5 Product Design

PowerPoint presentation to accompany

Heizer, Render, and Munson
Operations Management,
Global Edition

Instructor:
Dr. Tahir Iqbal

5-1
 Outline

• Goods and service selection

• Product decision
• Product Strategy Options Support
Competitive Advantage
• Product Life Cycles
• Life Cycle and Strategy
• Product-by-Value Analysis

5-2
 Outline - Continued

• Generating New Products

• New Product Opportunities
• Product Development
• Product Development System
• Organizing for Product Development
• Manufacturability and Value Engineering
• Ethics, Environmentally Friendly Design, and
Sustainability

5-3
 Outline - Continued

 Time-Based Competition
 Purchasing Technology by Acquiring a
Firm
 Joint Ventures
 Alliances
 Defining a Product
 Service Design
 Transition to Production

5-4
Learning Objectives

When you complete this chapter you should

be able to :
1. Define product life cycle
2. Describe a product development system
3. Describe how time-based competition is
implemented
5. Describe how products and services are
defined by operations management
6. Describe customer participation in the
design and production of services

5-5
 Goods and Service Selection:
Product Decision

• Most products have limited or predictable life

cycles.
• Companies must constantly look for designing
and developing and offering the new products
to the market.
• Thus companies must take product decision.

5-6
 Goods and Service Selection:
Product Decision

The product decision includes:

selection, definition and design of the
products.
The objective of the product decision is to
develop and implement a product strategy that
meets the demands of the marketplace with a
competitive advantage

5-7
Product Decision

 Involve choosing the good or service to

provide customer
 Top organizations typically focus on core
products
 Customers buy satisfaction, not just a
physical good or particular service
 Fundamental to an organization's strategy
with implications throughout the operations
function

5-8
Product Strategy Options Support
Competitive Advantage

 Differentiation
 EyeHosp, Jordan
 Low cost
 Kudu, Saudi Arabia
 Rapid response
 Toyota

5-9
Product Life Cycles

 May be any length from a few hours

to decades.
 The operations function must be able
to introduce new products
successfully.

5 - 10
Product Life Cycles

Cost of development and production

Sales, cost, and cash flow

Sales revenue
Net revenue (profit)

Cash
flow

Negative
cash flow Loss

Introduction Growth Maturity Decline

Figure 5.1

5 - 11
Product Life Cycle

Introductory Phase
 Fine tuning may warrant
unusual expenses for
1. Research
2. Product development
3. Process modification and
enhancement
4. Supplier development

5 - 12
Product Life Cycle

Growth Phase
 Product design begins to
stabilize
 Effective forecasting of
capacity becomes necessary
 Adding or enhancing capacity
may be necessary

5 - 13
Product Life Cycle

Maturity Phase
 Competitors now established
 High volume, innovative
production may be needed
 Improved cost control,
reduction in options, paring
down of product line

5 - 14
Product Life Cycle

Decline Phase
 Unless product makes a
special contribution to the
organization, must plan to
terminate offering

5 - 15
Product-by-Value Analysis

 Lists products in descending order of

their individual dollar contribution to the
firm
 Lists the total annual dollar contribution
of the product
 Helps management evaluate alternative
strategies

5 - 16
Generating New Products

New Product Opportunities

1. Understanding the
customer i ng
s t o r m
2. Economic change Br a i n o ol
e fu l t
u s
3. Sociological and is a
demographic change
4. Technological change
5. Political/legal change
6. Market practice, professional
standards, suppliers, distributors

5 - 17
Product Development System

Ideas

Ability Figure 5.2

Customer Requirements

Functional Specifications

Product Specifications Scope for

Scope of design and
product Design Review engineering
development teams
team Test Market

Introduction

Evaluation

5 - 18
Organizing for Product Development

There are four common approaches to

organizing product development.
1. Organization with distinct departments
 Traditional U.S. approach
 Duties and responsibilities are defined
 Difficult to foster forward thinking

2. A champion
 Product manager drives the product
through the product development
system and related organizations

5 - 19
Organizing for Product Development
3. Team approach
 Cross functional – representatives from
all disciplines or functions
These teams are called
• Product development teams,
• design for manufacturability teams,
• value engineering teams
4. Japanese “whole organization”
approach
 No organizational divisions

5 - 20
Issues for Product Design
• Robust design
• Modular design
• Computer-aided design (CAD)
• Computer-aided manufacturing (CAM)
• Virtual reality technology
• Value analysis
• Sustainability and Life Cycle Assessment (LCA)

5 - 21
Robust Design
• Product is designed so that small variations in
production or assembly do not adversely affect
the product
• Typically results in lower cost and higher quality

5 - 22
Modular Design
• Products designed in easily segmented
components
• Adds flexibility to both production and marketing
• Improved ability to satisfy customer requirements

