Chapter 6

Design of Goods Product Development System

and Services

Product Decision
-The good or service the organization provides society
-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

Product Strategy Options Quality Function Deployment

-Differentiation -Identify customer wants
-Shouldice Hospital -Identify how the good/service will satisfy customer
-Low cost wants
-Taco Bell -Relate customer wants to product hows
-Rapid response -Identify relationships between the firm’s hows
-Toyota -Develop importance ratings
-Evaluate competing products
Product Life Cycles -Compare performance to desirable technical
Attributes

QFD House of Quality

Product Life Cycle Costs

House of Quality Example -Your team has

been charged with designing a new camera for
Great Cameras, Inc.
-The first action is to construct a House of
Quality
Product-by-Value Analysis

New Product Opportunities

1. Understanding the customer House of Quality Sequence
2. Economic change
3. Sociological and demographic change Deploying resources through the organization in
4. Technological change response to customer requirements
5. Political/legal change
6. Market practice, professional standards,
suppliers, distributors
• Brainstorming is useful tool
Organizing for Product Development Robust Design
 Historically – distinct departments • Product is designed so that small variations in
production or assembly do not adversely affect
• Duties and responsibilities are defined
the product
• Difficult to foster forward thinking
• Typically results in lower cost and higher quality
 A Champion
Modular Design
• Product manager drives the product
• Products designed in easily segmented
through the product development components
system and related organizations
• Adds flexibility to both production and marketing
 Team approach
• Improved ability to satisfy customer
• Cross functional – representatives from
requirements
all disciplines or functions
Computer Aided Design (CAD)
• Product development teams, design for
manufacturability teams, value • Using computers to design products and
engineering teams prepare engineering documentation
 Japanese “whole organization” approach • Shorter development cycles, improved
accuracy, lower cost
• No organizational divisions
• Information and designs can be deployed
Manufacturability and Value Engineering
worldwide
 Benefits:
Extensions of CAD
1. Reduced complexity of products
• Design for Manufacturing and Assembly
2. Additional standardization of products (DFMA)
3. Improved functional aspects of product o Solve manufacturing problems during
the design stage
4. Improved job design and job safety
• 3-D Object Modeling
5. Improved maintainability (serviceability)
of the product o Small prototype
development
6. Robust design
• CAD through the
Cost Reduction of a Bracket via Value Engineering
internet

• International data
exchange through STEP
Computer-Aided Manufacturing (CAM)

• Utilizing specialized computers and program to

control manufacturing equipment

• Often driven by the CAD system (CAD/CAM)

