OPERATIONS MANG SLP AND CASE 3

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Product Decision

The good or service the organization provides society

Top organizations typically focus on core products

Customers buy satisfaction, not just a physical good or particular service

Fundamental to an organization's strategy with implications throughout the operations function

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Product Strategy Options

Differentiation
Shouldice Hospital
Low cost
Taco Bell
Rapid response
Toyota

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Product Life Cycles

May be any length from a few hours to decades
The operations function must be able to introduce new products successfully

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Product Life Cycles

Negative cash flow

Figure 5.1

Introduction Growth Maturity Decline

Sales, cost, and cash flow

Cost of development and production

Cash flow

Net revenue (profit)

Sales revenue

Loss

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Product Life Cycle Costs

Costs incurred

Costs committed

Ease of change

Concept Detailed Manufacturing Distribution,

design design service,

prototype and disposal

Percent of total cost

100 –

80 –

60 –

40 –

20 –

0 –

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Product Life Cycle

Introduction

Fine tuning
Research
Product development
Process modification and enhancement
Supplier development

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Product Life Cycle

Growth

Product design begins to stabilize
Effective forecasting of capacity becomes necessary
Adding or enhancing capacity may be necessary

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Product Life Cycle

Maturity

Competitors now established
High volume, innovative production may be needed
Improved cost control, reduction in options, paring down of product line

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Product Life Cycle

Decline

Unless product makes a special contribution to the organization, must plan to terminate offering

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Importance of New Products

Figure 5.2

Industry leader

Top third

Middle third

Bottom third

Percentage of Sales from New Products

50%

40%

30%

20%

10%

Position of Firm in Its Industry

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Product-by-Value Analysis

Lists products in descending order of their individual dollar contribution to the firm

Lists the total annual dollar contribution of the product

Helps management evaluate alternative strategies

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Product-by-Value Analysis

Sam’s Furniture Factory

Individual Contribution ($)	Total Annual Contribution ($)
Love Seat	$102	$36,720
Arm Chair	$87	$51,765
Foot Stool	$12	$6,240
Recliner	$136	$51,000

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New Product Opportunities

Brainstorming is a useful tool

Understanding the customer
Economic change
Sociological and demographic change
Technological change
Political/legal change
Market practice, professional standards, suppliers, distributors

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Product Development System

Figure 5.3

Scope of product development team

Scope for design and engineering teams

Evaluation

Introduction

Test Market

Functional Specifications

Design Review

Product Specifications

Customer Requirements

Ability

Ideas

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Quality Function Deployment

Identify customer wants

Identify how the good/service will satisfy customer wants

Relate customer wants to product hows

Identify relationships between the firm’s hows

Develop importance ratings

Evaluate competing products

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QFD House of Quality

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

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House of Quality Example

Your team has been charged with designing a new camera for Great Cameras, Inc.

The first action is
to construct a
House of Quality

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House of Quality Example

Customer

importance

rating

(5 = highest)

Lightweight 3

Easy to use 4

Reliable 5

Easy to hold steady 2

No double exposures 1

What the customer wants

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

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House of Quality Example

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

Low electricity requirements

Aluminum components

Auto focus

Auto exposure

Auto film advance

Ergonomic design

How to Satisfy

Customer Wants

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House of Quality Example

Lightweight 3

Easy to use 4

Reliable 5

Easy to hold steady 2

No double exposures 1

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

High relationship

Medium relationship

Low relationship

Relationship matrix

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House of Quality Example

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

Low electricity requirements

Aluminum components

Auto focus

Auto exposure

Auto film advance

Ergonomic design

Relationships between the things we can do

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House of Quality Example

Weighted rating

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

Lightweight 3

Easy to use 4

Reliable 5

Easy to hold steady 2

No double exposures 1

Our importance ratings 22 9 27 27 32 25

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House of Quality Example

Company A

Company B

G P

F G

G P

P P

Lightweight 3

Easy to use 4

Reliable 5

Easy to hold steady 2

No double exposures 1

Our importance ratings 22 5

How well do competing products meet customer wants

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

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House of Quality Example

What the Customer

Wants

Relationship

Matrix

Technical

Attributes and

Evaluation

How to Satisfy

Customer Wants

Interrelationships

Analysis of

Competitors

Technical attributes

Technical evaluation

Company A 0.7 60% yes 1 ok G

Company B 0.6 50% yes 2 ok F

Us 0.5 75% yes 2 ok G

0.5 A

75%

2’ to ∞

2 circuits

Failure 1 per 10,000

Panel ranking

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House of Quality Example

Completed House of Quality

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House of Quality Sequence

Figure 5.4

Deploying resources through the organization in response to customer requirements

Design characteristics

Specific components

House 2

Customer requirements

Design characteristics

House 1

Specific components

Production process

House 3

Production process

Quality plan

House 4

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Organizing for Product Development

Historically – distinct departments

Duties and responsibilities are defined

Difficult to foster forward thinking

Today – team approach

Cross functional – representatives from all disciplines or functions

Concurrent engineering – cross functional team

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Manufacturability and
Value Engineering

