CHAPTER 4

Product
&
Service Design

CHAPTER 4: LEARNING OBJECTIVES

LO 4.1 Explain the strategic importance of product and service
design
LO 4.2 List some of the main sources of design ideas
LO 4.3 Discuss the importance of legal, ethical, and sustainability
considerations in product and service design
LO 4.4 Sustainability : Cradle-to-Grave Assessment, End of Life
Programs, the 3 Rs
LO 4.6 Discuss several key issues in product or service design
LO 4.7 Name the phases in service design
LO 4.8 List the characteristics of well-designed service systems
LO 4.9 List some guidelines for successful service design

4-2

2
 INTRODUCTION

 Strategic Product and Service Design

 What Does Product and Service Design Do?

 Key Questions

 Reasons for Product or Service Design or Redesign

4-3
LO 4.1

STRATEGIC PRODUCT AND SERVICE

DESIGN
 The essence of an organization is the goods and
services it offers
 Every aspect of the organization (its supply
chain) is structured around them
 Product and service design – or redesign – should
be closely tied to an organization’s strategy
 Organizations that have well-designed products or
services are more likely to realize their goals than
those with poorly designed products or services

4-4
LO 4.1

4
 WHAT DOES PRODUCT & SERVICE
DESIGN DO?
1. Translate customer wants and needs into product
and service requirements (marketing, operations)
2. Refine existing products and services (marketing)
3. Develop new products and/or services (marketing,
operations)
4. Formulate quality goals (marketing, operations)
5. Formulate cost targets (accounting, finance,
operations)
6. Construct and test prototypes (operations,
marketing, engineering)
7. Document specifications
8. Translate product and service specifications into
process specifications (engineering, operations)
4-5
LO 4.2

KEY QUESTIONS
From a buyer’s standpoint purchasing decisions;
1. Cost
2. quality or performance
From the organization’s standpoint;
1. Is there a demand for it?
 Market size
 Demand profile*
2. Can we do it?
 Manufacturability - the capability of an
organization to produce an item at an
acceptable profit
 Serviceability - the capability of an organization
to provide a service at an acceptable cost or
profit 4-6
LO 4.3

6
 KEY QUESTIONS (CONT.)
3. What level of quality is appropriate?

 Customer expectations

 Competitor quality

 Fit with current offering

4. Does it make sense from an economic

standpoint?

 Liability issues, ethical considerations,

sustainability issues, costs and profits

4-7
LO 4.3

REASONS TO DESIGN OR RE-DESIGN

 The driving forces for product and service design or
redesign are market opportunities and threats:

 Economic

 Social and demographic

 Political, liability, or legal

 Competitive

 Cost or availability

 Technological (important now)

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LO 4.4

8
 IDEA GENERATION

1. Supply-chain based

2. Competitor based

3. Research based

4-9
LO 4.5

IDEA GENERATION
1. Supply-Chain Based
 Ideas can come from anywhere in the supply chain:

 Customers

 Suppliers

 Distributors

 Employees

 Maintenance and repair personnel

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LO 4.5

10
 IDEA GENERATION
2. Competitor Based

 By studying how a competitor operates and its

products and services, many useful ideas can be
generated

 Reverse engineering

 Dismantling and inspecting a competitor’s

product to discover product improvements

4-11
LO 4.5

11

IDEA GENERATION
3. Research Based
 Research and development (R&D)*
 Organized efforts to increase scientific
knowledge or product innovation
 Basic research
 Has the objective of advancing the state of
knowledge about a subject without any near-
term expectation of commercial applications
 Applied research
 Has the objective of achieving commercial
applications
 Development
 Converts the results of applied research into
LO 4.5 useful commercial applications. 4-12

12
 LEGAL CONSIDERATIONS
 Legal considerations
 Product liability
 The responsibility a manufacturer has for any
injuries or damages caused by faulty product
 Some of the concomitant costs
Litigation
Legal and insurance costs
Settlement costs
Costly product recalls
Reputation effects
 Uniform Commercial Code

 Under the UCC, products carry an implication

of merchantability and fitness* 4-13
LO 4.6

13

ETHICAL CONSIDERATIONS
 Designers are often under pressure to

 Speed up the design process

 Cut costs

 These pressures force trade-off decisions

 What if a product has bugs?

