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Goods and Service Design

COLLIER/EVANS

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

LEARNING OUTCOMES

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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

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LEARNING OUTCOMES (continued)

Introduction

Every design project is a series of trade-offs between:

Technology and functionality

Ambition and affordability

Desires of the people creating the object and needs of the people using it

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Steps Involved in Designing Goods and Services

Strategic mission and vision

Strategic and market analysis, and understanding competitive priorities

Customer benefit package design and configuration

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Steps Involved in Designing Goods and Services

Detailed goods, service, and process design

For manufactured goods

Manufactured design and development

Process selection and design

For services

Service and service delivery design

Service encounter design

Market introduction/deployment

Marketplace evaluation

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Customer-Focused Design

Customer requirements - Wants and needs are reflected through the design of good or service

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

Quality function deployment(QFD): Approach to guide the design, creation, and marketing of goods and services by:

Integrating the voice of the customer into all decisions

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Building the House of Quality

Determine customer requirements through the voice of the customer (VOC)

Define technical requirements of the product

Determine interrelationships between the technical requirements

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Building the House of Quality

Relationship matrix defines what technical requirements satisfy VOC needs

Customer priorities and competitive evaluation help select which VOC requirements the product should focus on

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6.2 The House of Quality

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Exhibit

Tolerance Design

Determining the acceptable tolerance

For manufactured goods, design blueprints specify a target dimension (nominal), along with a range of permissible variation (tolerance)

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6.3 Traditional Goal Post View of Conforming to Specifications

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Exhibit

Taguchi Loss Function

Genichi Taguchi, a Japanese engineer, maintained traditional practice of setting design specifications is flawed

Argument – The smaller the variation about the nominal specification, the better the quality

In turn, products are more consistent, fail less frequently, and will be less costly in the long run

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Taguchi Loss Function

L(x) = k(x – T )2

Where

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

x - Actual value of the dimension

k - Constant that translates the deviation into dollars

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6.4 Nominal-Is-Best Taguchi Loss Function

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Exhibit

Design for Reliability

Reliability: Probability that goods and services performs its intended function for stated period of time under specified operating conditions

Probability - Value between 0 and 1

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Design for Reliability

Series system - If one component fails, the entire system fails

Reliability of a series system - Product of the individual probabilities of each process in a system

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

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6.7 Structure of a Serial System

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Exhibit

Design for Reliability

Parallel systems - Functions are independent and the entire system will fail only if all components fail

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

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6.8 Structure of a Parallel System

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Exhibit

Design for Manufacturability (DFM)

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

Improves:

Productivity

Quality

Flexibility

Customer satisfaction

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Design for Sustainability

Design for environment (DfE): Explicit consideration of environmental concerns during the design of goods, services, and processes

Designing for recycling

Disassembly

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Service Delivery System Design

Includes

Facility location and layout

Servicescape

Process and job design

Technology and information support systems

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Facility Location and Layout

Location affects a customer’s travel time

Important competitive priority in a service business

Layout affects process flow, costs, and customer perception and satisfaction

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Servicescape

Physical evidence that customer can use to form an impression

Provides the behavioral setting where service encounters take place

Standardization - Enhances efficiency, especially for multiple site organizations

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Dimensions and Types of Servicescape

Dimensions

Ambient conditions

Spatial layout and functionality

Signs, symbols, and artifacts

Types

Lean servicescape environment: Provide service using simple designs

Elaborate servicescape environment: Provide service using more complicated designs and service systems

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Service Process Design

Activity of developing an efficient sequence of activities to:

Satisfy internal and external customer requirements

Develop procedures to ensure that:

Things are done right the first time

Interactions between customers and service providers are simple and quick

Human error is avoided

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Technology and Information Support Systems

Hard and soft technology is an important factor in designing services

Ensure:

Speed

Accuracy

Customization

Flexibility

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Service Encounter Design

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

Principal elements

Customer contact behavior and skills

Service provider selection, development, and empowerment

Recognition and reward

Service recovery and guarantees

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Customer Contact Behavior

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

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

High-contact systems

Low-contact systems

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Customer Contact Requirements

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

Technical requirements as response time

Service management skills such as cross-selling other services

Behavioral requirements

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Service Provider Selection, Development, and Empowerment

Recruit and train employees to exceed customer expectations

Empowerment: Giving people authority to make decisions based on:

Intuition

Control over the work

Taking risks and learning from mistakes

Promoting change

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Recognition and Reward

Key motivational factors

Recognition

Advancement

Achievement

Nature of the work

Good compensation system can help to attract, retain, and motivate employees

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Service Guarantees

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

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

Service failure

Error

Defect

Mistake

Crisis

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Service Recovery

Process of correcting a service upset and satisfying the customer

Steps

Begin immediately after a service upset

Document the process and train employees

Listen to the customer and respond sympathetically

Resolve the problem quickly, provide an apology, offer compensation

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An Integrative Case Study of LensCrafters

Steps 1 and 2 - Strategic mission, market analysis and competitive priorities

Step 3 - Customer benefit package design and configuration

Steps 4a and b - Manufactured good design and process selection

Step 4c - Service-delivery system design

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An Integrative Case Study of LensCrafters

Step 4d - Service encounter design

Steps 5 and 6 - Market introduction/deployment and evaluation

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An Integrative Case Study of LensCrafters

Mission statement - Focused on being the best by:

Creating customers for life by delivering legendary customer service

Developing and energizing associates and leaders in the world’s best work place

Crafting perfect quality in about an hour

Delivering superior overall value to meet each customer’s individual needs

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6.11 One Example View of LensCrafters’ Customer Benefit Package

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Exhibit

An Integrative Case Study of LensCrafters

Manufactured good design and process selection

Manufacturing process is integrated into the service facility to provide rapid order response, yet not sacrifice quality

Equipment used in labs is technologically advanced in the industry

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

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6.12 A Schematic View of a Typical LensCrafters Store Layout

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Exhibit

An Integrative Case Study of LensCrafters

Service encounter design

Each job requires both technical and service management skills

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

Lab technicians are certified in all work tasks and processes

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An Integrative Case Study of LensCrafters

Market introduction/deployment and evaluation

Develop processes to introduce changes into all existing locations

To maintain operational consistency and achieve its strategic objectives

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To design and improve goods and services, most companies use the steps involved in designing goods and services

Taguchi loss function: L(x) = k(x – T )2

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

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

SUMMARY

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Customer contact

Design for environment (DfE)

Design for manufacturability (DFM)

Elaborate servicescape environment

Empowerment

High-contact systems

Lean servicescape environment

Low-contact systems

Product simplification

Prototype testing

KEY TERMS

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Quality function deployment (QFD)

Reliability

Service delivery system design

Service encounter design

Service guarantee

Service process design

Service recovery

Service upset

Servicescape

Voice of the customer

KEY TERMS

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