Issues for Product Development
Benefits of CAD/CAM
• Robust design
1. Product quality
• Modular design
• Computer-aided design (CAD) 2. Shorter design time
• Computer-aided manufacturing (CAM)
3. Production cost reductions
• Virtual reality technology
• Value analysis 4. Database availability
• Environmentally friendly design
5. New range of capabilities
Virtual Reality Technology
• Computer technology used to develop an
interactive, 3-D model of a product from the
basic CAD data
• Allows people to ‘see’ the finished design
before a physical model is built
• Very effective in large-scale designs such as
plant layout
Value Analysis
• Focuses on design improvement during
production
• Seeks improvements leading either to a
better product or a product which can be
produced more economically
Ethics and Environmentally Friendly Designs
It is possible to enhance productivity, drive
down costs, and preserve resources
Effective at any stage of the product life cycle
• Design
• Production
• Destruction
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
Goals for Ethical and Environmentally Friendly
Designs
1.Develop safe and more environmentally sound
product
2.Minimize waste of raw materials and energy
3.Reduce environmental liabilities
4.Increase cost-effectiveness of complying with
environmental regulations
5.Be recognized as a good corporate citizen
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
Legal and Industry Standards
For Design …
• Federal Drug Administration
• Consumer Products Safety Commission
• National Highway Safety Administration
• Children’s Product Safety Act
For Manufacture/Assembly …
• Occupational Safety and Health Administration
• Environmental Protection Agency
• Professional ergonomic standards
• State and local laws dealing with employment
standards, discrimination, etc.
For Disassembly/Disposal …
• Vehicle Recycling Partnership
• Increasingly rigid laws worldwide
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
Product Development Continuum
External Development Strategies
• 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
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
Defining the 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
Product Documents
Engineering drawing
• Shows dimensions, tolerances, and materials
• Shows codes for Group Technology
Bill of Material
• Lists components, quantities and where use
• Shows product structure
 Monterey Jack Cheese • Reduced tooling setup time, work-in-process,
(a) U.S. grade AA. Monterey cheese shall and production time
conform to the following requirements: Documents for Production
(1) Flavor. Is fine and highly pleasing, free • Assembly drawing
from undesirable flavors and odors. May • Assembly chart
possess a very slight acid or feed flavor. • Route sheet
(2) Body and texture. A plug drawn from • Work order
the cheese shall be reasonably firm. It shall • Engineering change notices (ECNs)
have numerous small mechanical openings Assembly Drawing
evenly distributed throughout the plug. It shall • Shows exploded view of product -Details
not possess sweet holes, yeast holes, or other relative locations to show how to
gas holes. assemble the product
(3) Color. Shall have a natural, uniform, Assembly Chart
bright and attractive appearance.
• Identifies the point of production where
(4) Finish and appearance - bandaged
components flow into subassemblies and
and paraffin-dipped. The rind shall be sound,
ultimately into the final product
firm, and smooth providing a good protection to Route Sheet
the cheese.
• Lists the operations and times required to
produce a component
Engineering Drawings

Work Order
• Instructions to produce a given quantity of a
particular item, usually to a schedule
Bills of Material
BOM for Panel Weldment

Engineering Change Notice (ECN)

A correction or modification to a product’s definition or
documentation
• Engineering drawings
Group Technology • Bill of material
• Parts grouped into families with similar Quite common with long product life cycles, long
characteristics manufacturing lead times, or rapidly changing
• Coding system describes processing and technologies
physical characteristics Configuration Management
• Part families can be produced in dedicated • The need to manage ECNs has led to the
manufacturing cells development of configuration management
Group Technology Scheme systems
• A product’s planned and changing components
are accurately identified and control and
accountability for change are identified and
maintained
Product Life-Cycle Management (PLM)
Integrated software that brings together most, if not all,
Group Technology Benefits elements of product design and manufacture
• Improved design • Product design
• Reduced raw material and purchases • CAD/CAM, DFMA
• Simplified production planning and control • Product routing
• Improved layout, routing, and machine loading • Materials
• Assembly
 • Environmental
Service Design
Service typically includes direct interaction with the
customer
• Increased opportunity for customization
• Reduced productivity
Cost and quality are still determined at the design stage
• Delay customization
• Modularization
• Reduce customer interaction, often through
automation
Service Design