 Release the product and risk damage to your

reputation

 Work out the bugs and forego revenue

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LO 4.6

14
 HUMAN CONSIDERATIONS

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LO 4.6

15

CULTURAL CONSIDERATIONS

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LO 4.6

16
 GLOBAL CONSIDERATIONS

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LO 4.6

17

SUSTAINABILITY – ENVIRONMENTAL
FACTOR
 Sustainability

 Using resources in ways that do not harm

ecological systems that support human existence
 Key aspects of designing for sustainability
 Cradle-to-grave assessment (Life-Cycle assessment)*
 End-of-life programs
 The 3Rs
 Reduction of costs and materials used
 Re-using parts of returned products
 Recycling
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LO 4.6

18
 SUSTAINABILITY
 CRADLE-TO-GRAVE ASSESSMENT
 aka Life-Cycle Assessment (LCA)
 Theassessment of the environmental impact of a
product or service throughout its useful life
 Focuses on such factors as
Global warming
Smog formation
Oxygen depletion
Solid waste generation
 LCA procedures are part of the ISO 14000
environmental management procedures
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LO 4.7

19

SUSTAIBABILITY
END-OF-LIFE PROGRAMS
 EOL deals with products that have reached the
end of their useful lives
 Include consumer products and business
equipment's
 Purpose

 To reduce the dumping of products in landfills

or third world countries like electronics
 Toavoid Incineration: converting materials into
hazardous air and water emissions and
generate toxic ash

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LO 4.7

20
 SUSTAINABILITY – 3R
1. REDUCE: COSTS AND MATERIALS
 Value analysis
 Examination of the function of parts and
materials in an effort to reduce the cost and/or
improve the performance of a product
 Common questions used in value analysis
 Isthe item necessary; does it have value;
could it be eliminated?
 Are there alternative sources for the item?
 Could another material, part, or service be
used instead?
 Can two or more parts be combined?
4-21
LO 4.8

21

SUSTAINABILITY – 3R
1. REDUCE: COSTS AND MATERIALS
 Value analysis (cont..)
 Can specifications be less stringent to save
time or money?
 Do suppliers/providers have suggestions for
improvements?
 Can packaging be improved or made less
costly?

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LO 4.8

22
 SUSTAINABILITY – 3R
2. REUSE - REMANUFACTURING
 Remanufacturing
 Refurbishing used products by replacing worn-
out or defective components
 Can be performed by the original
manufacturer or another company
 Reasons to remanufacture:
 Remanufactured products can be sold for
about 50% of the cost of a new product
 The process requires mostly unskilled and
semi-skilled workers
 In the global market, European lawmakers
are increasingly requiring manufacturers to
take back used products*
 Design for disassembly (DFD) 4-23
LO 4.8

23

SUSTAINABILITY – 3R
3. RECYCLE
 Recycling

 Recovering materials for future use

 Applies to manufactured parts
 Also applies to materials used during
production
 Why recycle?
 Cost savings
 Environmental concerns
 Environmental regulations
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LO 4.8

24
 SUSTAINABILITY – 3R
3. RECYCLE

 Companies doing business in the EU must show

that a specified proportion of their products are
recyclable

 Design for recycling (DFR)

 Product design that takes into account the

ability to disassemble a used product to
recover the recyclable parts

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LO 4.8

25

OTHER DESIGN CONSIDERATIONS

1. Strategies for product or service Life stages
2. Product life cycle Management
3. Degree of standardization
4. Designing for mass Customization
5. Reliability
6. Robust design
7. Degree of newness
8. Quality function deployment
9. The kano model

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LO 4.9

26
 OTHER DESIGN CONSIDERATIONS
1. PRODUCT OR SERVICE LIFE STAGES

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LO 4.9

27

OTHER DESIGN CONSIDERATIONS

2. PRODUCT LIFE CYCLE MANAGEMENT
 It is a systematic approach to managing the series
of changes a product goes through, from its
conception, design, and development, through
production and any redesign, to its end of life.

 PLM incorporates everything related to a particular

product*

A goal of PLM is to eliminate waste and improve

efficiency.

