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42

Product Design

Chapter outline

3.1 Strategies for new-product introduction

3.2 New-product development process

3.3 Cross-functional product design

3.4 Supply chain collaboration

3.5 Quality function deployment

3.6 Value analysis

3.7 Modular design

3.8 Key points and terms

New-product development is a crucial part of business. New products provide growth opportunities and a competitive advantage for a firm. Increasingly, there is a challenge to introduce new products more quickly without sacrificing quality. For example, the world's automobile makers can now introduce a new car design in two years, whereas it used to take four years. Personal computers have a very short product life cycle, sometimes less than a year.

New-product design greatly affects operations by specifying the products that will be made; it is a prerequisite for production to occur. At the same time, existing processes and products can constrain the technology available for new products. Thus, new products must be defined with not only the market in mind but also the production process that will be used to make a product.

Product design refers to either a physical, manufactured product or a service. In this chapter, we emphasize product development for manufactured products.

Product decisions affect each of the four decision-making areas of operations. Therefore, product decisions should be closely coordinated with operations to en- sure that operations is integrated with product design. Through close cooperation among operations, marketing, and other functions, the product design can be integrated with decisions regarding process, quality, capacity, and inventory. Fail- ure to coordinate product design and operations can have disastrous results. For example, an analysis by Nissan Motor Company indicated that 6000 different fasteners were used in the production of its automobiles. Nissan is aiming to cut the number of fasteners in half and then in half again until an economic point is reached.

Chapter 3 Product Design 43

Operations Leader The Product Development Process at Ford

The product development process is how Ford's vi- sion becomes reality-and how societal needs are arrayed and accommodated through innovative de- sign and engineering.

• Research and development technical approaches to a variety of environmental, safety, and perfor- mance challenges.

To accomplish its goals Ford spends about $4 bil- lion per year on research and development. The product development process itself is changing in significant ways. Ford is developing a global ap- proach to product development by integrating the engineering and purchasing organizations and as- signing development responsibilities to particular vehicle segments such as small, midsize, and large cars and utilizing expertise from around the world. This should result in more customer-focused prod- ucts at lower costs with better quality by eliminating duplicate engineering and purchasing practices. Ford recently announced this realignment of its Global Product Programs.

An automobile is the most complex product that most people are ever likely to own. A typical midsize family car is made up of more than 20,000 individual ~ ~ /7 parts comprising ttbr~rT§~~ 600 major sub-

systems or com- ponents. At least 73 different materials are used in a typical vehicle, including 24 different types of plastics.

The process of designing and producing a modern vehicle is similarly complex. It begins with information inputs of three major types:

• Ford strategy and goals for performance and leadership.

• Market research. Source: www.ford.com, 2002 and www.wikipedia.org, 2012.

Product design follows from the development of a business strategy. The busi- ness strategy will include a value proposition that defines the target market, the differentiation of your product, and why the customer should buy from you. This is the starting point for designing a new product. These new-product designs re- flect the business strategy, and the strategy is adjusted to fit the new-product de- signs. See the Operations Leader box on the Ford Motor Company for linkages between strategy and new-product development.

3.1 STRATEGIES FOR NEW-PRODUCT INTRODUCTION

There are three fundamentally different ways to introduce new products. These approaches are called market pull, technology push, and interfunctional view.

Market pull. According to this view, the market is the primary basis for determining the products a firm should make, with little regard for existing tech- nology. A firm should make what it can sell. Customer needs are determined, and then the firm organizes the resources and processes needed to supply the customer. The market will "pull" through the products that are made. Technology push. In this view, technology is the primary determinant of the products the firm should make, with little regard for the market. The firm should pursue a technology-based advantage by developing superior technologies and products. The products then are pushed into the market, and marketing's job is to create demand for these superior products. Since the products have superior technology, they will have a natural advantage in the market and the customers will want to buy them.

44 Part One Introduction

FIGURE 3 Lack of cooperation in designing a swing. The Firm Designs a Swing for the Children

As proposed by the marketing department As specified in the product request As designed by the senior designer

As produced by manufacturing As used by the customer What the customer wanted

~~ Interfunctional view. This view holds that the product should not only fit the market needs but have a technical advantage as well. To accomplish this, all functions (e.g., marketing, engineering, operations, and finance) should coop- erate to design the new products needed by the firm. Often this is done by forming cross-functional teams that are responsible for the development of a new product. This is the most appealing of the three views but also the most difficult to implement. Often cross-functional rivalry and friction must be overcome to achieve the degree of cooperation required for interfunctional product development to succeed. If it can be implemented, the interfunctional approach usually will produce the best results, and we emphasize it in the re- mainder of this chapter. The lack of interfunctional cooperation is depicted in Figure 3.1.

