Product Design

WHAT IS PRODUCT

A product, is anything that can

be offered to a market to satisfy

a want or a need (Kotler)

WHAT IS PRODUCT?
Physical Goods :Cars, Medicines Services : Banking, Insurance, Internet Persons : Sachin Tendulkar, Abhishek Bachchan Places : Kashmir, Singapore Properties : The Konark Kinara Organizations : RSS, Reliance Information : Cancer / HIV / Polio Awareness Ideas :Loss Prevention

What Is New Product?

A product is considered to be a new when it is: new to the world, to the market,

to the producer,
to the seller, or

some combination of these.

Categories of New Products

New-To-The-World

New Product Lines

Six Categories of New Products

Product Line Additions Improvements/Revisions

Repositioned Products
Lower-Priced Products

New-Product Development Process

New-Product Strategy Idea Generation Idea Screening

Business Analysis
Development Test Marketing Commercialization New Product

Successful New-Product Development Process

Long-Term Commitment

New Product Strategy

Product Success Factors

Capitalize on Experience

Establish an Environment

ORGANISATIONAL COMPETITVENESS THROUGH PRODUCT DESIGN Cost Proportion: A high proportion, almost 70 to 80 per cent, of a products production cost could be determined at the design stage

Life Cycle Costs

A good design could reduce various costs such as that of :
Materials

Manufacturing Process
Quality Use & Maintenance by the Customer Depreciation Environmental (for society at large)

Competitiveness
Four Ways to Achieve Competitiveness

Through Quality Through Time Through Cost Through Flexibility

A Good Product Design Offers Competitiveness Through Quality Quality of:

Performance Features and Aesthetics Reliability and Durability Serviceability and Safety User Friendliness and Customizability

Environment - Friendliness

TIME-BASED COMPETITION IN DESIGN

Time To Design & Develop Is Vital. Because, Changes Keep Occurring In: business environment target market technology competitive position of the firm
Speed Up Product Development Through: Concurrent Engineering Cross-functional Teams for product development

Product Design
Concepts in Product Design

Manufacturability
Standardization

Reverse Engineering Research & Development

Product Life Cycle

Concepts in Product Design

Robust Design

Concurrent Engineering Computer Aided Design (CAD)

Modular Design

DESIGN FOR MANUFACTURABILITY (DFM) Product designed in such a way that the processes to manufacture are

easier

quicker
less expensive

Over the Wall syndrome

Product Design cannot be thrown over the wall towards manufacturing people to produce it. Engineering changes after the design are very expensive and wasteful of time and effort.

DFM Principles for Assemblies

Minimize the number of parts
Standardize designs

Minimize the number of operations

Modify the parts for ease of assembly Use modules Minimize new-ness Use Poka Yoke or fool-proofing

DFM Principles for Components

Standardize the features Use Product Families concept Avoid complex contours Make use of tolerances Make parts
self-aligning

with symmetry
easy to handle easy to assemble

DESIGN FOR EXCELLENCE (DFX)

DFM is only one aspect of excellence in design. Excellence should be in various functions and aspects of business. Even DFM has to be for the entire Product Family. Look beyond ones own organization, to other firms in the value chain. Look beyond the present, to the future efficiencies. Design should be for overall Excellence.

Product Design for Service Industry

Service Design a service product or a service offering - defines the service company itself, not just the lifetime costs. Service Design decides on the attributes it will cater to and also those it will not according to the business it has defined for self.
e.g. As a design, Wal-Mart will not offer what Saks Fifth Avenue offers. OR Tiffanys Room will not offer what the other restaurants even in the 5 star hotels would offer.

Reliability is very important in Service Design. Because, services are fragile; rework is not possible. Service design should keep this in view.

Product Design for Service Industry contd.

Service Design has few parallels to DFM. Service is designed primarily with the customer in view.
Customer is right there in the service operations.
He is not merely the consumer of the service; He can be integral to the production of the service.

Perhaps, there is a need for Design for Customer Participation (DCP). Therefore, Service Product Design has to be accompanied simultaneously with The Design of Service Process.

Any Questions??

