DESIGN OF

PRODUCTS AND SERVICES

Chapter Three
McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
 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
 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
 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
 Phase 0: Planning
• Precedes project approval
• Begins with corporate strategy
• Includes assessment of technology
developments and market objectives
• Output is the project mission statement
 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
 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
 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
 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
 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
 Designing for the Customer

House of Quality

Ideal
Quality Function Value Analysis/
Deployment
Customer Value Engineering
Product
 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
 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
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?
 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”
 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?
 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
 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?
 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
Structural Alternatives for a Family
Restaurant
 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
Merging the Project Financials and
Schedule into a Cash Flow Report
 Possible Sensitivity Analysis Scenarios

• Longer product development time

• Higher/lower sales volume

• Higher/lower sales price

• Higher/lower development costs

 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
Performance Measures for
Development Projects