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Product Design and Development

OPERATIONS
MANAGEMENT ‰Perhaps the most important strategic decision that a
firm can make involves the selection and development
of new products:
products:
‰Deciding what products should be offered? and how they
Product Design and should be positioned in the marketplace? will determine the
growth, profitability, and future direction of the firm
Development ‰Significant competitive advantage can be achieved by
having products of superior design
Chapter 05 ‰Product that are appealing reliable, easy to operate, and
economical to service give a perception of quality to the
customer
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Product Design and Development Product Design and Development

‰ New product decisions affect not only the ‰ A superior product, however is not the sole
production system, but other function areas in the criteria for product design.
design. Products also need to
organization as well for instance:
instance: be manufactured efficiently and economically
economically..
‰Financial division must raise capital and prepare budgets ‰This is where operations management can make
for research and development of new products and substantial contributions to the product design process
process..
processes ‰Simplicity of style is often accompanied by simplicity
‰Legal Department must review warranty information and of assembly
assembly.. This enables lower costs by reducing the
assess potential product liability during the product design assembly time and requiring smaller inventories
inventories..
process ‰The four major strategic criteria -efficiency, quality,
‰The purchasing department must interact with the dependability, and flexibility-
flexibility- all improve e.g. IBM and
engineering group to determine what materials are required GE
to produce the product so that appropriate vendors can be
selected..
selected
٣ ٤

Product/Service Design Product Design and Development

„ To succeed, firms must build an infrastructure ‰ The design of a new product or service begins with
that allows them to accomplish the following: the conception of an idea and continues through a
variety of development and testing phases until
„ Quickly develop and design new innovative products
of superior quality and commit to a policy of detailed production specifications are determined,
continuously improving the designs of existing production designs, and product is introduced in the
products. marketplace
‰Marketing plays a major role in the early stages of product
„ Build flexible production systems capable of quickly
producing products of near-
near-perfect quality and low design and development by assessing consumer needs and
communicating them to research and development
development..
cost that can be quickly changed to accommodate
‰The operations function is responsible for designing and
customer needs.
implementing the production process for the product.
product.
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Product/Service Design Product/Service Design

When a product/service is designed:
designed: Product/service design directly affects:
„ The detailed characteristics of the „ Product/service quality
product/service are established
established.. „ Production/delivery cost
„ The
Th characteristics
h i i off the
h product/service
d / i „ Customer satisfaction
directly affects how the product/service can be
produced/ delivered.
delivered.
„ How the product/service is produced/delivered
determines the design of the production/
delivery system .
٧ ٨

Product Decisions and Business

Strategy
Types of products:
‰ Types of products:
products: ‰ Custom products
‰Custom products ‰Produce upon demand
‰Made in small quantities
‰Option
p oriented p
products
‰Design to meet customer’s specifications
‰Standard Products
‰The production cost is relatively high

‰Assurance of quality requires careful attention at

every stage in the manufacturing process
‰The customer must wait for the product to be made
as it produced upon demand
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Types of products: Types of products:

‰ Option--Oriented Products
Option ‰ Standard Products
‰Unique configurations of subassemblies that are designed ‰Made in larger quantities
to fit together
‰The customer has no option to choose from
‰The customer participates in choosing the options to be
‰Quality is easiest to achieve because the product is
assembled
made the same way every time
‰The subassemblies are made in relatively large quantities
therefore costs are reduced
reduced.. ‰Customer will only have to wait for the product if it is

‰The quality is easier to achieve because of repetition

out of stock
‰The customer must wait while the product is assembled
to the desired configuration
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Types of products: The product Life Cycle:

‰ The classification of custom, option-
option-oriented, and Sales
standard products are important from a strategic Growth Maturity
perspective Decline
Introduction
‰If a company makes a custom line of products and its
competitors offers an equivalent product on an option option--oriented
or standard basis,
basis then the competitor has an advantage in term
of efficiency, quality, flexibility, and dependability
‰Henry Ford was one of the first to change the automobile
from custom product to a standard product
‰Today the typical automobile is the classic option- option-oriented
product
‰Products often begin as custom products and over time,
become standard products.
products. The ability to guide products
along this progression determines a company’s success
success..
Time
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The Product Life Cycle: The Product Life Cycle and

