Product Design and

Development

Lecture# 11 Dr. Suresh Varadarajan

Feb 11, 2021 sureshv@iittp.ac.in
Design Process
Gathering Information

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Early Placement of Gathering Information Step

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Data, Information, and Knowledge

• Data is a set of discrete, objective facts about events.

• These data may be experimental observations about the
testing of a new product, or data on sales that are part of a
marketing study.
• Information is data that has been treated in some way
that is conveys a message.
• Enables for key decisions
• The word inform originally meant “to give shape to”.

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Ways of Data Becoming Information
• Data becomes information when its creator adds meaning. This can be
done in the following ways:

• Contextualized: We know for what purpose the data was

gathered.
• Categorized: We know the units of analysis or key components of
the data.
• Calculated: The data have been analyzed mathematically or
statistically.
• Corrected: errors have been removed from the data.
• Condensed: The data have been summarized in a more concise
form.
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Knowledge
• Knowledge is broader, deeper, and richer than data or
information.
• Knowledge is a mix of experience, values, contextual
information, and expert insight that provides a framework for
evaluating and incorporating new experiences and
information.
• Transformation from information to knowledge happened
through:
• Comparison -- with other situations one has known
• Consequence -- implications does the situation has for actions
• Connections – relationships between bits of information
• Conversation – what others think about this information

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Types of Design Information
What are the different types of information for engineering design?

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Types of Design Information
Customer Surveys & Feedback, Marketing Data
Related Designs Specs & Drawings for previous versions
Similar designs of competitors
Analysis Methods Handbooks, Textbooks, Monographs, Technical Reports,
Specialized computer programs
Materials Performance in past designs, Properties
Manufacturing Capability of Processes, Capacity analysis
Manufacturing sources, Assembly methods
Cost Cost history, Current material & manufacturing costs
Standard Components Availability & Quality of vendors, Size & Technical Data
Technical standards ISO, ASTM, Company specific
Governmental Regulations Performance-based, Safety requirements
Life Cycle issues Maintenance/service feedback,
Reliability/quality/warranty data
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Sources of Design Information
Where can we find the information we need?

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Sources of Design Information
Libraries Dictionaries, engineering handbooks, texts, periodicals

Internet A massive depository of information

Technical reports, databases, agency-based search engines,
Government
laws & regulations
Engineering Technical journals & news magazines, Technical conference
professional societies proceedings, Codes & standards
& trade associations

Intellectual property Patents, Copyrights, Trademarks

Buildup of knowledge, Contacts with colleagues, Personal

Personal activities network, contacts with suppliers & vendors, Attendance f
conferences, Visits of other companies

Direct involvement, Surveys, Feedback from warranty

Customers payments

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5.4 Library Sources of
Information
What are the library sources?

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Types of Library Sources
• Dictionaries and Encyclopedias:
• McGraw-Hill Encyclopedia of Environmental Science and
Engineering, 3d ed., McGraw-Hill, New York, 1993.
• Handbooks:
• Handbook of engineering fundamentals
• Handbook of mechanical engineering
• Textbooks and Monographs:
• Monographs are books with a narrower and more specialized
content that the books used as texts.
• Periodicals
• Catalogs, Brochures, and Business Information
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Common Database for Electronic Access

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5.5 Government Sources of
Information
How does government help gathering information?

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Government Role in Research
 The federal government either conducts or pays for about
35% of the research and development performed in this
country.
• That generates an enormous amount of information, mostly in the
form of technical reports.
• Government-sponsored reports are only one segment of
what is known among information specialists as the gray
literature.
• The Government Printing Office (GPO) is the federal agency
with the responsibility of reproducing and distributing
federal documents.
• Reports prepared under contract by industrial and university
R&D organizations may be obtained from the National
Technical Information Service (NTIS).

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5.6 Information From the
Internet
How can internet information help a design project?

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Searching with Google

• Issues with Google is not getting “hits” for your keywords.

• The following simple rules help:

• Suppose we want to find responses on the topic proportional control.