 For example, PLM is considered to be an integral

part of lean production
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LO 4.10

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 OTHER DESIGN CONSIDERATIONS
PHASES OF PLM

 Beginningof life, which involves design and

development;
 Middleof life, which involves working with suppliers,
managing product information and warranties; and
 End of life, which involves strategies for product
discontinuance, disposal, or recycling.

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LO 4.10

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OTHER DESIGN CONSIDERATIONS

3. STANDARDIZATION
 Standardization

 Extent to which there is an absence of variety in

a product, service, or process

 Products are made in large quantities of

identical items

 Every customer or item processed receives

essentially the same service

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LO 4.10

30
 OTHER DESIGN CONSIDERATIONS
ADVANTAGES OF STANDARDIZATION
1. Fewer parts to deal with in inventory and in
manufacturing.
2. Reduced training costs and time.
3. More routine purchasing, handling, and inspection
procedures.
4. Orders fillable from inventory.
5. Opportunities for long production runs and
automation.
6. Need for fewer parts justifies increased
expenditures on perfecting designs and improving
quality control procedures.
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LO 4.10

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OTHER DESIGN CONSIDERATIONS

DISADVANTAGES OF STANDARDIZATION

1. Designs may be frozen with too many

imperfections remaining.

2. High cost of design changes increases

resistance to improvements.

3. Decreased variety results in less consumer

appeal.

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LO 4.10

32
 OTHER DESIGN CONSIDERATIONS
4. DESIGNING FOR MASS CUSTOMIZATION
 Mass customization
A strategy of producing basically standardized
goods or services, but incorporating some
degree of customization in the final product or
service
 Facilitating techniques
 Delayed differentiation
 Modular design

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LO 4.10

33

OTHER DESIGN CONSIDERATIONS

4. DESIGNING FOR MASS CUSTOMIZATION

 Delayed differentiation
 The process of producing, but not quite
completing, a product or service until customer
preferences are known

 It is a postponement tactic

 Produce a piece of furniture, but do not stain

it; the customer chooses the stain

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LO 4.10

34
 OTHER DESIGN CONSIDERATIONS
4. DESIGNING FOR MASS CUSTOMIZATION
 Modular design
A form of standardization in which component
parts are grouped into modules that are easily
replaced or interchanged
 Advantages
Easier diagnosis and remedy of failures
Easier repair and replacement
Simplification of manufacturing and assembly
Training costs are relatively low
 Disadvantages
Limited number of possible product
configurations
Limited ability to repair a faulty module; the
entire module must often be scrapped
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LO 4.10

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OTHER DESIGN CONSIDERATIONS

5. Reliability
 Reliability

 The ability of a product, part, or system to

perform its intended function under a prescribed
set of conditions
 Failure

 Situation
in which a product, part, or system does
not perform as intended
 Reliabilitiesare always specified with respect to
certain conditions
 Normal operating conditions
The set of conditions under which an item’s
reliability is specified 4-36
LO 4.10

36
 OTHER DESIGN CONSIDERATIONS
5. Reliability
POTENTIAL WAYS TO IMPROVE RELIABILITY
1. Improve component design.

2. Improve production and/or assembly techniques.

3. Improve testing.

4. Use backups.

5. Improve preventive maintenance procedures.

6. Improve user education.

7. Improve system design

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LO 4.10

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OTHER DESIGN CONSIDERATIONS

6. ROBUST DESIGN
 Robust design
 A design that results in products or services that
can function over a broad range of conditions*
 The more robust a product or service, the less
likely it will fail due to a change in the
environment in which it is used or in which it
is performed
 Pertains to product as well as process design
 Consider the following automobiles:
Ferrari Enzo
Toyota Avalon
Which design is more robust?
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LO 4.10

38
 OTHER DESIGN CONSIDERATIONS
6. ROBUST DESIGN
Taguchi’s Approach.

 Japanese engineer Genichi Taguchi’s approach

is based on the concept of robust design.

“It is often easier to design a product that is

insensitive to environmental factors, either in
manufacturing or in use, than to control the
environmental factors.”