3.2 NEW-PRODUCT DEVELOPMENT PROCESS

Most firms have an organized new-product development (NPD) process that fol- lows specific phases or prescribed steps. These phases may be formally defined in company documents and require sign-offs by senior management between phases. The purpose of this process is to gain control of product development and ensure that all important issues are addressed by the NPD team. ISO 9000 certification

Concept Development

Product Design

"Product Design & Manufacturing

At Tri-State Industries,"

Vol. VI

Chapter 3 Product Design 45

requires that a prescribed NPD process be defined and followed by the company in the development of its products .I

The typical phases followed by firms in developing new products are concept development, product design, and pilot production/testing. The names of these phases and the number of phases may vary from one company to the next, but there is a great deal of similarity among the various approaches used.

This phase is concerned with idea generation and the evaluation of alternative ideas for the new product. During this phase, several product concepts usually are generated and evaluated. The physical product is not designed during concept development; rather, different approaches to defining and meeting the market need are considered and the best approach is selected by the company. When Gen- eral Mills designs a new cereal, it must start with the concept development. Will the new cereal use wheat, oats, corn, bran, or a combination of them? What shape will appeal to the market (flakes, biscuits, "little Oh's"), and will the new cereal have added sugar and vitamins? In the end, will the new cereal ultimately appeal to the customers?

Among the several conceptual designs considered and evaluated, one will be selected for the next phase of product development. The decision to proceed to the product design phase ordinarily requires top management approval. At the time of approval, a cross-functional team will be established, if one does not exist already, to design the new product.

This phase is concerned with designing the physical new product. At the begin- ning, the firm has a general idea of what the new product will be but not too many specific . At the end of the product design phase, the firm has a set of product specifications and engineering drawings (or computer images) specified in suffi- cient detail that production prototypes can be built and tested.

Product design requires consideration of many different trade-offs between product cost, quality (features), and schedule. Engineers will be assigned to work on the various parts of the project. As they work, they will make decisions that ultimately will affect the product's cost, its quality (features), and the schedule for product introduction. It is easy to see why marketing, operations, and finance/ accounting must also be involved with engineering during this phase so that appropriate trade-offs can be made for the greatest benefit of the entire business.

Engineering probably will use computer software to design the product and simulate its operation before it is made. This will help ensure that the product works when it is produced. Virtual prototypes, designed and tested inside a com- puter, are frequently used to speed up and simplify the engineering design tasks. CAD (computer-aided design) systems are also used to view the product on the computer screen and, in some cases, to eliminate the need for blueprints or draw- ings. At the end of this phase, the computer images and database are transmitted to production as a basis for pilot production. In the cereal example above, the product design phase will specify the exact recipe for making the cereal, including

1 ISO stands for the International Organization for Standards. ISO 9000 is a standard that applies to new- product development and to production to ensure that quality products are designed and manufar• 2d. The ISO 9000 standard requires that a procedure manual for new -product development be defined dnd used by the company.

46 Part One Introduction

the amounts of all the ingredients and the method to make the cereal (mixing method, baking temperature, etc.).

Process design should be taking place simultaneously with product design. Manufacturing should not wait for the final design to be completed before process design begins. As a matter of fact, it is better if process design is done in parallel with product design so that changes can be made in the prod- uct to facilitate the production process before finalizing the product design. It is also a good idea for the product design- ers to have some manufacturing experience so that they are aware of the process choices that are available and the pitfalls of designs that can lead to poor production processes. Figure 3.2 shows how process design should proceed in parallel with product design.

Services also require product and process design. For ser- vices, however, the product may in fact be the process. For ex- ample, a new bank debit card was introduced that provides free long-distance minutes for each use of the card for purchases of $10 or more. This card, which was introduced by TCF Financial

This is a CAD system used for product design. Corporation, required a process change to keep track of the

Pilot Production/ Testing

FIGURE 3.2 New- product design process.

phone credits for the customer and provide those credits to the customer's phone account. The product was relatively simple to design in this case, but the process change was more complex.

In this third phase, products require testing of production prototypes before they are put into production. For example, in the design of a new laptop computer, several laptops would be built as prototypes and tested for their ability to meet the product specifications. This may include performance tests of hardware and soft- ware and lifetime tests of reliability of the laptop. Similar pilot production and testing is done for aircraft, automobiles, new cereals, and many other new prod- ucts. In some cases, the preliminary product is made in sufficient volume that it can be test marketed, for example, new consumer products. Pilot testing the cereal design described above requires the production of cereal samples and packaging for consumer testing (prototypes). A panel of consumers will be assembled to taste the cereal and decide whether they like it. A test market in a city may also be used to test the cereal on a larger scale before full-scale production is launched.

~ Concept development

+ Product design Preliminary process design

+ + Pilot production/testing r I Final process design

Chapter 3 Product Design 47

During this phase, the process for production is finalized. Since the product design is nearing completion, the process can be designed in great detail and tested for its capability to make the product that has been designed. Process and product modifications should be considered so that the process is optimized be- fore full-scale production and market introduction begin. To facilitate full-scale production, an information package should be finalized that contains not only product specifications but also process design specifications, training proce- dures for operators, and test results. This will facilitate the transition from de- sign to production.