Value Analysis (VA) / Value Engineering (VE)

Origin & Definition of Value Analysis

Origins of Value Analysis, Value Engineering, or Value Management

Value Analysis was developed in the late 1940s by Lawrence D. Miles. He worked in the Purchase Department of General Electric Company in the USA

Value Analysis was a response to the question: How had companies managed to innovate during World War II despite of rationed materials and war time shortages
Miles presented a model on the idea that All cost is for function. Customers buy functions experienced through products and services A function is something that a product or service does for someone who uses it Miles named his approach as Value Analysis and later Value Engineering. Today, it is also called Value Management
Definition of Value Analysis

Value Analysis is an organized effort to provide required functions of a product at lowest overall cost consistent with achieving the required quality, performance and market acceptance VALUE ANALYSIS IS NOT A CHEAPENING PROCESS. RELIABILITY & PERFORMANCE ARE NOT SACRIFICED FOR THE SAKE OF CUTTING COST

VALUE ANALYSIS / VALUE ENGINEERING

Value Analysis (VA) & Value Engineering (VE) - also called Value Methodology or Value Management - is a powerful problemsolving tool that can reduce costs while maintaining or improving performance and quality requirements. It is a function-oriented, systematic team approach to providing value in a product or in a service.

VALUE METHODOLOGY
The value methodology helps organizations compete more effectively in local, national and international markets by:
- Decreasing Costs

- Increasing Profits - Improving Quality - Expanding Market Share - Saving Time - Solving Problems

Using resources more effectively

VALUE ANALYSIS - VA
VA is a step-by-step approach to identify the functions of a product, process, system or service;

to establish a monetary value for that function

then provide the desired function at an overall minimum cost without affecting any of the existing parameters like Quality, Safety, Maintainability, Productivity, and other Performance Characteristics.

Value Engineering
Value Engineering is where the value of all the components used in the construction of a product from design to final delivery stage are completely analysed and pursued.

Difference Between Value Analysis & Value Engineering

VALUE ANALYSIS Indicates application on the product that is into manufacturing. All factors come together including workers, subcontractors, engineers to make a team with total experience and knowledge VALUE ENGINEERING Indicates application on the product at its design stage. It is always done by a specific product design(engineers) team.

Difference Between Value Analysis & Value Engineering

VALUE ANALYSIS VALUE ENGINEERING

It may change the present stage of the product or operation It is worked out mostly with help of knowledge and experience

the changes are executed at the initial stages (design) only. It requires specific technical knowledge.

What Is Overall Cost?

Overall Costs means different to different people.

For a producer
overall cost is the summation of all the elements of the cost required to produce a product or service such as labour, material, overhead, etc.

For a consumer
overall cost is the monetary sum (= price) for which the products or services are purchased in the market.

Value

Value is what is perceived by

the user Key Question??

How To Increase The Value

FUNCTION OF VA/VE

FUNCTION HERE MEANS NEED

Value of A Function Can Be Increased by Four Methods

1. Decrease the cost while ensuring the same level of performance. 2. Enhance the performance at the same cost. 3. Decrease the cost and increase the performance 4. Increase both performance and cost ensuring that performance increases more than the increment in the cost.

V=P
V=P V=P V=P

/C
/C /C /C

THE VARIOUS TYPES OF FUNCTION

Use Function and Aesthetic Function Primary Function and Secondary Function Higher Order and Secondary Function

USE FUNCTION AND AESTHETIC FUNCTION

Use Function
Performs some action, expresses in active tone (For example: Wristwatch : Hour or Minute Hands)

Aesthetic Function
Pleases customer, expressed in passive or non-measurable tone (For example: Wristwatch :
Matching Strap)

PRIMARY FUNCTION AND SECONDARY FUNCTION Primary Function Basic purpose for which a product exists (For Example: Wristwatch : To Show Time) Secondary Function Arises out of specific design chosen to fulfil the primary function (For Example:
Wristwatch : To Show Date & Day / Phases of the Moon )

HIGHER ORDER AND SECONDARY FUNCTION

Higher Order Function Reason of satisfying the basic function

(For example: Wristwatch: To Show Time)

Lower Order Function Means of achieving the basic function

(For example: Wristwatch: To Have Strap)

VALUE ANALYSIS TESTS

Does its use contribute value? Is its cost proportional to its usefulness? Does it need all its features? Is there anything better for the intended use? Can a usable part be made by a lower cost method?

VALUE ANALYSIS TESTS

Can a standard product be found which will be usable?
Is it made on proper tooling, considering quantities used? Do materials, reasonable labour, overhead, and profit total its cost? Will another dependable supplier provide it for less? Is anyone buying it for less?

Value Analysis Is Characterized By Four Key Elements

Structured Approach with 10 Steps (VA/VE Job Plan)

Function-Cost-Analysis

Creativity

Focused Team Effort

A Function Description Which Is Neutral In Regard To Solutions Will Increase The Room For Creativity And New Solutions
Situation As-is
Level of Functions Put Sheets Together

Situation To-be Put Sheets Together

Process of Abstraction

What exactly

does it do?

In what way

else?

