case study 10

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Chapter 15

Developing Products and Services

Chapter Objectives

Be able to:

Describe the six dimensions of product design that are of particular interest to operations and supply chain managers.

Describe the five phases of product and service development and explain the difference between sequential development and concurrent engineering.

Discuss the different roles played by areas such as marketing, engineering and suppliers during the development process.

Describe some of the most common approaches to improving product and service designs, including the Define-Measure-Analyze-Design-Verify (DMADV) process, quality function deployment (QFD), design for manufacturability (DFM), and target costing.

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Introduction

Product Design – The characteristics or features of a product or service that determine its ability to meet the needs of the user.

Product Development Process– The overall process of strategy, organization, concept generation, product and marketing plan creation and evaluation, and commercialization of a new product.

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Introduction

Four Reasons for Developing New Products and Services

New products or services can give firms a competitive advantage in the marketplace.

New products or services provide benefits to the firm.

Companies develop new products or services to exploit existing capabilities.

Companies can use new product development to block out competitors.

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Operations and Supply Chain Perspectives on Design

Repeatability

The design of products to be less sensitive to variations, including manufacturing variation and misuse, increasing the probability that they will perform as intended.

Testability

The ease with which critical components or functions can be tested during production.

Serviceability

The ease with which parts can be replaced, serviced, or evaluated.

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Operations and Supply Chain Perspectives on Design

Production Volumes

Increased volumes due to developing a new product or service can be handled by expanding a firm’s own operations by building new facilities, hiring additional workers, buying new equipment, or joint planning with key suppliers.

Product Costs

Obvious costs – Costs that are the easiest to see and manage.

Hidden costs – Costs that are not easy to track but can have a major impact.

The number of parts in a product

Engineering changes

Transportation costs

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Operations and Supply Chain Perspectives on Design

Match with Existing Capabilities

A new product or service that allows a manufacturer to use existing parts and manufacturing facilities is usually easier to support than one that requires new ones.

Service that exploit existing capabilities are especially attractive.

Companies should consider such factors as production volumes and existing capabilities when designing new products or services.

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The Development Process

Table 15.1

Phases of Product and Service Development

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The Development Process

Concept development phase – The first phase of a product development effort where a company identifies ideas for new or revised products and services.

Planning phase – The second phase of a product development effort company where a company begins to address the feasibility of a product or service.

Design and development phase – The third phase of a product development effort where the company starts to invest heavily in the development effort and builds and evaluates prototypes.

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The Development Process

Commercial preparation phase – The fourth phase of a product development effort where firms start to invest heavily in the operations and supply chain resources needed to support the new product or service.

Launch phase – The final phase of a product development effort. For products, this means “filling up” the supply chain with products. For services, it can mean making the services broadly available to the target marketplace.

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The Development Process

Sequential development – A process in which a product or service idea must clear specific hurdles before it can go on to the next development phase.

Concurrent engineering – An alternative to sequential development in which activities in different development stages are allowed to overlap with one another, shortening the total development time.

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The Development Process

Figure 15.1

Concurrent Engineering

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Organizational Roles in Product and Service Development

Engineering – Provide the expertise.

Marketing – Understand the marketplace.

Accounting – Play the role of “scorekeeper.”

Finance – Judge the financial impact and determine how to acquire the needed capital.

Designers – Handle product design and create “identities” for companies, environments, and service experiences.

Purchasing – Identify the best suppliers and sign them up early in the process and act as a consultant for material supply markets.

Suppliers – Bring opportunities for improvement, reduce financial risks, help in the development process.

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Approaches to Improving Product and Service Designs

DMADV (Define – Measure – Analyze – Design – Verify)

Define the project goals and customer deliverables.

Measure and determine customer needs and specifications.

Analyze the product or process options to meet the customer needs.

Design the product or process.

Verify the new product or process.

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Approaches to Improving Product and Service Designs

Quality Function Deployment (QFD) – A graphical tool used to help organizations move from vague notions of what customers want to specific engineering and operational requirements. Also called the House of Quality

Left side - Lists customer requirements and their relative importance to target customers.

Along the top - Lists specific product characteristics.

Main body - Shows how each of the product characteristics does or does not support the customer requirements.

Roof - Shows synergies between some of the features.

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Approaches to Improving Product and Service Designs

QFD matrices

First matrix: Customer requirements g Product characteristics

Second matrix: Product characteristics g Product specifications

Third matrix: Product specifications g Process characteristics

Fourth matrix: Process characteristics g Process specifications

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Approaches to Improving Product and Service Designs

QFD Matrix for a Smartphone

Figure 15.2

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Approaches to Improving Product and Service Designs

Using QFD Matrices to move from Customer Requirements to Process Specifications

Figure 15.3

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Approaches to Improving Product and Service Designs

Computer-aided design (CAD) system – An information system that allows engineers to develop, modify, share, and even test designs in a virtual world.

Computer-aided design/computer-aided manufacturing system (CAD/CAM) – An extension of CAD where CAD-based designs are translated into machine instructions, which are then fed automatically into computer-controlled manufacturing equipment.

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Approaches to Improving Product and Service Designs

Design for manufacturability (DFM) – The systematic consideration of manufacturing issues in the design and development process, facilitating the fabrication of the product’s components and their assembly into the overall product.

Parts standardization

Modular architecture.

Design for maintainability (DFMt) – The systematic consideration of maintainability issues over the product’s projected life cycle in the design and development process.

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Approaches to Improving Product and Service Designs

Design for Six Sigma (DFSS) – An approach to product and process design which seeks to ensure that the organization is capable of providing products or services that meet Six Sigma quality levels.

In general, no more than 3.4 Defects Per Million Opportunities (DPMO)

Design for the environment (DFE) – An approach to new product design that addresses environmental, safety, and health issues over the product’s projected life cycle during the design and development process.

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Approaches to Improving Product and Service Designs

Target costing – The process of designing a product to meet a specific cost objective.

Setting the planned selling price and subtracting the desired profit as well as marketing and distribution costs, thus leaving the required target cost (design to cost)

Value analysis – The process that involves examining all elements of a component, an assembly, an end product, or a service to make sure it fulfills its intended function at the lowest total cost.

Value = function/cost

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Approaches to Improving Product and Service Designs

Typical questions asked by Value Analysis Team

Is the cost of the final product proportionate to its usefulness?

Does the product need all its features or internal parts?

Is there a better production method to produce the item or product?

Can a lower-cost standard part replace a customized part?

Are we using the proper tooling, considering the quantities required?

Will another dependable supplier provide material, components, or subassemblies for less?

Are there equally effective but lower-cost materials available?

Are packaging cost reductions possible?

Is an item properly classified for shipping purposes to receive the lowest transportation rates?

Are design or quality specifications too tight, given customer requirements?

If we are making an item now, can we buy it for less (and vice versa)?

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Printed in the United States of America.

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