3.3 CROSS-FUNCTIONAL PRODUCT DESIGN

The new-product development process is one of frequent misalignment. No mat- ter how excellent the advanced planning or the technology is, misalignment be- tween the product design and operations is a common occurrence. Misalignments can occur in technology, infrastructure, and reward systems.

Technology misalignment occurs when the product designed by engineering cannot be made by operations. This happens when technologies are new or un- proven or are not well understood. Operations can have an infrastructure that is misaligned with the new product in terms of labor skills, control systems, quality assurance, and organization. Finally, reward systems may reinforce the use of cur- rent technology rather than the new processes needed.

To overcome these problems in technology development, a concurrent market- ing, engineering, and production approach has been suggested. The traditional approach proceeds in stages or steps, as shown in part (a) of Figure 3.3. It is as- sumed that technology will be transferred in stages, as a handoff, between market- ing, engineering, and operations. This is a sequential process, with each function completing its work before the next one starts.

Figure 3.3 (b) illustrates a simultaneous development process, also called concur- rent engineering (or simultaneous engineering). All functions are involved from the beginning, frequently by forming a new-product development team, as soon as con- cept development is started. In the first stage, marketing has the major effort, but other functions also have a role. During the product design phase, marketing re- duces its effort, but not to zero, while engineering has the major role. Finally, opera- tions picks up the lead as the new product is tested and launched into the market.

FIGURE 3.3 Sequential and concurrent approaches.

t: ~ ~ Marketing Engineering Operations .

Time

Sequential approach (a)

--- .... -.... ... ... ........

Time

Concurrent approach (b)

Operations ----- ..

48 Part One Introduction

TEAMWORK IN ACTION. Product design teams are used to involve all functions in the simultaneous design of new products.

~,

I

The traditional approach is more like a relay race, while the concurrent ap- proach is like rugby. In a re- lay race, each runner picks up the baton for one portion of the race. In rugby, the entire team runs down the field to- gether, pushing and shoving in a group, to advance the ball toward the goal.

Concurrent engineering techniques were used at the

National Center for Disease Control Institute for Occupational Safety and Health. The concurrent product development team revolutionized the national certification process for industrial respirators used to protect workers in hazardous environments. The cross-functional team ensured that handoffs between functions occurred quickly and smoothly. As a result, the team improved procedures to speed up certification and ensure better quality respirators, thereby improving safety for workers.

Concurrent engineering has several benefits. According to a recent survey, de- sign project time has been reduced up to 30 percent and product redesign has been cut in half. A product engineering manager at a,midsize producer of air distribu- tion equipment says, "Concurrent engineering has enabled us to do more in less time with limited resources."2

However, recent research has shown that concurrent engineering is not always effective.3 The research finds that neither concurrent engineering nor integrated teams should be used universally as best practices. Concurrent engineering should be avoided in projects with high uncertainty (e.g., unfamiliar product, market, or technology) since it decreases project performance. Concurrent engineering in- creases performance only for product extensions that serve existing markets with current technology. This result indicates that best practices are often not universal in nature, but are contingent on the situation at hand.

3.4 SUPPLY CHAIN COLLABORATION

Just as internal collaboration is important, so is external collaboration with supply chain customers and suppliers. While relationships with customers and suppliers often are established in new-product development, collaboration is something dif- ferent, requiring actual participation in the design process.

Collaboration with customers means tapping into their knowledge and exper- tise to design products they are willing to buy. The collaboration can take many different forms, including the following:

• Asking customers the right questions. What can we do to help you make your lives easier or more productive?

• Aligning incentives for customers to share their knowledge with the design team. Incentives could include merchandise, monetary rewards, and first access to new designs.

2 www.scpdnet.org. 3 Ahmad, Mallick, and Schroeder (to appear).

Chapter 3 Product Design 49

Operations Leader Suppliers Design Batteries for the Chevy Volt

For the Chevy Volt, 25 battery makers were considered before General Motors awarded development to two battery suppliers: Continental Automotive of Germany, which is getting its batteries from A 123 of Watertown, Massachusetts, and Compact Power, a Michigan unit of a Korean battery maker. These two suppliers developed the batteries in collaboration with GM, which tested

2011 Volt

the prototypes. GM engineers simulated real-life con- ditions by repeatedly drawing power and stress test- ing the batteries under vibration, temperature changes, and extreme conditions.

In October 2008, General Motors chose Compact Power as the sole battery supplier for the Volt. The first preproduction car was built in June 2009 in Warren, Michigan. By October 2009, 80 prototype Volts had been built and road-tested under various grueling conditions. In November 2010, the first factory-built Volt rolled off the assembly line as the most fuel-efficient vehicle sold in the United States. This illustrates the costly and time-consuming devel- opment process for a complex new automobile tech- nology. Subsequently, the Chevy Volt was named 2011 Motor Trend Car of the Year, 2011 Green Car of the Year, 2011 North American Car of the Year, and 2011 World Green Car.

Source: Adapted from www.wikipedia.org, 2012.