Operations
‰ The product life cycle curve shows that when a ‰ Introductory Phase
Phase:: When the product is first
product is first introduced, sales begin to grow slowly introduced.
introduced.
‰Design changes are frequent, focusing on changes that will
‰Then there is a period of rapid growth as the product make the product more innovative
gains acceptance and markets for it develop (assuming, ‰Operations managers must maintain high degree of flexibility
in order to be responsive to these design changes
of course,, the p
product survives the initial p
phase))
‰The
Th workforce
kf must be
b highly
h hl skilled
k ll d in order
d to quickly
kl adapt
d
‰Period of maturity, in which demand levels off and to changing production requirements
‰During this stage the product is produced in small volumes,
no new distribution channels are available
available.. and hence highhigh--capital investment in production facilities is
‰Finally, the product may begin to lose appeal as usually not required
‰Unusual expenditures for: for:
substitute products are introduced and become more 1. Research,
popular this is the decline phase.
phase. 2. Product development,
3. Process modification and enhancement,
4. Supplier development.
development.
١٥ ١٦

The Product Life Cycle and The Product Life Cycle and
Operations Operations
‰ At the growth Phase:
Phase: ‰ At the Maturity Phase:
Phase:
‰Product design has begun to stabilize and effective ‰By the time the product is mature, competitors are
forecasting of capacity requirements is necessary established.
established.
‰Sales volume increases, manufacturing g must have the ‰Manufacturing g must focus more on improvingp g
ability to meet the growing demand productivity and minimizing costs
‰Operations is driven by the market and the focus is ‰Less production flexibility is needed as the product
on process innovation become more standardized,
‰Production volume increases, and capacity growth ‰Some product innovation is possible and often
and utilization become critical desirable in order to maintain market share

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The Product Life Cycle and Designing and Developing

Operations Products and Services
‰ At the Decline Phase:
Phase:
‰Management may need to be ruthless with those products ‰ A product design must include the determination of
whose life cycle is at the end technical specifications that meet a customer’s needs
‰Dying products are typically poor products in which to invest ‰Operations personnel must document
document::
resources and managerial
g talent ‰The process specifications that determine how the
‰Unless dying products make some unique contribution to the product is to be made,
firm’s reputation or its product line or can be sold with an ‰The controls that will monitor incoming materials and
unusually high contribution, their production should be purchased parts
terminated ‰The controls for monitoring the manufacturing process
itself
‰ It is clear that operations must constantly review its focus in
‰The packaging and distribution of the product and
order to meet strategic goals and objectives as each product
‰“What the customer sees” including instruction manuals
moves through its life cycle and service policies
١٩ ٢٠

Product Design/Development Process: Few Successes

Suppliers and Competitors
‰Many ideas are immediately rejected
Sales Force
Research
Engineers
because of:
1. Idea Generation ‰Marketing factors
Government
Consumer
Number ‰Budgetary consideration
2. Initial Screening need
regulation
Information ‰Technically infeasible
2000 Ideas
3. Initial Product Design and Development
1750
Market Design review,
4. Economic Analysis 1500 requirement Testing, Introduction
1000
5. Prototype Testing Functional
1000 specifications
6. Final Product and Product Process Design 500 Product
500 specification
One
The  To Manufacturing 100 25 success!
The 
Environment
Firm 0
To Market ٢١
Development Stage ٢٢

Product Development Process: Product Development Process:

Phase 1. Idea Generation Phase 2. Screening
‰The purpose of screening is to eliminate ideas that do not appear to have
‰Ideas for new products can arise from
from:: potential for success and thus avoid expensive development costs
‰Three major criteria are used in initial screening, these criteria and their
‰Customers fundamental questions considered for each are listed below:
below:
Criteria Fundamental Questions
‰Employees
Product Development Is the product new or simply an imitation?
‰New
N ttechnology
hn l Criteria Can we produce it with existing facilities?
Is it technically feasible?
‰Research and Development (R&D)
Will there be any patent or other legal problems?