• We get results about: proportional in some web pages, control in
others, proportional control is still others.
• We should put the phrase in quotation marks: “proportional control”.

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5.7 Professional Societies
and Trade Associations
What do professional societies do?

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Professional Societies
 Professional societies are organized to advance a particular profession
and to honor those in the profession for outstanding accomplishments.
 Engineering societies rarely lobby for specific legislation that will
benefit their membership.
 The first U.S. engineering professional society was the American
Society of Civil Engineers (ASCE).
 Professional Societies:
 AIME
 ASME
 IEEE
 AIChE
 ASHRAE
 SPIE
 ASEE

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5.8 Codes and Standards
How can codes and standards help?

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Codes, Standards, and Specifications
 Codes:
 A code is a set of rules for performing some task, as in the local
city building code or fire code.
 Standards:
 A standard is less prescriptive and can be defined as a set of
technical definitions and guidelines.
 Specification:
 A specification describes how a system should work, and is
usually is much more specific and detailed than a standard, but
sometimes it is difficult to differentiate between documents
that are called standards and those called specifications.

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ANSI, NIST, ASTM, ASME,ISO
 The American National Standards Institute (ANSI) is the
coordinating organization for the voluntary standards system
for he United States. (www.ansi.org).
 The standards responsibility of the U.S. government is carried
out by the National Institute for Standards and Technology
(NIST).
 ASTM International is the major organization that prepares
standards in the field of materials and product systems.
 The ASME prepares the well-known Boiler and Pressure Vessel
Code that is incorporated into the laws of most states.
 ISO is the international organization for standardization
(www.iso.org)
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 5.9 Patents and Other
Intellectual Property
What is a patent? How can a patent provide information?

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Patent and Other Intellectual Property
 Patent:
 A patent, granted by a government, gives its owner the right to prevent
others from making, using, or selling the patented invention.
 Copyright:
 A copyright gives its owner the exclusive right to publish and sell a written
or artistic work.
 Trademark:
 A trademark is any name, word, symbol, or device that is used by a
company to identify its goods or services and distinguish them from those
made or sold by others.
 Trade Secret:
 A trade secret is any formula, pattern, device, or compilation of
information that is used in a business to create an opportunity over
competitors who do not have this information.
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Intellectual Property
❖Intellectual Property has received increasing attention in
the high-tech work.

 The technology in the information technology and

telecommunication businesses has become so complex
that there is a greater willingness to accept the
innovations of other companies.
 Since the technology is moving fast there is a tendency
for cutting-edge technology to quickly change to a
commodity-type business.
 Customers are demanding common standards and
interoperability between systems.
 For start-up companies, patents are important because
they represent assets that can be sold in case the
company is not successful and goes out of business.
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Patent

• There are three general criteria for awarding a patent:

• The invention must be new or novel.
• The invention must be useful.
• It must not be obvious to a person skilled in the art covered
by the patent.

✓ A key requirement is novelty.

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Technology Licensing
• The right to exclusive use of technology that is
granted by a patent may be transferred to another
party through a licensing agreement.
• A license may be either an exclusive license, in which
it is agreed not to grant any further licenses, or a
nonexclusive license.

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Patent Literature
• The U.S. Patent system is the largest body of information
about technology in the world!
• The U.S. Patent and Trademark Office (USPTO) has been highly
computerized.
• Typical reasons for making a patent search are:
• You have been asked to comment on a patent used by a
competitor.
• You are looking fro ideas to improve your design concept.
• You have come up with a really cool design concept, and
you want to determine if the idea is novel enough to
warrant the expense of preparing a patent submission.
• You want to continue to update yourself on a particular
technology of interest.
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Reading a Patent
 Because a patent is a legal document, it is organized
and written in a style much different from the style of
the usual technical paper.
 Patents must stand on their own and contain sufficient
disclosure to permit the public to practice the invention
after the patent expires.
 Each Patent is a complete:
 exposition on the problem
 solution to the problem
 the applications for the invention in practical use

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Figure from US Patent 5,540,428
BASKETBALL RETRIEVAL AND RETURN APPRATUS

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Copyrights
• A copyright is the exclusive legal right to publish a tangible
expression of literary, scientific, or artistic work, whether it
appears in digital, print, audio, or visual form.
• While the U.S. Copyright Act does not directly define fair use, it
does base it on four factors:
• The purpose and character of the use.
• The nature of the copyrighted work.
• The amount of the work used in relation to the copyrighted work as a
whole.
• The effect of the use on the potential market value of the copyrighted
work.