• Creating a collaborative technology platform to share information. This can take many forms, including computer networks or software to enable collabo- ration. For example, National Semiconductor created software that allows cus- tomers to design circuits by using National Semiconductor's products.

• Including customers as advisors to the design team.

To collaborate with customers, Procter & Gamble created the "P&G Advisor" program. It lets consumers contribute to product development by trying new items and providing quick feedback on designs.

While collaborating with customers provides benefits, it also requires a change in attitude from "controlling the design" to working in partnership with custom- ers. This requires a different mindset. For example, the designers cannot simply ask the customers what they want or need, since customers don't always know. A more sophisticated approach is to observe customers using current products to find limitations or ask customers what they do to reach the outcomes they seek. The members of the design team should also ask themselves, What do customers do that we can do better? When they work with customers collaboratively in this way, new product designs are improved.

The second aspect of collaboration in the supply chain is working with suppli- ers. Since purchased materials often account for more than 50 percent of the cost of goods sold, suppliers should collaborate to design the product. This is particularly important when the product involves new technologies in which the company does not have expertise.

Suppliers can be asked to join the new-product development team or to provide input at critical points in the design process. Their role is to offer improvements in

50 Part One lntmduction

the design or alternative approaches that leverage their expertise. When a suppli~ is considered a potential collaborator, the following criteria should be considered:

• Technical expertise: Does the supplier have technical expertise that the compan~­ does not have?

• Capability: Can the supplier hit targets for cost, quality, and product performance:- • Capacity: Can the supplier meet the product development schedule and the

ramp-up to production?

• Low risk: What is the risk that the supplier will not perform as expected?

Studies have shown that overall performance improves through supplier COl- laboration from 10 to 20 percent in cost, time, quality, and product performance. But should all suppliers be considered for collaboration? No, it's best to include only those who are critical to the design and have something to offer the proceJ~­ One example of critical supplier support is the battery design for the Chevy Voh as shown in the Operations Leader box on the previous page. When there i5 collaboration with critical suppliers and customers in the supply chain, the desi. process is greatly improved.

3.5 QUALITY FUNCTION DEPLOYMENT

~ "Quality Product

& Process Design," Vol. IV

Customer Attributes

The new-product development process is aided by many different tools and tech- niques, some of which are covered in the remainder of this chapter. Quality func- tion deployment (QFD) is a tool for linking customer requirements as defined by the customer to technical specifications. QFD is very useful in translating the ordi- nary language obtained from the customers to technical requirements understood by engineers. It also facilitates interfunctional cooperation between marketina engineering, and manufacturing.

QFD was first used in 1972 at the Mitsubishi shipyard in Japan. It spread from there to Toyota and to American companies. Now many companies throughou~ the world are using QFD in industries such as automobiles, electronics, home appliances, and services. QFD has been found to be very useful as a communica- tion tool, and it helps ensure that all the customer requirements are being consid- ered and nothing has been forgotten.

When using QFD, the firm identifies various customer attributes. Each of these attributes can be met by one or more engineering characteristics of the product. By using the matrix shown in Figure 3.4, the customer attributes on the left side of the matrix can be related to the engineering characteristics on the top of the matrix.. When the matrix, first popularized by Hauser and Clausing (1988), is completed, it is called the house of quality.

The house of quality illustrated in Figure 3.4 will be explained in some detail by using a bicycle example. We will work through this example one step at a time, beginning with the customer attributes.

The customer attributes (CAs) shown on the left side of the matrix in Figure 3.~ represent the voice of the customer. These attributes are determined through marke'" research in conjunction with potential customers of the bicycle to define the important attributes of the product. Therefore, a target market must be defined so that the appropriate types of customers can be contacted. Suppose, in this case, the bicycle is being designed for a very specific market: use by college students on

FIGURE 3.4 Relationship matrix. -

QJ u ~

"' t: 0 p..

.§ QJ

-~ -; a:l ~

\~ Customer attributes Easy to pedal

Strong and durable

Fast acceleration

Low cost

Looks nice

Etc.

Total

Her bicycle can be designed by use of QFD.

10

20

15

20

10

25

100

§ "' .... "' QJ OJl

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,.Q

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(})

" X

Engineering characteristics ., ::9 ;a ~ ., :::;\ p..

;§ QJ ! Ei ~ "' "0 .... QJ OJl ...... QJ ·a:: ...... p.. ~

0 "' -=

OJl

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0 X " (}) (}) 0 X X " X 0 0

§ ~ ·;:; p..

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2l "' 0 u

X

(})

Chapter 3 Product Design 51

Relationships

(}) Strong positive

" Positive X Negative 0 Strong negative

Customer perceptions

1 2 3 4 5

I I n 1\ I

I I 1\ on I I

I I o1n 1\ I

I II\ 0 n I

I 1n 0 1\ I

_6. Our bike Q Competitor A D Competitor B

campus. College students would be in- terviewed or questioned to determine what they consider important features or attributes of a bicycle. Suppose that the students would like a bicycle that is easy to pedal, is strong and durable, has fast acceleration, has a low cost, and looks nice. Note that these CAs are not very specific at this point and need further definition by means of the QFD process.