Documents for Services
• High levels of customer interaction necessitate
different documentation
• Often explicit job instructions for moments-of-
truth
• Scripts and storyboards are other techniques
Application of Decision Trees to Product
Design
• Particularly useful when there are a series of
decisions and outcomes which lead to other
decisions and outcomes
Application of Decision Trees to Product
Design
Procedures
• Include all possible alternatives and states of
nature - including “doing nothing”
• Enter payoffs at end of branch
• Determine the expected value of each branch
and “prune” the tree to find the alternative with
the best expected value
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
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
CHAPTER 7:
STRATEGIC CAPACITY PLANNING
Capacity
Is the upper limit or ceiling On the load that an
operating unit can handle
• The capacity also includes:
• Equipment
• Space
• employee skill
The basic question in capacity Handling are:
• What kind of capacity is needed?
• How much is needed
• when it is needed
Design Capacity
• Maximum output rate or service capacity an
operation, process, or facility is designed for
Effective Capacity
• Design capacity minus allowances such as
personal time, maintenance, and scrap.
Actual output
• Rate of output actually achieved cannot exceed
effective capacity.
Determinants of Effective Capacity
Facilities
• the design of facilities including size and
provision for expansion is key
• locational factors such as transportation
costs, distance to market, labor supply,
energy sources, and room for expansion are
also important
• likewise layout of the work area and
environmental factors also play a significant role
about long term demand patterns,
technological changes, and the behavior of its
competitors.
Key Decisions of Capacity Planning
-The amount capacity needed
-The timing of changes
-The need to maintain balance throughout the
system
Product and Service Factors
• product and service design can have a
tremendous influence on capacity
• the more uniform the output the more
opportunities there are for standardization
of methods and materials
Process Factors
• The quantity capability of a process is an
obvious determinant of capacity but subtle
determinant is the influence of output quality.
• Process improvement that increase quality and
productivity can result in increased capacity.
Human factors
• The task that make up a job, the variety of
activities involved, also the training, skill and
experience required to perform a job all have an
impact on the potential and actual output.
Policy Factors
• Management policy can affect capacity by
allowing or not allowing capacity options such
as overtime or second or third shifts.
Operational Factors
• inventory stocking decisions, late deliveries,
purchasing requirements, acceptability of
purchased materials, quality inspection and
control procedures also have an impact on
effective capacity.
Supply Chain Factors
It must be taken into account in capacity planning if
substantial capacity changes are involved.
External Factors
Product standards, especially minimum quality and
performance standards, can restrict management’s
option for increasing capacity.
Strategy Formulation
The Challenge of Planning Service Capacity
-The extent of flexibility of facilities and the
workforce.
Three important factors in planning service
capacity
The need to be near customers
Convenience for customers is often an
important aspects of services. Generally, a
service must be located near the customer.
 The inability to store service Take a “big
Speed of the delivery, or customers picture’ approach to capacity changes

Deciding on the amount capacity involves planning.

consideration of expected demand and capacity
cost.
The degree of volatility
Capacity cushion which is an amount Demand volatility presents problem 4
capacity in excess of expected demand when there capacity planners. Demand volatility tends to be is
some uncertainty about demand. higher for services than goods, not only in timing of
demand, but also in the amount of time required to
- the greater the degree of demand uncertainty, the service individual customers. greater
the amount cushion used.
Make or Buy
Steps in the Capacity Planning Process Once capacity requirements have been
- Estimate future capacity requirements determined, the organization must decide
whether
waiting time become a major concern in a when developing capacity alternative, it is
service capacity to produce goods or provide a important to consider how parts of the system
service itself, or outsource from other interrelate.
organization.

Factors:
Available capacity if an organization
has available the
Prepare to deal with capacity
equipment, necessary skills, and time, it often
makes sense to produce an item or perform a “chunks” no machine comes
service in-house, the additional cost would be
in continuous
relatively small compared with those required
to buy items or subcontract services. capacities.

Expertise Attempt to smooth out capacity

If a firm lacks the expertise to do the
requirements unevenness incapacity
job satisfactory buying might be a reasonable
alternative. requirements also

Quality Considerations can create certain problems.

Firms that specialize can usually offer
higher quality that an organization can optimal steady, the organization is often
attain itself. better off doing the
Conversely, unique quality requirements are the work itself. level, increasing the output
Identify the optimal operating level rate results in decreasing average
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roduction units typically have an ideal or
Diseconomies of
desire to closely monitor quality may
scale
cause an organization to perform a job
Cost
itself. optimal level of operation in terms
of unit cost of output.
Any cost savings achieved from
buying or if the output rate is more
The Nature of Demand when demand
for an item is high and economies of than the optimal level, increasing the
scale if the output rate is less than the output rate results in making must weigh
against the preceding factors. cost
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or increasing average unit costs.
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