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5.10 Company-Centered
Information
What is the importance of gaining information by networking?

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Finding Information
• The degree to which individual engineers pursue
information:
• The nature of the project.
• The personality and temperament of the individual.
• Conversations are sometimes crucial to the solution of a
problem.
• The corporate culture concerning knowledge generation
and management.
• Perhaps the necessary information is known to exist but it
is classified, available only to those with a need to know.

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Information Gathered in a Company
• The amount of design information that can be obtained from within
the company is quite considerable and of many varieties such as:
• Product Specifications
• Concept designs for previous products
• Test data on previous products
• Bill of material on previous products
• Cost data on previous projects
• Reports on previous design projects
• Marketing data on previous products
• Sales data on previous products
• Warranty reports on previous products
• Manufacturing data
• Design guides prepared for new employees
• Company standards
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Target Costing
Introduction
• An engineering design is not complete until we have a good
idea of the cost required to build the design or manufacture the
product.
• Understanding the elements that make up cost is vital because
competition between companies and between nations is fiercer
than ever.
• Decisions made in the design process commit 70 to 80 percent
of the cost of a product.
• It is in the conceptual and embodiment design stages that a
majority of the costs are locked into the product.
Ways of Using Cost Estimates
1. To provide information to establish the selling price of a product or
a quotation for a good or service.
2. To determine the most economical method, process, or material for
manufacturing a product.
3. To become a basis for a cost-reduction program.
4. To determine standards of production performance that may be
used to control costs.
5. To provide input concerning the profitability of a new product.

Dieter/Schmidt, Engineering Design 5e. ©2013. The McGraw-

38
Hill Companies
Design To Cost
• Design to cost, also called target costing, is the approach in which a
target value for the cost of a product is established at the beginning
of a product development project.
• All design decisions are examined for their impact on keeping below
the target cost.
• If this proves to be excessive, then the only practical recourse is to try
to wring the excess cost out of the manufacturing process or to
substitute a less expensive material, often at the expense of quality.

Dieter/Schmidt, Engineering Design 5e. ©2013. The McGraw-

39
Hill Companies
Steps in Accomplishing Design To Cost
• Establish a realistic and reliable target cost.
• Divide the target cost into subunits:
1. Cost of subsystems and components in similar designs
2. Division according to competitor’s components in similar designs
3. On the basis of estimates of what the customer is willing to pay for various
functions and features of the product.
• Oversight of compliance with cost targets.

Dieter/Schmidt, Engineering Design 5e. ©2013. The McGraw-

40
Hill Companies
 Was invented/Developed by Toyota in
1965

80-90% of the life cycle cost is determined

at the design phase of the product
Target (Tanaka)

Costing continuous improvement, “cost kaizen”,

inevitably lead to fewer opportunities to
cut costs (Tanaka)

SOLUTION: actual costs -> predetermined

costs
Target Costing: Definition

Target Costing is defined as a cost management

tool for reducing the overall cost of a product over
its entire life-cycle with the help of production,
engineering, research and design.
Target costing

Target costing represents a fundamentally different approach. It

is based on three premises:
1. orienting products to customer affordability or market-
driven pricing
2. treating product cost as an independent variable during the
definition of a product’s requirements
3. proactively working to achieve target cost during product
and process development..
Target Costing: Motivation
• Global competition with mobile capital
• Technology leadership no longer provides lasting competitive
edge
• Pressure for lower prices
• Shorter product life cycles
• Demand for custom products