A few more things are now added to the house of quality. After the CAs have been listed on the left side of the matrix, they are rated on their relative importance by customers to sum to a total of 100 points. This is shown on the "chimney" column of the house of quality in Figure 3.4. On the right side of the matrix is a comparison of how the company's current bicycle com- pares to the competitor's offerings on each of the CAs.

52 Part One Introduction

Engineering Characteristics

The next step in QFD is to translate the customer attributes into engineering char- acteristics (ECs). This is done by thinking about how each of the customer attri- butes can be met by the new bicycle design. Engineering characteristics must be measurable and specific and are closely related to the final design specifications for the product.

For the bicycle design, some of the ECs might be number of gears, weight of the bicycle in pounds, strength of the frame, cruising speed, and number of coats of paint on the frame. These characteristics are put on the top of the matrix in Figure 3.4 and then related to each of the customer attributes. For example, theCA "easy to pedal" is strongly related to the number of gears on the bicycle. Generally, the more gears, the easier it is to pedal the bicycle in different conditions and situations. Also, "easy to pedal" is inversely related to the weight of the bike. Various symbols are placed in the matrix (see Figure 3.4 for the key) to indicate the nature of the relation- ship between each particular CA and the ECs. This can be done by conducting engi- neering tests or by using generally understood relationships.

Next, we switch to Figure 3.5, which adds a roof to the house of quality. The roof shows how each EC is related to the other ECs. This makes it possible to study any of the trade-offs that may be required between one EC and another. For example, we see that the weight of the bicycle will negatively affect its cruising speed. Also, the number of coats of paint will have a mild positive effect on bicycle weight.

Finally, on the bottom of the matrix in Figure 3.5 we have indicated the value of each EC achieved by the competitors' bicycles. ,We have also shown a target value that we have set for our new bicycle design. The target value is determined by the

FIGURE 3.5 House of quality.

--;-

~ Relationships

u = (:]) Strong positive " t:

0 X

p.

" Positive .§ <II <II § > .:= e ..., X Negative :0 " .S ... <II !:l .~ '"'"'~ <II <II ...... <II ...... "' ~:= " @ Strong negative ~ o~ ~til o.r> p. '""" ..c:~ Ollp. ...... \~

<II- <!lor> !oS .5 Ei 0 .r>"' 'Yo "' e ;; = "'- Customer perceptions Customer >, <II ·s -:u = <II u .l;j 0 attributes zoo ~ ... 1 2 3 4 5 (/) u u Easy to pedal 10 (:]) ® X " I I n 1\ I Strong and durable 20 (:]) (:]) ® I I 1\ on I I Fast acceleration 15 " X X " I I o1n 1\ I Low cost 20 X X ® ® X I 1/\ 0 n I Looks nice 10 (:]) I 1n () 1\ I Etc. 25

Competitive A 10 40 1000 30 2 b. Our bike evaluation B 10 50 1,000 25 2 Q Competitor A Targets 12 35 1,100 35 3 D Competitor B

Chapter 3 Product Design 53

importance of various customer attributes, the linkages to ECs, and the desired performance of the new bicycle relative to those of the competitors. The ultimate result of the house of quality is a translation of the CAs into target values for ECs on the bottom of the matrix.

The house of quality has been found to be very useful in increasing cross- functional communications because it neatly connects the market requirements, which the customer values, with the design characteristics that engineers must consider. Thus, a design can be developed that will meet the needs of the market while still considering all the design trade-offs required. The house of quality can be extended into production by linking the product to various parts and to process-design parameters. In this case, the target values for the product design become customer attributes for the part design and process design. Also, the house of quality can be linked to suppliers by considering the target value of the design as customer attributes for the suppliers. In this way, a linked design can be developed between all parties in the supply chain involved in designing and producing the product.

QFD also can be applied to service industries in much the same way it is ap- plied to manufacturing. To illustrate, suppose a pizza shop is considering adding a take-out delivery service for its pizza and related products.

The CAs for this new service have been determined from customers to be fast, courteous, and reliable service. Also, the delivery agent should have a clean-cut appearance and the order should be delivered complete (no missing items) with hot pizza. The CAs are listed on the left side of the QFD ma!rix in Figure 3.6.

FIGURE 3.6 QFD for Pizza U.9.A. delivery.

Customer attributes

Fast service

Courteous service

Reliable (as promised)

1 O ean-cut appearance

Complete order

Hot pizza

i Competitive . ! ~aluation

.1 'fugets

30

10

25

10

15

10

A

B

X

20 5.0 80 18 5.5 85 15 6.0 90

1

150F 140F 150F

Relationships

G) Strong positive .Y Positive

X Negative

@ Strong negative Customer perceptions

2 3 4 5

v\ 0 0 0

0/\ 0 , no, 1\ 1

0 0/\ I i::,. Our position Q Competitor A D Competitor B

54 Part One Introduction

For services it can be difficult to identify the ECs, which are sometimes hard to define and measure. In this case the ECs are delivery time (minutes), customer satisfaction (from a periodic survey of customers), actual delivery time com- pared with promised delivery time, and the temperature of the pizza when it is delivered. Note that the customer survey will measure intangible CAs such as a clean-cut appearance, courtesy, order completeness, and general satisfaction with the service.

