Business operating management

Yuzhi Zhao

chapter5.pptx

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Goods and Service Design

COLLIER/EVANS

Operations + Supply Chain Management

LEARNING OUTCOMES, Part 1

Describe the steps involved in designing goods and services

Explain the concept and application of quality function deployment

Describe how the Taguchi loss function, reliability, design for manufacturability, and design for sustainability are used for designing manufactured goods

OM6 | CH7

LEARNING OUTCOMES, Part 2

Explain the five elements of service-delivery system design

Describe the four elements of service encounter design

Explain how goods and service design concepts are integrated at LensCrafters

OM6 | CH7

Steps Involved in Designing Goods and Services, Part 1

LO 5-1

Strategic mission and vision development

Strategic and market analysis, and understanding competitive priorities

Customer benefit package design and configuration

Based on:

A solid understanding of customer needs and target markets

The value that customers place on time, place, information, entertainment, exchange, and form

OM6 | CH5

Steps Involved in Designing Goods and Services, Part 2

LO 5-1

Goods, service, and process design

Prototype testing

Process by which a model is constructed to test a product’s performance under actual operating conditions

Tests consumer reactions to prototypes

Market introduction/deployment

Marketplace evaluation

OM6 | CH5

Quality Function Deployment (QFD)

LO 5-2

Guides the design, creation, and marketing of goods and services by integrating the voice of the customer into all decisions

Voice of the customer: Customer requirements as expressed in customers’ own terms

Applied to a specific manufactured good or service, or to the entire customer benefit package

OM6 | CH5

Exhibit 5.2

House of Quality

LO 5-2

OM6 | CH1

Taguchi Loss Function, Part 1

LO 5-3

Graphical representation of quality as the variation from the nominal specification (target dimension) of a design specification

Variation is translated into an economic loss function

Small variations from the nominal specification result in a better quality for goods and services

OM6 | CH5

Taguchi Loss Function, Part 2

LO 5-3

L(x) = k(x − T)2

Where

L(x) - Monetary value of the loss associated with deviating from the target

k - Constant that translates the deviation into dollars

x - Actual value of the dimension

T - Target

OM6 | CH5

Exhibit 5.4

Nominal-Is-Best Taguchi Loss Function

LO 5-3

OM6 | CH1

Reliability, Part 1

LO 5-3

Probability that a good, piece of equipment, or system performs as intended for a stated period of time under specified conditions

Computed for each component of a manufacturing process design

Individual reliabilities are denoted by p1, p2, . . . , pn

OM6 | CH5

Reliability, Part 2

LO 5-3

N-component series system (Rs) - Entire system fails if one component fails

Rs = (p1) (p2) (p3) . . . (pn)

Parallel system (Rp) - Entire system fails only if all components fail

Rp = 1 − (1 − p1) (1 − p2) (1 − p3) . . . (1 − pn)

OM6 | CH5

Design for Manufacturability (DFM)

LO 5-3

Process of designing a product for efficient production at the highest level of quality

Product simplification: Process of trying to simplify designs to reduce complexity and costs that helps in improving:

Productivity

Quality

Flexibility

Customer satisfaction

OM6 | CH5

Design for Environment (DfE)

LO 5-3

Explicit consideration of environmental concerns during the design of goods, services, and processes

Includes:

Designing for recycling

Disassembly

OM6 | CH5

Service-Delivery System Design Elements, Part 1

LO 5-4

Facility location

Affects a customer’s travel time

Important competitive priority in a service business

Facility layout

Affects process flow, costs, and customer perception and satisfaction

OM6 | CH5

Service-Delivery System Design Elements, Part 2

LO 5-4

Servicescape

Physical evidence that a customer uses to form an impression

Provides the behavioral setting where service encounters take place

Principal dimensions - Ambient conditions, spatial layout and functionality, and signs, symbols, and artifacts

OM6 | CH5

Service-Delivery System Design Elements, Part 3

LO 5-4

Types

Lean servicescape environments

Elaborate servicescape environments

Service process design

Process of developing an efficient sequence of activities to satisfy internal and external customer requirements