Target costing is particularly useful in industries

that have low profit margins and high competition.
• Where the profit margin is based on selling price, target total cost
can be calculated as follows:

Target cost = selling price – (profit percentage × selling price)

• Where the profit margin is based on cost, target cost can be found
as follows:
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑃𝑟𝑖𝑐𝑒
𝑇𝑎𝑟𝑔𝑒𝑡 𝐶𝑜𝑠𝑡 =
1 + 𝑃𝑟𝑜𝑓𝑖𝑡 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒
Target Cost vs Budgeted Cost
• A target cost is the allowable amount of cost that can be incurred on
a product and still earn the required profit from that product. It is a
market driven cost that is computed before a product is produced.

• A budgeted cost is a predetermined cost after a product is in

production. A budget is an operational definition of an allowable cost
broken by items and by periods.
Allowable Cost vs Achievable cost
• An allowable target cost is the maximum amount that can be spent
on a product.
• An achievable cost is the estimate that tells management whether
the product and process design is capable of meeting the allowable
cost target.
Traditional Product Costing vs Target Costing
Traditional Product Cost Target Cost
Management Management

Market Research Market Research

Product Specific Features Product Specific Features

Design Target Costing

Development

Material Price Material

Design Development
Price
Cost Planning/Costing

Production Production
Target Costing vs Product Cost (Cost Plus) Methodology
Target Costing and Design to Cost
Approaches to Target Costing

• Price based Targeting

• Cost based Targeting
• Value based Targeting

• A target cost is the maximum amount of cost that can be incurred on

a product.
Target Cost = Market Price – Expected Margin
Price based Targeting
• Sets target cost for the product through comparison with that of
competitors
• This means setting the price of the product by observing what the
market will bear, then deducting the desired profit margin from the
price, and thereby obtaining the target cost.
Cost based Targeting
• It sets the cost first , then the desired profit margin is derived at the
price of the product.
• This method requires the suppliers to reveal the very details of their
cost structure and will sour the buyer-supplier relationships so itsn’t
good for the long run
Value-based targeting
• It sets the price by what it thinks the market will ‘value’ the product
• After that, the producer sets the desired profit margin and then tries
all ways to keep the cost below that of the target cost.
Main Elements of Target Costing Process**
Market Cost Reduction
Opportunities Pressures

Product Specification Supplier cost

Changes estimates

** Cooper & Slagmulder

Some Limitations in Target Costing adoption

• Possible misuse of the technique.

• Producers might make use of cost-based target costing to squeeze
the profit margins of suppliers, thereby getting materials at the
lowest cost possible.
• the stress on the design team of companies using target
costing disadvantage to the company.
• Product development time might be lengthen as product is
repeatedly designed to bring cost below that of target.
Implementation Steps
1. Price-led costing ~ market prices are used to determine target
costs

2. Focus on customers ~ value to the customer must be greater than

the cost of the product itself

3. Focus on design ~ cost control must occur before production

Implementation Steps
4. Cross-functional involvement ~ inter functional
product and process teams

5. Value-chain involvement ~ all members of the

value chain included

6. Life-cycle orientation ~ minimizing total life-cycle

costs
Control Points

Top management in case of establishing a new product

Cost estimating group decomposing the preset value

Cross-functional target costing teams analysing the production

process
Target costing by Caterpillar: Example
• The main aim: to reduce costs by 5.4%

• The cost of the comparable model is based on current manufacturing

capabilities
Similar approach to the target costing by
Caterpillar
• cross-functional organizational team
• emphasize cost reduction during the new product development cycle
• reduce costs through efficiency improvements
Similar approach to the target costing by
Caterpillar
A few areas of reduction:
• Assembly
• Cab
• Engine
• Hydraulics
• Power Train
• Structures
• Linkage
• Other
Target costing prospective
• Target costing which has been widely used by Japanese firms since
1970s now is spread all over the world
• Main industries: transportation and heavy equipment industries
(Intensive competition, extensive supply chains, and relatively long
product development cycles)
QFD – Class Exercise
End of Session