The CAs are now related to each of the ECs in the same way as in the bicycle example. Also, the roof of the house of quality, customer perceptions, competitive evaluations, and targets are added to complete the analysis, as shown in Figure 3.6. While QFD for service may be measured somewhat differently than it is for manu- facturing, the same general principles apply.

3.6 VALUE ANALYSIS

There is a need not only to meet customer requirements but to ensure that the product is manufacturable. Design for manufacturing (DFM) is an approach that consists of two things: (1) simplification of products and (2) manufacture of multiple products using common parts, processes, and modules. In this section, we cover simplification of products based on value analysis (or value engineer- ing), which preferably is conducted before the product is produced.

Value analysis is a method for improving the usefulness of a product without increasing its cost or reducing the cost without reducing the usefulness of the product. It can result in great cost savings, a better product for the customer, or both. A logical step-by-step approach is used in value analysis.

Value is defined as the ratio of usefulness to cost. Cost is an absolute term that measures the amount of resources used to produce the product. Usefulness, in contrast, is a relative term describing the functionality that the customer ascribes to the product. Usefulness can be described by terms such as product features, performance, and reliability of the product.

In value analysis the following terms are used:

• Objective: the primary purpose of the product. • Basic function: a basic function, if eliminated, would render the product useless

in terms of its stated objective. • Secondary function: a function that is the result of the way the product is de-

signed and permits accomplishment of the basic function.

For example, to access the contents of a tin can we might have the following:

• Objective: remove the contents of the can. • Basic function: open the can. • Secondary function: cut the lid.

It is necessary to open the can to achieve the objective, which is to remove the con- tents. Therefore, opening the can is a basic function. But it is not necessary to per- form the secondary function of cutting the lid. Other methods could be used to open the can, such as a pull tab, key top, or screw top, as in Figure 3.7.

Value analysis is the process of examining secondary functions to see if an alter- native can be identified that will improve the value ratio. This is done by first

FIGURE 3.7 Value analysis can be used :o determine the 3est way to open a :in can.

Chapter 3 Product Design 55

identifying the cost of the current secondary function. Then the costs of alternative secondary functions are calculated. If these alternatives have a lower cost without sacrificing the usefulness of opening the can to the customer, then value is im- proved. Also, the usefulness may be improved (ease of removal of the lid, ability to reseal the can, etc.) at the same cost, which would also increase the value to the customer.

Value analysis is a way to improve a product in the customer's eyes. After all, the customer is interested in value and purchases products on the basis of value received. Value analysis frequently is related to manufacturability, since a product designed f9r manufacturability has the lowest cost and the most value. Design for manufacturability removes unnecessary parts and makes the product easier to make. This approach will reduce cost, improve the usefulness of the product, or both. See Figure 3.8 for a dramatic example of product simplification that improved manufacturability and value.

FIGURE 3.8 Tool Box DFM This example illustrates the progression of a tool box insert from design inception through the evolution of a DFM study that resulted in reducing the design part count from 20 to 2 parts, improving reliability, and lowering product cost. Source: John Ingalls, "How Design Teams Use DFM/ A to Lower Costs and Speed Products to Market," Target 12, no. 1 (1996), pp . 13-19.

20 parts 8 parts 4 parts 2 parts

56 Part One Introduction

3.7 MODULAR DESIGN

~~

Another aspect of DFM is to simplify the design of multiple products. Usuall~­ products are designed one at a time without much regard for commonality o:' parts or modular properties that can aid production and still meet customer needs.

Modular design makes it possible to have relatively high product variety an - low component variety at the same time. The core idea is to develop a series o-' basic product components, or modules, that can be assembled into a large number of different products. To the customer, it appears there are a great number of differ- ent products. To operations, there are only a limited number of basic components and processes. Modular design is a prerequisite to mass customization, which is described in the next chapter.

Controlling the number of different components that go into products is of great importance to operations, since this makes it possible to produce more effi- ciently for larger volumes while also allowing standardization of processes and equipment. A large number of product variations will greatly increase the com- plexity and cost of operations.

Modular design offers a fundamental way to change thinking about product design. Instead of designing each product separately, the company designs prod- ucts around standard component modules and standard processes. If this is done, the product line must be carefully analyzed and div,ided into basic modules. Com- mon modules should be developed that can serve more than one product line, and unnecessary product frills should be eliminated. This approach will still allow for a great deal of product variety, but the number of unnecessary product variations will be reduced.