Benefits:

Reduced complexity of products

Additional standardization of products

Improved functional aspects of product

Improved job design and job safety

Improved maintainability of the product

Robust design

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Cost Reduction of a Bracket through Value Engineering

Figure 5.5

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Issues for Product Development

Robust design

Modular design

Computer-aided design (CAD)

Computer-aided manufacturing (CAM)

Virtual reality technology

Value analysis

Environmentally friendly design

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Robust Design

Product is designed so that small variations in production or assembly do not adversely affect the product
Typically results in lower cost and higher quality

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Modular Design

Products designed in easily segmented components

Adds flexibility to both production and marketing

Improved ability to satisfy customer requirements

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Computer Aided Design (CAD)

Using computers to design products and prepare engineering documentation

Shorter development cycles, improved accuracy, lower cost

Information and designs can be deployed worldwide

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Extensions of CAD

Design for Manufacturing and Assembly (DFMA)

Solve manufacturing problems during the design stage

3-D Object Modeling

Small prototype development

International data exchange through STEP

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Computer-Aided Manufacturing (CAM)

Utilizing specialized computers and program to control manufacturing equipment
Often driven by the CAD system

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Benefits of CAD/CAM

Product quality

Shorter design time

Production cost reductions

Database availability

New range of capabilities

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Virtual Reality Technology

Computer technology used to develop an interactive, 3-D model of a product from the basic CAD data

Allows people to ‘see’ the finished design before a physical model is built

Very effective in large-scale designs such as plant layout

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Value Analysis

Focuses on design improvement during production

Seeks improvements leading either to a better product or a product which can be produced more economically

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Ethics and Environmentally Friendly Designs

It is possible to enhance productivity, drive down costs, and preserve resources

The Ethical Approach

View product design from a systems perspective
Consider the entire life cycle of the product

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Goals for Ethical and Environmentally Friendly Designs

Develop safe and more environmentally sound products
Minimize waste of raw materials and energy
Reduce environmental liabilities
Increase cost-effectiveness of complying with environmental regulations
Be recognized as a good corporate citizen

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Guidelines for Environmentally Friendly Designs

Make products recyclable

Use recycled materials

Use less harmful ingredients

Use lighter components

Use less energy

Use less material

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Legal and Industry Standards

For Design …

Federal Drug Administration
Consumer Products Safety Commission
National Highway Safety Administration
Children’s Product Safety Act

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Legal and Industry Standards

For Manufacture/Assembly …

Occupational Safety and Health Administration
Environmental Protection Agency
Professional ergonomic standards
State and local laws dealing with employment standards, discrimination, etc.

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Legal and Industry Standards

For Disassembly/Disposal …

Vehicle Recycling Partnership
Increasingly rigid laws worldwide

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Time-Based Competition

Product life cycles are becoming shorter and the rate of technological change is increasing
Developing new products faster can result in a competitive advantage

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Product Development Continuum

External Development Strategies

Alliances

Joint Ventures

Purchase Technology or Expertise
by Acquiring the Developer

Internal Development Strategies

Migrations of Existing Products

Enhancement to Existing Products

New Internally Developed Products

Figure 5.6

Internal Cost of Product Development Shared

Lengthy Speed of Product Development Rapid and/
or Existing

High Risk of Product Development Shared

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Acquiring Technology

By Purchasing a Firm
Speeds development
Issues concern the fit between the acquired organization and product and the host
Through Joint Ventures
Both organizations learn
Risks are shared
Through Alliances
Cooperative agreements between independent organizations

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Defining The Product

First definition is in terms of functions
Rigorous specifications are developed during the design phase
Manufactured products will have an engineering drawing
Bill of material (BOM) lists the components of a product

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Product Documents

Engineering drawing

Shows dimensions, tolerances, and materials

Shows codes for Group Technology

Bill of Material

Lists components, quantities and where used

Shows product structure

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Monterey Jack Cheese

(a) U.S. grade AA. Monterey cheese shall conform to the following requirements:

(1) Flavor. Is fine and highly pleasing, free from undesirable flavors and odors. May possess a very slight acid or feed flavor.

(2) Body and texture. A plug drawn from the cheese shall be reasonably firm. It shall have numerous small mechanical openings evenly distributed throughout the plug. It shall not possess sweet holes, yeast holes, or other gas holes.

(3) Color. Shall have a natural, uniform, bright and attractive appearance.

(4) Finish and appearance - bandaged and paraffin-dipped. The rind shall be sound, firm, and smooth providing a good protection to the cheese.