OM6 | CH5

Service-Delivery System Design Elements, Part 4

LO 5-4

Technology and information support systems

Ensure speed, accuracy, customization, and flexibility in designing services

OM6 | CH5

Service-Encounter Design

LO 5-5

Focuses on the interaction, directly or indirectly, between the service provider(s) and the customer

Elements

Customer contact behavior and skills

Service provider selection, development, and empowerment

Recognition and reward

Service recovery and guarantees

OM6 | CH5

Customer Contact

LO 5-5

Physical or virtual presence of customers in the service delivery system during a service experience

Measured by the percentage of time customers must be in the system relative to the total time it takes to provide the service

Types

High-contact systems

Low-contact systems

OM6 | CH5

Customer-Contact Requirements

LO 5-5

Measurable performance levels that define the quality of customer contact with representatives of an organization

Include:

Response time

Service management skills such as cross-selling other services

Behavioral requirements

OM6 | CH5

Service-Provider Selection, Development, and Empowerment

LO 5-5

Focus on meeting and exceeding customer expectations

Empowerment: Gives people the authority to:

Make decisions based on intuition

Control their work

Take risks and learn from mistakes

Promote change

OM6 | CH5

Recognition and Reward

LO 5-5

Help motivate and retain excellent service providers

Key motivational factors

Recognition

Advancement

Achievement

Nature of the work

Good compensation system

OM6 | CH5

Service Guarantee, Part 1

LO 5-5

Promise to reward and compensate a customer if a service upset occurs during the service experience

Service upset: Problem that a customer faces with the service delivery system

Referred to by terms such as service failure, error, defect, mistake, and crisis

OM6 | CH5

Service Guarantee, Part 2

LO 5-5

Types

Explicit service guarantee

Given in writing

Included in service provider publications and advertisements

Implicit guarantee

Not given in writing

Implied in everything a service provider does

OM6 | CH5

Service Recovery

LO 5-5

Process of correcting a service upset and satisfying customers

Steps

Begin immediately after a service upset occurs

Document the process and train employees to use them

Listen to the customer and respond sympathetically

Resolve the problem quickly, provide an apology, and offer compensation if necessary

OM6 | CH5

Framework for Goods and Service Design in LensCrafters, Part 1

LO 5-6

Strategic mission

Deliver legendary customer service

Develop and energize associates and leaders

Craft perfect-quality eyewear in about an hour

Deliver superior overall value to meet customers’ needs

OM6 | CH5

Framework for Goods and Service Design in LensCrafters, Part 2

LO 5-6

Good design and process selection

Manufacturing process is integrated into the service facility to provide rapid order response without compromising on quality

Equipment used in labs is technologically advanced

Eyewear is manufactured to specifications in a clean, modern, professionally run facility

OM6 | CH5

Exhibit 5.12

Schematic View of a Typical LensCrafters Store Layout

LO 5-6

OM6 | CH1

Framework for Goods and Service Design in LensCrafters, Part 3

LO 5-6

Service encounter design

Employees possess technical and service management skills

Associates are well trained, friendly, and knowledgeable about their jobs

Lab technicians are certified in work tasks and processes

Comprehensive and unconditional service guarantee (of 90 days) is provided to the customers

OM6 | CH5

LensCrafters

LO 5-6

Faces challenges in replicating its design concept in new markets

Processes need to be developed to introduce technology- and procedure-related changes at all existing locations

To help achieve operational consistency and strategic objectives

OM6 | CH5

KEY TERMS, Part 1

Prototype testing

Voice of the customer

Quality function deployment (QFD)

Reliability

Design for manufacturability (DFM)

Product simplification

Design for environment (DfE)

Service delivery system design

Servicescape

Lean servicescape environment

Elaborate servicescape environment

OM6 | CH7

KEY TERMS, Part 2

Service process design

Service encounter design

Customer contact

High-contact systems

Low-contact systems

Customer-contact requirements

Empowerment

Service upset

Service guarantee

Service recovery

OM6 | CH7

SUMMARY

Companies use the goods and services design framework to improve their products

L(x) = k(x − T)2 represents the Taguchi loss function

Essential to know the elements of service delivery system design and elements of the service encounter design

LensCrafters’ manufacturing and service design depends on a variety of operations management concepts

OM6 | CH7

4LTR Press

OM6 | CH7