The modular design approach can best be illustrated by an example. A group of students at the University of Minnesota studied the operations of a large man- ufacturer of beds, a company that produced over 2000 different combinations of mattresses. The team discovered that 50 percent of those combinations ac- counted for only 3 percent of sales. Market surveys showed that this much prod- uct variety was not advantageous to marketing and at the same time had increased costs.

Using modular design ideas, a mattress product line was designed with four basic sizes: regular, twin, queen, and king. The inside construction of the mattresses was limited to only a few different spring arrangements and foam padding thick- nesses. A moderate variety of mattress covers were used to meet consumer prefer- ences for color and type of design. This approach greatly reduced the number of mattress components while providing substantial variety for the customer. For ex- ample, with four bed sizes, three types of spring construction, three types of foam, and eight different covers, a total of 288 different mattress designs were possible.

4 X 3 X 3 X 8 = 288 combinations

Not all these combinations were produced, since some might be unacceptable to the customer (e.g., the expensive springs with the thin foam pad). Although there are still many product combinations in this example, the number of components has been limited.

The team suggested that marketing, operations, and engineering get together to define the basic components that would be made and the product combina- tions desired. They also suggested that the company rigorously adhere to those

Dell uses modular design.

Chapter 3 Product Design 57

components once the decision had been made, with a periodic revision perhaps once a year. The team not only dealt with the problem of product proliferation but, by using the concept of modular design, retained the marketing advantages of product variety.

Dell Computer Corporation uses modular design for its computers. Dell note- books, for e)\.ample, have many optional choices: three processors, seven memo- ries, six hard drives, two video cards, two media devices, five wireless options, four displays, five software choices, and six colors. This provides a total of 40 dif- ferent modules (or components) that go into Dell notebooks. The theoretical num- ber of different notebooks that can be produced is as follows:

3 X 7 X 6 X 2 X 2 X 5 X 4 X 5 X 6 = 302,400

Of course, not every module is combined with every other module, thereby limit- ing the total number of choices. Modular design provides an opportunity to streamline production at Dell while offering abundant consumer choices.

3.8 KEY POINTS AND TERMS

New-product design has a great impact on operations, since it determines the specifications for the product. Likewise, operations can constrain a firm's ability to develop new products and make them more costly to produce. As a result, opera- tions should be deeply involved in new-product development.

• There are three ways to develop new products: market pull, technology push, and interfunctional. The interfunctional approach is usually the best since it includes both market and technological considerations in the new-product design.

58 Part One Introduction

Key Terms

STUDENT INTERNET EXERCISES

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• The new-product development process is often specified in companies as having three phases: concept development, product design, and pilot production/ testing.

• Products should be designed from the start for manufacturability. This is done by considering design of the production process as part of product design and utilizing a concurrent engineering approach.

• Concurrent engineering uses overlapping phases for product design rather than a sequential approach. Typically, an NPD team is formed with representa- tion from all major functions (marketing, engineering, operations, and finance/ accounting) to ensure cross-functional integration.

• Supply chain collaboration in new-product development is essential. This should be accomplished by collaborating with both customers and suppliers in the NPD process.

• Quality function deployment is used to connect customer attributes to engi- neering characteristics. This typically is done through a technique called the house of quality that can be used for both manufacturing and services.

• Design for manufacturability can be accomplished by means of product simpli- fication or modular production.

• Product simplification is done through value analysis, which achieves the max- imum usefulness for the customer at the lowest cost.

• Modular design is used to minimize the number of different parts needed to make a product line of related products. This can be done by designing stan- dard modules and considering only the combinations of options that have significant market demand.

Market pull 43 Technology push 43 Inter functional

view 44 Concept development 45 Product design 45 Pilot production/

testing 45 Process design 46 Production prototypes 46

Information package 47

Misalignment 47 Sequential process 47 Concurrent

engineering 47 Collaboration 48 Quality function

deployment 50 House of quality 50

1. Japan Business Consultants http://www.mazur.net/publishe.htm

Customer attributes 50 Engineering

characteristics 52 Trade-offs 52 Target value 52 Design for

manufacturing 54 Value analysis 54 Modular design 56

Read how QFD was used to design various products or services.

2. Society of Concurrent Product Development http://www.scpdnet.org/paper.htm

Read one of the papers on this site and come to class prepared to discuss your findings.

3. 3M Company http://www.3m.com

Describe a unique product introduced by 3M. Search the 3M site for the word innovation to find example products.

Discussion Questions

1. Why is interfunctional cooperation important for new-product design? What are the symptoms of a possible lack of interfunctional cooperation?

2. In what circumstances might a market-pull approach or a technology-push approach to new-product design be the best approach?

3. Describe the steps that might be required in writing and producing a play. Compare these steps to the three steps for new-product d evel- opment described in Section 3.2. Is there a correspondence?

4. Why has there been an increase in product variety in our economy?

5. How can the modular design concept control pro- duction variety and at the same time allow prod- uct variety?

6. What is the proper role of the operations function in product design?

7. What form does the product specification take for the following firms: a travel agency, a beer com- pany, and a consulting firm?