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LO 4.10

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OTHER DESIGN CONSIDERATIONS

7. DEGREE OF NEWNESS
 Product or service design change can range from:
1. Modification of an existing product or service
2. Expansion of an existing product line or service
offering
3. Clone of a competitor’s product or service
4. New product or service
 Thedegree of change affects the newness to the
organization and the newness to the market.
 Risks and benefits? Low or high level of Newness?
 Low and high profit margins?
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LO 4.10

40
 OTHER DESIGN CONSIDERATIONS
8. QUALITY FUNCTION DEPLOYMENT
 Quality Function Deployment (QFD)

 An approach that integrates the “voice of the

customer” into both product and service
development

 The purpose is to ensure that customer

requirements are factored into every aspect
of the process

 Listening to and understanding the customer is

the central feature of QFD*
4-41
LO 4.10

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QUALITY FUNCTION DEPLOYMENT*

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LO 4.10

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 QUALITY FUNCTION DEPLOYMENT*

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LO 4.10

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QUALITY FUNCTION DEPLOYMENT

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LO 4.10

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 QUALITY FUNCTION DEPLOYMENT

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LO 4.10

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THE HOUSE OF QUALITY SEQUENCE

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LO 4.10

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 OTHER DESIGN CONSIDERATIONS
KANO MODEL*
 1. Basic quality
 Refersto customer requirements that have only
limited effect on customer satisfaction if present,
but lead to dissatisfaction if absent
 Performance quality
 Refers to customer requirements that generate
satisfaction or dissatisfaction in proportion to
their level of functionality and appeal
 Excitement quality
 Refersto a feature or attribute that was
unexpected by the customer and causes
excitement
4-47
LO 4.10

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THE KANO MODEL – AS TIME PASSES

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LO 4.10

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 LESSONS OF THE KANO MODEL
 Design elements that fall into each aspect of
quality must first be determined.
 Once basic needs have been met, additional
efforts in those areas should not be pursued.
 For performance features, cost–benefit analysis
comes into play, and these features should be
included as long as the benefit exceeds the cost.
 it is important for companies to strive to identify
and include these excitement features* when
economically feasible.

The Kano model can be used in

conjunction with QFD as well as in Six Sigma
projects 4-49
LO 4.10

49

PHASES IN PRODUCT DESIGN AND

DEVELOPMENT
1. Feasibility analysis
2. Product specifications
3. Process specifications
4. Prototype development
5. Design review
6. Market test
7. Product introduction
8. Follow-up evaluation
4-50
LO 4.10

50
 DESIGNING TECHNIQUES FOR
PRODUCTION

1. Concurrent Engineering
2. Computer-Aided Design
3. Production Requirements
4. Component Commonality

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LO 4.10

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DESIGNING TECHNIQUES FOR

PRODUCTION
1. Concurrent engineering*
 Concurrent engineering
 Bringing
engineering design and manufacturing
personnel together early in the design phase
 Also may involve manufacturing, marketing
and purchasing personnel in loosely
integrated cross-functional teams
 Views of suppliers and customers may also
be sought
 The purpose is to achieve product designs that
reflect customer wants as well as manufacturing
capabilities 4-52
LO 4.10

52
 DESIGNING TECHNIQUES FOR PRODUCTION
2. COMPUTER-AIDED DESIGN (CAD)

4-53
LO 4.10

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DESIGNING TECHNIQUES FOR

PRODUCTION
2. COMPUTER-AIDED DESIGN (CAD)
 CAD
 Productdesign using computer graphics
 Advantages
 Increases productivity of designers, 3 to 10
times
 Creates a database for manufacturing
information and product specifications
 Provides possibility of engineering and cost
analysis on proposed designs
 CAD that includes finite element analysis (FEA)
can significantly reduce time to market
 Enables developers to perform simulations that
aid in the design, analysis, and
4-54
LO 4.10 commercialization of new products
54
 DESIGNING TECHNIQUES FOR
PRODUCTION
3. PRODUCTION REQUIREMENTS
 Designers must take into account production
capabilities
 Equipment

 Skills

 Types of materials
 Schedules

 Technologies

 Special abilities

4-55
LO 4.10

55

DESIGNING TECHNIQUES FOR

PRODUCTION
3. PRODUCTION REQUIREMENTS
1. Manufacturability
 Ease of fabrication and/or assembly
It has important implications for
 Cost
 Productivity
 Quality
2. Design for manufacturing (DFM)
 The designing of products that are compatible with
an organization’s capabilities.
3. Design for assembly (DFA)
 Design that focuses on reducing the number of parts
in a product and on assembly methods and
sequence. 4-56
LO 4.10