Code of Federal Regulation, Parts 53 to 109,. Revised as of Jan. 1, 1985, General Service Administration

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Engineering Drawings

Figure 5.8

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Bills of Material

Panel Weldment

Figure 5.9

NUMBER DESCRIPTION QTY

A 60-71 PANEL WELDM’T 1

A 60-7 LOWER ROLLER ASSM. 1

R 60-17 ROLLER 1

R 60-428 PIN 1

P 60-2 LOCKNUT 1

A 60-72 GUIDE ASSM. REAR 1

R 60-57-1 SUPPORT ANGLE 1

A 60-4 ROLLER ASSM. 1

02-50-1150 BOLT 1

A 60-73 GUIDE ASSM. FRONT 1

A 60-74 SUPPORT WELDM’T 1

R 60-99 WEAR PLATE 1

02-50-1150 BOLT 1

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Bills of Material

BBQ Bacon Cheeseburger

Figure 5.9

Description Qty

Bun 1

Hamburger patty 8 oz.

Cheddar cheese 2 slices

Bacon 2 strips

BBQ onions 1/2 cup

Hickory BBQ sauce 1 oz.

Burger set

Lettuce 1 leaf

Tomato 1 slice

Red onion 4 rings

Pickle 1 slice

French fries 5 oz.

Seasoned salt 1 tsp.

11-inch plate 1

HRC flag 1

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Group Technology

Parts grouped into families with similar characteristics

Coding system describes processing and physical characteristics

Part families can be produced
in dedicated manufacturing cells

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Group Technology Scheme

Figure 5.10

(a) Ungrouped Parts

(b) Grouped Cylindrical Parts (families of parts)

Grooved Slotted Threaded Drilled Machined

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Group Technology Benefits

Improved design

Reduced raw material and purchases

Simplified production planning and control

Improved layout, routing, and machine loading

Reduced tooling setup time, work-in-process, and production time

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Documents for Production

Assembly drawing

Assembly chart

Route sheet

Work order

Engineering change notices (ECNs)

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Assembly Drawing

Shows exploded view of product
Details relative locations to show how to assemble the product

Figure 5.11 (a)

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Assembly Chart

Figure 5.11 (b)

Identifies the point of production where components flow into subassemblies and ultimately into the final product

SA
1

SA
2

R 209 Angle

R 207 Angle

Bolts w/nuts (2)

R 209 Angle

R 207 Angle

Bolt w/nut

R 404 Roller

Lock washer

Part number tag

Box w/packing material

Bolts w/nuts (2)

Left
bracket

assembly

Right
bracket

assembly

Poka-yoke inspection

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Route Sheet

Lists the operations and times required to produce a component

Setup Operation

Process Machine Operations Time Time/Unit

1 Auto Insert 2 Insert Component 1.5 .4
Set 56

2 Manual Insert Component .5 2.3
Insert 1 Set 12C

3 Wave Solder Solder all 1.5 4.1
components
to board

4 Test 4 Circuit integrity .25 .5
test 4GY

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Work Order

Instructions to produce a given quantity of a particular item, usually to a schedule

Work Order

Item Quantity Start Date Due Date

Production Delivery

Dept Location

157C 125 5/2/06 5/4/06

F32 Dept K11

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Engineering Change Notice (ECN)

A correction or modification to a product’s definition or documentation
Engineering drawings
Bill of material

Quite common with long product life cycles, long manufacturing lead times, or rapidly changing technologies

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Configuration Management

The need to manage ECNs has led to the development of configuration management systems
A product’s planned and changing components are accurately identified and control and accountability for change are identified and maintained

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Product Lifecycle Management

Integrated software that brings together most, if not all, elements of product design and manufacture
Product design
CAD/CAM, DFMA
Product routing
Materials
Assembly
Environmental

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Service Design

Service typically includes direct interaction with the customer
Increased opportunity for customization
Reduced productivity
Cost and quality are still determined at the design stage
Delay customization
Modularization
Reduce customer interaction, often through automation

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Service Design

Figure 5.12

(c) Customer participation in design and delivery such as counseling, college education, financial management of personal affairs, or interior decorating

(a) Customer participation in design such as pre-arranged funeral services or cosmetic surgery

(b) Customer participation in delivery such as stress test for cardiac exam or delivery of a baby

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Moments of Truth

Concept created by Jan Carlzon of Scandinavian Airways
Critical moments between the customer and the organization that determine customer satisfaction
There may be many of these moments
These are opportunities to gain or lose business

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Moments-of-Truth
Computer Company Hotline

Figure 5.13

The technician was sincerely concerned and apologetic about my problem

He asked intelligent questions that allowed me to feel confident in his abilities

The technician offered various times to have work done to suit my schedule

Ways to avoid future problems were suggested

Experience Enhancers

Only one local number needs to be dialed

I never get a busy signal

I get a human being to answer my call quickly and he or she is pleasant and responsive to my problem

A timely resolution to my problem is offered

The technician is able to explain to me what I can expect to happen next

Standard Expectations

I had to call more than once to get through

A recording spoke to me rather than a person

While on hold, I get silence,and wonder if I am disconnected

The technician sounded like he was reading a form of routine questions

The technician sounded uninterested

I felt the technician rushed me

Experience Detractors

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Documents for Services

High levels of customer interaction necessitates different documentation
Often explicit job instructions for moments-of-truth
Scripts and storyboards are other techniques