5 - 23
Computer Aided Design (CAD)
• Using computers to
design products and
prepare engineering
documentation
• Shorter development
cycles, improved
accuracy, lower cost
• Information and
designs can be
deployed worldwide

5 - 24
Computer-Aided Manufacturing
(CAM)
• Utilizing specialized computers and program to
control manufacturing equipment
• Often driven by the CAD system (CAD/CAM)
• Additive manufacturing
• Extension of CAD that builds products by adding
material layer upon layer

5 - 25
Virtual Reality Technology
• A visual form of
communication in
which images
substitute for reality
and typically allow the
user to respond
interactively
• Allows people to ‘see’
the finished design
before a physical model
is built
• Very effective in large-
scale designs such as
plant layout
5 - 26
Value Analysis
• Focuses on design improvement during production
• Seeks improvements leading either to a better
product or a product that can be produced more
economically with less environmental impact

5 - 27
Sustainability and Life Cycle
Assessment (LCA)
• Sustainability means meeting the needs of the
present without compromising the ability of future
generations to meet their needs
• LCA is a formal evaluation of the environmental
impact of a product

5 - 28
Manufacturability and Value Engineering

Activities that help improve a product design,

production, maintainability and use.
 Benefits:
1. Reduced complexity of products
2. Reduction of environmental impact
3. Additional standardization of products
4. Improved functional aspects of product
5. Improved job design and job safety
6. Improved maintainability (serviceability) of
the product
7. Robust design
5 - 29
Cost Reduction of a Bracket via Value
Engineering

Figure 5.5
5 - 30
Ethics, Environmentally Friendly Designs,
and Sustainability

 It is possible to enhance productivity

and deliver goods and services in an
environmentally and ethically
responsible manner
 In OM, sustainability means
ecological stability
 Conservation and renewal of
resources through the entire product
life cycle
5 - 31
Ethics, Environmentally Friendly Designs,
and Sustainability

 Design
 Polyester film and shoes
 Production
 Prevention in production and
packaging
 Destruction
 Recycling in automobiles

5 - 32
The Ethical Approach

 View product design from a

systems perspective
 Inputs, processes, outputs
 Costs to the firm/costs to
society
 Consider the entire life cycle of
the product

5 - 33
The Ethical Approach

 Goals
1. Developing safe end environmentally
sound practices
2. Minimizing waste of resources
3. Reducing environmental liabilities
4. Increasing cost-effectiveness of
complying with environmental
regulations
5. Begin recognized as a good
corporate citizen

5 - 34
Guidelines for Environmentally Friendly
Designs

1. Make products recyclable

2. Use recycled materials
3. Use less harmful ingredients
4. Use lighter components
5. Use less energy
6. Use less material

5 - 35
Time-Based Competition

 Product life cycles are becoming

shorter and the rate of technological
change is increasing
 Developing new products faster can
result in a competitive advantage

5 - 36
Product Development Continuum

EXTERNAL DEVELOPMENT
STRATEGIES
Figure 5.6 Alliances
Joint ventures
Purchase technology or expertise
by acquiring the developer

INTERNAL DEVELOPMENT STRATEGIES

Migrations of existing products
Enhancements to existing products
New internally developed products

Internal Cost of product development Shared

Lengthy Speed of product development Rapid and/
or Existing
High Risk of product development Shared

5 - 37
Acquiring Technology

 By Purchasing a Firm
 Speeds development
 Issues concern the fit between the acquired
organization and product and the host
 Through Joint Ventures
 Both organizations learn
 Risks are shared
 Through Alliances
 Cooperative agreements between
independent organizations

5 - 38
Defining a Product

 First definition is in terms of

functions
 Rigorous specifications are
developed during the design phase
 Manufactured products will have an
engineering drawing
 Bill of material (BOM) lists the
components of a product

5 - 39
Service Design
• Many aspects of services are intangible
• Service typically includes direct interaction with
the customer
• Service productivity is notoriously low partially
because of customer involvement in the design or
delivery of the service, or both
• Complicates product design

5 - 40
Designing More Efficient
Services
• Limit the options: Improves efficiency and
ability to meet customer expectations
• Delay customization
• Modularization: Eases customization of a service

• Automation: Reduces cost, increases customer

service
• Moment of truth: Critical moments between the
customer and the organization that determine
customer satisfaction

5 - 41
Service Design

Figure 5.12
5 - 42
Service Design

Figure 5.12
5 - 43
Transition to Production

 Know when to move to production

 Product development can be viewed as
evolutionary and never complete
 Product must move from design to
production in a timely manner
 Most products have a trial production period
to insure producibility
 Develop tooling, quality control, training
 Ensures successful production

5 - 44
Transition to Production

 Responsibility must also transition as the

product moves through its life cycle
 Line management takes over from
design
 Three common approaches to managing
transition
 Project managers
 Product development teams
 Integrate product development and
manufacturing organizations
5 - 45