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 DESIGNING TECHNIQUES FOR
PRODUCTION
4. COMPONENT COMMONALITY
 When products have a high degree of similarity in
features and components, a part can be used in
multiple products
 Benefits:

 Savings in design time

 Standard training for assembly and installation
 Opportunities to buy in bulk from suppliers
 Commonality of parts for repair
 Fewer inventory items must be handled
4-57
LO 4.10

57

SERVICE DESIGN
Service ???
 Begins with a choice of service strategy,
which determines the nature and focus of
the service, and the target market
 Key issues in service design
 Degree of variation in service
requirements
 Degree of customer contact and
involvement

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LO 4.11

58
 SERVICE DESIGN
SERVICE DELIVERY SYSTEM
which includes the facilities, processes, and skills
needed to provide the service.
PRODUCT BUNDLE
the combination of goods and services provided to
a customer.
SERVICE PACKAGE
1. The physical resources needed.
2. The accompanying goods that are purchased or
consumed by the customer, or provided with the
service.
3. Explicit services (the essential/core features of a
service, such as tax preparation).
4. Implicit services (ancillary/extra features, such as
friendliness, courtesy).
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LO 4.11

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DIFFERENCES BETWEEN SERVICE

AND PRODUCT DESIGN
1. Products are generally tangible, services intangible
2. Services are created and delivered at the same
time
3. Services cannot be inventoried
4. Services are highly visible to consumers
5. Some services have low barriers to entry and exit
6. Location is often important to service design, with
convenience as a major factor
7. Service systems range from those with little or no
customer contact to those that have a very high
degree of customer contact
8. Demand variability alternately creates waiting lines
or idle service resources
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LO 4.11

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 PHASES IN SERVICE DESIGN PROCESS
1. Conceptualize.
• Idea generation
• Assessment of customer wants/needs
(marketing)
• Assessment of demand potential (marketing)
2. Identify service package components needed
(operations and marketing).
3. Determine performance specifications (operations
and marketing).
4. Translate performance specifications into design
specifications.
5. Translate design specifications into delivery
specifications.
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SERVICE BLUEPRINTING
Service blueprint
A method used in service design to describe and
analyze a proposed service.
The major steps in service blueprinting are as follows:
1. Establish boundaries for the service and decide on
the level of detail needed.
2. Identify and determine the sequence of customer
and service actions and interactions. A flowchart
can be a useful tool for this.
3. Develop time estimates for each phase of the
process, as well as time variability.
4. Identify potential failure points and develop a plan
to prevent or minimize them, as well as a plan to
respond to service errors.
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LO 4.11

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 SERVICE BLUEPRINTING
A simple service blueprint for a restaurant

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LO 4.11

63

THE WELL-DESIGNED SERVICE

SYSTEM
 Characteristics
 Being consistent with the organization mission
 Being user-friendly
 Being robust if variability is a factor
 Being easy to sustain
 Being cost-effective
 Having value that is obvious to the customer
 Having effective linkages between back- and
front-of-the-house operations*
 Having a single, unifying theme
 Having design features and checks that will
ensure service that is reliable and of high quality
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LO 4.12

64
 CHALLENGES OF SERVICE DESIGN

 Variability

 Services generally cannot be stored, there

is the additional challenge of balancing
supply and demand.

 Services can be difficult to describe

precisely and are dynamic in nature,

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LO 4.12

65

SUCCESSFUL SERVICE DESIGN

1. Define the service package in detail
2. Focus on the operation from the customer’s
perspective
3. Consider the image that the service package will
present both to customers and to prospective
customers
4. Recognize that designers’ familiarity with the
system may give them a quite different
perspective than that of the customer, and take
steps to overcome this
5. Make sure that managers are involved and will
support the design once it is implemented
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LO 4.13

66
 SUCCESSFUL SERVICE DESIGN
6. Define quality for both tangibles and intangibles

7. Make sure that recruitment, training, and reward

policies are consistent with service expectations

8. Establish procedures to handle both predictable

and unpredictable events

9. Establish system to monitor, maintain, and improve

service

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LO 4.13

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