Market Criteria What is the current market for this product?

„ Pureresearch “knowledge-
“knowledge-oriented research” Is it expected to grow?
What is the competition?
„ Applied research “problem-
“problem-oriented research” How will this product affect our existing product line?

„ Development “product-
“product-oriented research” Financial Criteria What will the return on investment be?
How will this product contribute to overall profitability?
How will development and production affect our cash flow?
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See Example page 170

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Product Development Process: Product Development Process:

Phase 2. Screening Phase 3. Initial Product Design and Development
‰Example
Example:: Using a scoring model for new product
justification ‰The design of a product includes much more
Criteria Maximum
Possible Score
Minimum Possible Total Score
Score
than simply a physical description of the item.
item.
Product + 10 - 10 +5 ‰Three factors must be taken into account
account::
Development
1
1. The function of the product
Market + 12 - 12 0
2. Technical requirements and specifications
Financial +4 -4 +3
3. The economics of production and distribution
+8

‰The use of such a model helps top management conveniently

summarize important variables and provides a means for
analysis and discussion in the initial screening process
٢٥ ٢٦

Product Development Process: Product Development Process:

Phase 3. Initial Product Design and Development Phase 3. Initial Product Design and Development

1. The functional Influence

Influence:: In order to be a 2. Technological Influences
Influences::
commercial success the product must be ‰ Technical influence in product design include the
functional and appeal to consumers
consumers.. Some selection of the materials and component part to be
of the important design considerations that used and manufacturing method to be employed.
employed.
are related to a product’s function and ‰ Materials must be chosen to satisfy the functional
appearance are:
are: requirements of the product.
product.
‰ Size , weight, and appearance ‰ Knowledge of the engineering properties of
‰Safety materials is essential to the designer.
designer.
‰Quality and reliability
‰Product life, service, and maintenance
maintenance..
٢٧ ٢٨

Product Development Process: Product Development Process:

Phase 3. Initial Product Design and Development Phase 3. Initial Product Design and Development
3. Economic Influences
Influences:: ‰ To ensure that all important design objectives
‰ The price that a consumer must pay for a product depends are accounted for many companies have
on the direct and indirect cost of manufacturing and instituted formal design reviews during the
distribution..
distribution
‰ Two techniques that assist in reducing cost
cost:: product planning process.
process.
‰ Value engineering
engineering:: is focused on making certain that each element
of a product design serve a necessary function, this occurs before
‰ Design review process usually includes a failure
production and therefore represents a cost prevention technique.
technique. mode and effects analysis (FMEA) “to
‰ Value analysis:
analysis: examine existing product specifications and uncover serious design problems prior to
requirements and is a cost reduction technique.
technique.
‰ VE/VA consist of asking fundamental questions about a
manufacturing and improve the quality and
product, such as the following:
following: reliability of the product”. This technique
‰ What are the function of a particular component? Are they consists of answering questions such as:
as:
necessary? Can they be accomplished in a different way?
‰ What materials are used? Can a less
less--costly material be substituted? ‰ How could a component fail?
‰ How much material is wasted during manufacturing? Can this be ‰ What would the consequences be?
reduced by changing the design? ٢٩ ٣٠

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Product Development Process: Product Development Process:

Phase 4. Economic Analysis Phase 5. Prototype Testing
‰ The purpose of economic analysis is to determine more ‰ Once a product has been designed, a prototype is usually
specific quantitative measures of profitability and return on constructed to test its physical properties or use under actual
investment..
investment operating condition.
condition.
‰ A formal economic analysis is necessary in order to decide
whether or not to commit further resources toward
development
p of an idea
idea.. Phase 6. Final Product and Production Process
‰ In order to perform a formal economic analysis, an accurate D i
Design
estimate of demand is required
required.. ‰ Prototype design may indicate certain changes in the
‰ Estimate of production costs must be obtained
obtained.. Engineering preliminary design
design..
and accounting are responsible for estimating manufacturing ‰ During the final design phase, these changes are incorporated
costs of materials, supplies, personnel, equipments, into the design specifications.
specifications.
depreciation and other indirect operation costs
costs.. ‰ Drawing are made, and plans for production are initiated
‰ Finally the selling price of the product must be estimated in ‰ It is during this time that production processes are selected and
order to compute financial measures such as rate of return, many detailed problems in operations management are
payback period, and net present value for the final decision resolved..
resolved
go/no--go decision
go/no decision.. ٣١ ٣٢
See Example page 176

Getting New Products to Market Tools to Improve Speed to

Faster Market
„ Speed creates competitive advantages „ Autonomous Design and Development Teams
„ Speed saves money „ Teams are given decision-
decision-making responsibility and
more freedom to design and introduce new
„ Tools to improve speed:
products/services
p /
„ Autonomous design and development teams
„ Time
Time--to-
to-market has been slashed dramatically
„ Computer--aided design/computer-
Computer design/computer-aided
„ Enormous sums of money have been saved
manufacturing (CAD/CAM)
„ Teams do not have to deal with the bureaucratic red
„ Simultaneous (concurrent) engineering
tape ordinarily required to obtain approvals

٣٣ ٣٤

Tools to Improve Speed to Tools to Improve Speed to

Market Market
„ Computer-Aided Design/Computer-
Computer- Design/Computer-Aided Computer Aided Design (CAD)
Manufacturing (CAD/CAM) „ Designing products at
„ Engineers, using CAD/CAM, can generate many a computer terminal or
views of parts, rotate images, magnify views, and
check for interference between parts
work station
„ Part designs can be stored in a data base for use on
„ Design engineer
other products develops rough
„ When it is time for manufacturing, the product
sketch of product
design is retrieved, translated into a language that „ Uses computer to
production machinery understands, and then the draw product
production system can be automatically set up.
„ Often used with CAM
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Tools to Improve Speed to

Benefits of CAD/CAM
Market
Product/
„ Simultaneous Service Ideas
„ Shorter design time (Concurrent) Continuous
„ Database availability Engineering Economic and Technical Interaction
„ New capabilities Feasibility Studies
„ Example: Focus more on product ideas
„ Improved product quality Product/Service Design Production Process Design
„ Reduced production costs
Produce and Market
New Product/Service
٣٧ ٣٨

Simultaneous (Concurrent) Engineering Improving the Design

‰Concurrent/Simultaneous Engineering means that product/service of Existing Products/Services
design proceeds at the same time as process design with continuous
interaction „ Focus is improving performance, quality, and cost
‰The concept of Concurrent engineering has significantly compressed the
design, production, and introduction cycle of new products.
products. „ Objective is maintaining or improving market share of
‰Another tool in achieving the goal of faster introduction of new maturing products/services
products is with the use of computer
computer--Aided design/ Commuter
Commuter--
Aided
Aid d manufacturing
f i CAD/CAM
„ Little
tt e changes
c a ges can
ca be significant
s g ca t
‰Engineers can sit a computer workstations, generate many views of parts and „ Small, steady (continuous) improvements can add up to
assemblies, rotate images, magnify views, and check for interface between
parts
huge long
long--term improvements
‰Design can be stored in a data base, compared with other designs, and stored „ Value analysis is practiced, meaning design features are
for use on other products
products..
‰When it is time for manufacturing, the product design information in the
examined in terms of their cost/benefit (value).
data base is translated into a language that production machinery understand.
understand.
‰The production system can then automatically set up to run the new
products..
products
٣٩ ٤٠

