated into final assembly facilities that are designed to efficiently produce in lot sizes of one. Finally, while it outsources components, Dell uses longer-term relationships with its suppliers and links them into its information system to support quick response.

3–8

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Brainstorming: A General Method for

Problem Solving

• Defer judgment• Build on the ideas of others• Stay focused on the topic• One person at a time• Go for quantity• Encourage wild ideas• Be visual

3–9

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Six Phases of the Generic Development Process

(Formal Process)• Phase 0: Planning

• Phase 1: Concept development

• Phase 2: System-level design

• Phase 3: Design detail

• Phase 4: Testing and refinement

• Phase 5: Production ramp-up

3–10

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Phase 0: Planning• Precedes project approval• Begins with corporate strategy• Includes assessment of

technology developments and market objectives

• Output is the project mission statement

3–11

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.Phase 1: Concept Development

• Needs of the target market are identified

• Alternative product concepts are generated and evaluated

• One or more concepts are selected for further development and testing– Concept: a description of the form,

function, and features of a product

3–12

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.Phase 2: System-Level Design

• Definition of the product architecture• Decomposition of the product into

subsystems and components• Final assembly scheme for the production

system is usually defined• Output:– Geometric layout of the product– Functional specifications for each subsystem– Preliminary process flow diagram

3–13

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Phase 3: Design Detail• Complete specification of the geometry,

materials, and tolerances for all parts• Identification of all the standard parts to be

purchased from suppliers• Process plan is established• Tooling is designed• Output:

– Drawings describing the geometry of each part and its tooling

– Specifications of purchased parts– Process plan

3–14

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.Phase 4: Testing and Refinement

• Construction and evaluation of multiple preproduction versions of product– Same geometry and material as

production version– Not necessarily fabricated with the

actual production processes

• Prototypes tested to determine if the product will work as designed

3–15

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.Phase 5: Production Ramp-Up

• Product is made using the intended production system

• Need to train workers and resolve any remaining problems

• Products may be supplied to preferred customers for evaluation

• Transition to ongoing production is gradual

3–16

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.The Generic Product Development Process

3–17

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Generic Product Development Process

• Technology-push products: firm begins with new technology and looks for a market

• Platform products: built around a preexisting technological subsystem

• Process-intensive products: production process has an impact on the properties of the product– Product design cannot be separated from process

design

3–18

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Generic Product Development Process Continued

• Customized products: new products are slight variations of existing configurations

• High-risk products: technical or market uncertainties create high risks of failure

• Quick-build products: rapid modeling and prototyping enables many design-build-test cycles

3–19

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Generic Product Development Process Continued

• Complex systems: systems must be decomposed into several subsystems and many components

• Generic: begins with a market opportunity and team selects appropriate technologies to meet customer needs

3–20

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Summary of Variants of Generic Product

Development Process

3-20

3–21

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Quality FunctionDeployment

Value Analysis/Value Engineering

Ideal Customer Product

House of Quality

Designing for the Customer

3–22

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.Quality Function Deployment

• Interfunctional teams from marketing, design engineering, and manufacturing

• Begins with listening to the customer– Uses market research– Customer preferences are defined and

broken down into customer requirements

• House of quality

3–23

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.QFD: An Example from the Auto Industry

QFD involves converting the expectations and demands of the customers into clear objectives, which are then translated into the vehicle specification. For example, Topspeed found that passengers became uncomfortable if the car rolled more than two degrees and side acceleration exceeded 13.2 feet per second squared. These data were used to help define design criteria for the chassis engineers.

3–24

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.Completed House of Quality Matrix for a Car Door

Customer requirements information forms the basis for this matrix, used to translate them into operating or engineering goals

3–25

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Value Analysis/Value Engineering (VA/VE)

• Purpose is to simplify products and processes

• Objective is to achieve better performance at a lower cost while maintaining all functional requirements defined by the customer– Does the item have any design features that

are not necessary?– Can two or more parts be combined into one?– How can we cut down the weight?– Are there nonstandard parts that can be

eliminated?

3–26

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Designing Products for Manufacture and

Assembly• Traditional approach–“We design it, you build it” or “over

the wall”

• Concurrent engineering–“Let’s work together

simultaneously”

3–27

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Design for Manufacturing and

Assembly• Greatest improvements related to DFMA

arise from simplification of the product by reducing the number of separate parts:– During the operation of the product, does the

part move relative to all other parts already assembled?

– Must the part be of a different material or be isolated from other parts already assembled?

– Must the part be separate from all other parts to allow the disassembly of the product for adjustment or maintenance?

3–28

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.Proposed Motor Drive Design

3–29

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Redesign of Motor Drive Assembly Following Design

for Assembly Analysis

3–30

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Ecodesign• Ecodesign: the incorporation of

environmental considerations in the design and development of products or services– The whole life cycle is considered– The product is considered as a system– A multi-criteria approach is used

• Application of ecodesign can benefit business

3–31

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

BioBag

BioBag biodegradable and compostable plastic bags are used for carrying produce and are supplied on a roll. Text on the bag says “This bag is certified compostable. Use, reuse, then compost.”

3–32

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.Designing Service Products

• Service products are very different

• Direct customer involvement introduces significant variability in the process

• Questions to address:– How will this variability be addressed?–What are the implications for operational

cost and the customer service experience?

3–33

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Three General Factors for

Determining Fit• Service experience fit– The new service should fit into the

current service experience for the customer

• Operational fit– Existing processes should be able to

support the operation of the new service

• Financial impact– Introducing a new service should be

financially justified

3–34

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.Structural Alternatives for a Family Restaurant

3–35

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Economic Analysis of Project Development

Costs• Using measurable factors to help

determine:– Go/no-go milestones– Operational design and development decisions

• Building a base-case financial model

• A financial model consisting of major cash flows– Sensitivity analysis for “what if” questions

3–36

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Merging the Project Financials and Schedule into a Cash Flow Report

3–37

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Possible Sensitivity Analysis Scenarios

• Longer product development time

• Higher/lower sales volume

• Higher/lower sales price

• Higher/lower development costs

3–38

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Measuring Product Development Performance

• A steady stream of new products is important to competitiveness

• Firms must respond to changing customer needs and competitor moves

• Ability to identify opportunities and bring new products to market is critical–Must also be efficient

3–39

Cop

yri

gh

t ©

20

14

by M

cGra

w H

ill E

du

cati

on

(In

dia

) Pri

vate

Lim

ited

. A

ll ri

gh

ts

rese

rved

.

Performance Measures for Development

Projects