8. Perform a value analysis on the following items:

a. A stapler.

b. A mouse for computer operation.

c. A desk for use by students for studying.

9. Find examples of modular design .of products in everyday life.

10. Work with one of your classmates as your cus- tamer; you are the supplier. Have your customer select a product and specify the customer attri- butes (CAs) that are desirable. Then you specify the engineering characteristics (ECs) required to

Selected Bibliography

Ahmad, Sohel, Debashish Mallick, and Roger G. Schroeder. "New Product Development: Impact of Project Characteristics and Development Practices on Performance." Journal of Product Innovation Man- agement, to appear.

Asan, Umut, Seckin Polat, and Ron Sanchez. "Scenario- driven Modular Design in Managing Market Un- certainty." International Journal of Technology Management 42, no. 4 (2008), pp. 459-487.

Ciferri, Luca. "Bangle Shares Some BMW Design Secrets." Automotive News Europe 11, no. 13 Gune 2006), p. 18.

:3din, Neil. "A Promising Planning Tool: Quality Func- tion Deployment." Cost Engineering 44, no. 3 (March 2002), pp. 28-39.

Chapter 3 Product Design 59

meet the customer 's needs. Complete the house- of-quality matrix by specifying the relationships in the matrix. Ask your customer if the resulting ECs will meet his or her needs.

11. What are the essential benefits of using a QFD ap- proach to product design? Also, identify any nega- tive effects that might apply to the use of QFD.

12. Think of some examples of how QFD can be applied to service design problems.

13. A student would like to design a backpack for student books and supplies. The CAs are a (1) comfortable backpack that is (2) durable with (3) enough room and (4) not too heavy to carry. Think of some ECs that can be used to measure these customer attributes. Then construct a QFD matrix showing the positive and negative relation- ships that you expect to see in this case.

14. An entrepreneur is designing a submarine sand- wich shop that would be located on campus. De- fine the CAs that you would like to see for the service (not the product) delivered at this location. Then specify some ECs that can be used for mea- surement of the service.

15. Suppose a car you want to buy has five choices for interior colors, three types of radios, three engine choices, two battery types (regular and heavy duty), 10 exterior colors, two transmission choices, and four types of wheel covers. How many possible combinations of the car are possible for the manu- facturer? What can be done to limit the number of combinations without limiting customer choice?

16. What is the best way to get cross-functional teams involved in concurrent product design?

Flynn, Barbara, E. James Flynn, Susan Amundson, and Roger G. Schroeder. "Team Characteristics as Enablers of Fast Product Development Speed." Advances in Interdisciplinary Studies of Work Teams, Greenwich, CT: JAI Press, 6 (2000).

Funk, Jeffrey. "Systems, Components, and Modular Design: The Case of the US Semiconductor Indus- try." International Journal of Technology Management 42, no. 4 (2008), pp. 387-413.

Hauser, John R., and Don Clausing. "The House of Quality." Harvard Business Review, May-June 1988, pp. 63-73.

Lane Davis, Kristin. "Finding Value in the Value Engi- neering Process." Cost Engineering 46, no. 12 (December 2004), pp. 24-28.

...

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60 Part One Introduction

Li, Weidong, and Weiming Shen. "Collaborative Engineering: From Concurrent Engineering to Enterprise Collaboration." Computers in Industry 60, no. 6 (2009), pp. 365-366.

Mahanti, Rupa. "The Application of QFD to User Interface Design." Quality Management Journal16, no. 1 (2009), pp. 29--41.

Mallick, Debashis, and Roger G. Schroeder." An Integrated Framework for Measuring Product Development Performance in High Technology." Production and Operations Management 14, no. 2 (2005), pp. 142-158.

Ogawa, Susumu, and Frank Piller. "Reducing the Risks of New Product Development." Sloan Man- agement Review 47, no. 2 (Winter 2006), pp. 65-71.

=

Parker, Delvon, George Zsidisin, and Gary Ragatz. "Timing and Extent of Supplier Integration in New Product Development: A Contingency Approach." Journal of Supply Chain Management 44, no. 1 (2008), pp. 71-83.

. Pullan, Thankachan, M. Bhasi, and G. Madhu. "Appli- cation of Concurrent Engineering in Manufacturing Industry." International Journal of Computer Integrated Manufacturing 23, no. 5 (2010), pp. 425--440.

Schiele, Holger. "Early Supplier Integration: The Dual Role of Purchasing in New Product Development." R&D Management 40, no. 2 (2010), pp. 138-153.

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Part Two

4. Process Selection

5. Ser<tice Delivery System Design

6. Process-Flow Analysis

7. Lean Thinking and Lean Systems

Among the most important decisions made by operations managers are those involving the design and improvement of the process for producing goods and services. These decisions include choice of process and technology, analysis of flows through operations, and the associated value added in operations. Two themes underlie and unify Part Two: first, the idea of designing and improving a process to enhance the flows of materials, customers, and information; second, the idea of eliminating waste in process design. These principles can be used to design and manage a process that not only is efficient but provides va lue for the customer.