Designing for Ease of

Production Designing for Quality
„ Ease of Production (Manufacturability
Manufacturability)) „ Crucial element of product design is its impact
„ Specifications - Precise information about the on quality
characteristics of the product „ Quality is determined by the customer’s
„ Tolerances - Minimum & maximum limits on a perception of the degree of excellence of the
dimension that allows the item to function as designed product/service’s characteristics
„ Standardization - Reduce variety among a group of
products or parts
„ Simplification - Reduce or eliminate the complexity of a
part or product

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Designing for Quality

Designing for Quality A product’s design affects quality in two major areas

„ Quality Engineering refers to the process of ‰ At the supplier’s plant

plant:: a frequent cause of supplier quality
designing quality into a product and predicting problems is incomplete or inaccurate specification of the item to be
provided by the supplier
supplier..
potential quality problems prior to production.
‰This is often occurred with the custom parts because either either::
‰Quality engineering is concerned with the plans,
plans weakness
k i the
in th design
d i process,
pr engineers
i r who h do d nott follow
f ll sett
procedures, and methods for designing and evaluation procedures, or sloppiness in the procurement and purchasing process
of quality ‰The greater the number of different parts and more supplier
involved, the more likely it is that a supplier will receive an inaccurate
‰Problems of poor design may show up as errors,
or incomplete parts specification.
specification.
poor yield, damage, or functional failure in ‰Such problems can be reduced by designing a product around
fabrication, assembly, test, transport, and end use proffered parts (those already approved based on their reliability and
qualified source supply), Minimizing the number of parts in the
design, and procuring parts from a minimum number of vendorsvendors..
٤٣ ٤٤

Designing for Quality Designing for Quality

A product’s design affects quality in two major areas
‰At the manufacturer’s own plant
plant:: problems in the area ‰Quite recently, an approach to design developed by
of assembly and test can occurred
occurred.. Japan's Genichi Taguchi has received considerable
‰Design with numerous parts may cause parts mix mix--ups, missing attention.. Taguchi’s premise is simple:
attention simple: “Instead of
parts, and more test failure constantly directing effort in controlling a production
‰Parts without details to pprevent insertion in the wrongg orientation process to assure consistent quality, design the product to
may assembled improperly
achieve high quality despite the variations that will occur
‰Complicated assembly steps or tricky joining processes may lead
on the production line”
to incorrect, incomplete, unreliable, or otherwise faulty assemblies
‰ITT Corporation has used Taguchi’s technique to cut defects
‰The designer’s failure to consider conditions to which parts will
be exposed during assembly such as temperature, humidity,
by more than half, saving $60 million in first two years
‰Source “How to Make It Right the First Time” Business Week, 8 June
vibration, and dust may lead to failures during testing
testing..
1987, 142.
1987, 142.

٤٥ ٤٦

Robust Design Modular Design

„ Product is designed so that small variations in „ Products designed in easily segmented
production or assembly do not adversely affect components.
the product „ Adds flexibility to both production and
marketing

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Human Factors in Design Reliability in Product Design

„ Human factors mean the biomedical, „ Reliability is defined as the probability that a
psychosocial, training, and performance product performs its intended function for a
considerations associated with manufactured stated period of time under specified operating
product or service
service.. conditions..
conditions

٤٩ ٥٠

Designing and Developing New Designing and Developing New

Services Services
Three general dimensions of service design are:
„ Differences Between New Service and New
„ Degree of Standardization of the Service
Product Development
„ Custom-fashioned for particular customers or
Custom-
basically the same for all customers? „ Unless services are dominated by physical goods,
their development usually does not require
„ D
Degree off Customer
C C
Contact iin D
Delivering
li i the h
engineering, testing, and prototype building.
Service
„ Because many service businesses involve intangible
„ High level of contact or low level?
services, market sensing tends to be more by surveys
„ Mix of Physical Goods and Intangible Services rather than by market tests and demonstrations.
„ Mix dominated by physical goods or by intangible
services?
٥١ ٥٢

Quiz
„ What are the main types of product and explain
the importance of this for OM manager

٥٣