Level of Transformation

hold sheets of paper together

clip Sheets What does it do ?

to stick, to glue, to rivet, to staple, to clamp, to turn down corners, to put in a hose,

Level of Solutions

by accident

Paper Clip

Folder Clamp

If You Want To Solve A Problem Detach Yourself From The Problem First !!

Value Engineering
Value Engineering Workshop

VE In Session

Maruti Udyog Limited

Maruti Suzuki, the major passenger car company, has undertaken measures along with its vendors to save costs through VA initiatives. The company has introduced a scheme to encourage vendors to reduce their costs and share the benefits. The Chairman of Maruti Suzuki said, With the help of Value Analysis, we have saved around ` 42.50 crore in 2006-06 fiscal; ` 58 crore in 2006-07 and ` 75 crore in 2007-08

Any Question??

MAKE OR BUY DECISION

INTRODUCTION
Every organization has to decide whether to produce a product or offer service internally or purchase from outside source (Outsourcing) Theoretically, every item / service is a candidate for internal manufacture and every item currently produced internally is a candidate for outsourcing. Majority of the Make/Buy Decisions are pricerelated. However, many non-price factors require consideration Make/Buy Decisions are complex, time consuming and require senior management involvement

MAKE / BUY DECISIONS WHEN?

When the organization introduces new products. The fluctuating demand for the company's products.

When the organization carries out value analysis or cost reduction programs.
Deteriorating quality and delivery commitment of the supplier if presently the item is bought. The scarcity of funds for investment in additional plant and equipment.

FACTORS INFLUENCING MAKE/BUY DECISIONS

Factor
Volume of Production (Quantity)

Make Decision
Higher Material, Direct Labour , Setup, Depreciation, Admn, Overheads, Interests, Taxes, Inv. Carrying, Scrap Spoilage, Rework, etc. Large Prod. Capacity Vertical Integration Skilled, Competent Yes Lower -

Buy Decision
Lower

Cost Analysis

Purchase Price, Transportation, Sales Tax, Octroi, Procurement, Inv. Carrying, Incoming Inspection, etc.
Small Production Capacity Horizontal Integration Scarce No Higher -

Utilization of Production Capacity Integration of Prod. System Manpower Secrecy & Protection of Patent Act Fixed Cost Competent Vendors Quality & Reliability of Vendors

FUNCTIONAL ASPECTS INFLUENCING MAKE/BUY DECISIONS

Financial Aspects
Long-term Investment

Technological Aspects
Access to latest technology Feasibility and Terms & Conditions for Technology transfer Scrapping of Old / Outdated Plant & Machinery Product Life Cycle

Marketing Aspects
Fierce Competition Quality Make Decision (Future) Higher Market Share Make Decision

Purchasing Aspects
Availability, Delivery, Acceptable Price, Acceptable Quality, Competency & Reliability of Vendors, Financial Condition of Vendors etc.

Intangible Aspects
Environmental Factors, Labour Union Acceptance, Support to Ancilliarization, Growth of SSIs

NON-ECONOMIC FACTORS IN MAKE/BUY DECISIONS

Availability of Infrastructure and Skilled Personnel Availability of Alternate Source of Supply Employee Preferences and Stability Concerns Need to Maintain Trade Secrets Desire to Expand in to New Product Line Desire for Forward and backward Integration Long-lasting and Mutually Beneficial Relationships with Vendors

ILLUSTRATION
Demand for the component is at the rate of 6000 per year and this demand is going to continue for next three years. The company has two options. It can get the component manufactured from outside or it can manufacture in house. It costs the Co. ` 2.80 per unit to buy the component. The in-house manufacture will incur a fixed cost to the extent of ` 10,000 and variable cost of ` 1.50 per unit.

Give the Decision Rule for Make or Buy

SOLUTION : ILLUSTRATION

(CONTD.)

Let x be the number of units The Total Cost incurred in buying the component is Total Cost (Y1) = ` 2.80*x Total Cost in making the component in-house is Total Cost (Y2) = 10,000 + 1.50*x At BEP, both alternatives result in equal total costs At BEP, Y1 = Y2 2.80*x = 10,000 + 1.50*x or x = 7693 units

Decision Rule
If the quantity is 7693 units, both make and buy are equally economical If the quantity is less than 7693 units, then it is economical to buy If the quantity is more than 7693 units, then it is economical to make

BREAK-EVEN CHART
Cost (In Rs.) BEP Value `

Zone of Cheaper to Buy Zone of Cheaper to Buy

Fixed Cost = ` 10,000 Fixed Cost ` 10,000

BEP Volume/Quantity

Volume / Quantity

Any Question??

Thank you