1. 10/16/2010
Design of Goods Outline
5 and Services
Global Company Profile: Regal
Marine
Goods and Services Selection
PowerPoint presentation to accompany
Heizer and Render Product Strategy Options Support
Operations Management, 10e Competitive Advantage
Principles of Operations Management, 8e
PowerPoint slides by Jeff Heyl
Product Life Cycles
Life Cycle and Strategy
Product-by-Value Analysis
© 2011 Pearson Education, Inc. publishing as Prentice Hall 5-1 © 2011 Pearson Education, Inc. publishing as Prentice Hall 5-2
Outline - Continued Outline - Continued
Generating New Products
Issues for Product Design
New Product Opportunities
Robust Design
Importance of New Products
Modular Design
Product Development
p
Computer-Aided Design (CAD)
Product Development System
Computer-Aided Manufacturing
Quality Function Deployment (QFD) (CAM)
Organizing for Product Development Virtual Reality Technology
Manufacturability and Value Value Analysis
Engineering
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Outline - Continued Outline - Continued
Ethics, Environmentally Friendly Defining a Product
Design, and Sustainability Make-or-Buy Decisions
Systems and Life Cycle Perspectives Group Technology
Laws and Industry Standards
y
Documents For Production
Time-Based Competition Product Life-Cycle Management
Purchasing Technology by Acquiring (PLM)
a Firm
Service Design
Joint Ventures
Documents for Services
Alliances
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2. 10/16/2010
Outline - Continued Learning Objectives
Application of Decision Trees to When you complete this chapter you should
be able to :
Product Design
Transition to Production 1. Define product life cycle
2. Describe a product development system
2 D ib d td l t t
3. Build a house of quality
4. Describe how time-based competition is
implemented
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Learning Objectives Regal Marine
When you complete this chapter you should
be able to : Global market
5. Describe how products and services are 3-dimensional CAD system
defined by operations management
y p g Reduced product development time
6. Describe the documents needed for Reduced problems with tooling
production
Reduced problems in production
7. Describe customer participation in the
design and production of services Assembly line production
8. Apply decision trees to product issues JIT
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Product Decision Product Decision
The good or service the organization
The objective of the product decision provides society
is to develop and implement a Top organizations typically focus on
product strategy that meets the core products
p
demands of the marketplace with a
d d f th k t l ith
competitive advantage 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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3. 10/16/2010
Product Strategy Options Product Life Cycles
Differentiation
May be any length from a few
Shouldice Hospital hours to decades
Low cost The operations function must
Taco Bell be able to introduce new
Rapid response products successfully
Toyota
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Product Life Cycles Product Life Cycle
Cost of development and production
Introductory Phase
Sales, cost, and cash flow
Sales revenue
Net revenue (profit)
Fine tuning may warrant
unusual expenses for
a
Cash
flow
1. Research
Negative
2. Product development
cash flow Loss
3. Process modification and
enhancement
Introduction Growth Maturity Decline
4. Supplier development
Figure 5.1
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Product Life Cycle Product Life Cycle
Growth Phase Maturity Phase
Product design begins to Competitors now established
stabilize High volume, innovative
volume
Effective forecasting of production may be needed
capacity becomes necessary Improved cost control,
Adding or enhancing capacity reduction in options, paring
may be necessary down of product line
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3

4. 10/16/2010
Product Life Cycle Product Life Cycle Costs
100 –
Costs committed
Decline Phase
80 –
Percent of total cost
Unless product makes a
60 –
special contribution to the Costs incurred
organization, must plan to 40 –
terminate offering
20 –
Ease of change
0–
Concept Detailed Manufacturing Distribution,
design design service,
prototype and disposal
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Product-by-
Product-by-Value Analysis Product-by-
Product-by-Value Analysis
Lists products in descending Sam’s Furniture Factory
order of their individual dollar Individual Total Annual
contribution to the firm Contribution ($) Contribution ($)
Lists the total annual dollar Love Seat $102 $36,720
contribution of the product Arm Chair $87 $51,765
Helps management evaluate Foot Stool $12 $6,240
alternative strategies Recliner $136 $51,000
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New Product Opportunities Importance of New Products
Percentage of Sales from New Products
1. Understanding the 50%
customer
40%
2. Economic change
30%
3.
3 Sociological and
demographic change 20%
4. Technological change
10%
5. Political/legal change
6. Market practice, professional Industry Top Middle Bottom
standards, suppliers, distributors leader third third third
Position of Firm in Its Industry Figure 5.2a
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4

5. 10/16/2010
Disney Attendance Cisco Product Revenue
Magic Kingdom
Epcot Figure 5.2b Other Figure 5.2c
50 Disney-Hollywood 35 Switches
Animal Kingdom Routers
30
40
tors
25
ars
Billions of dolla
Millions of visit
30
20
15
20
10
10
5
0 0
‘93 ‘95 ‘97 ‘99 ‘01 ‘03 ‘05 ‘07 ‘02 ‘03 ‘04 ‘05 ‘06 ’07 ‘08
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Product Development Quality Function
Ideas
System Deployment
Ability Figure 5.3
1. Identify customer wants
Customer Requirements
2. Identify how the good/service will satisfy
Functional Specifications customer wants
Product Specifications Scope for 3. Relate
3 R l t customer wants to product hows
t t t d th
Scope of design and
product Design Review engineering 4. Identify relationships between the firm’s hows
development teams
team
5. Develop importance ratings
Test Market
6. Evaluate competing products
Introduction
7. Compare performance to desirable technical
Evaluation attributes
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QFD House of Quality House of Quality Example
Interrelationships
Customer
importance
ratings
How to satisfy Your team has been charged with
customer wants
designing a new camera for Great
Cameras, Inc.
ment
itive
What the
assessm
Relationship
The first action is
Competi
customer matrix
wants
to construct a
House of Quality
Target values Weighted
rating
Technical
evaluation
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6. 10/16/2010
Interrelationships Interrelationships
House of Quality Example How to Satisfy
Customer Wants House of Quality Example How to Satisfy
Customer Wants
Competitors
Competitors
Analysis of
Analysis of
What the What the
Relationship Relationship
Customer Customer
Matrix Matrix
Wants Wants
What the
Technical Technical
uirements
Attributes and Attributes and
Evaluation Evaluation
customer
wants Customer
Aluminum components
importance
rating
Low electricity requ
(5 = highest)
Ergonomic design
Lightweight 3
Auto exposure
How to Satisfy
Easy to use 4
Customer Wants
Paint pallet
Auto focus
Reliable 5
Easy to hold steady 2
Color correction 1
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Interrelationships Interrelationships
House of Quality Example How to Satisfy
Customer Wants House of Quality Example How to Satisfy
Customer Wants
Competitors
Competitors
Analysis of
Analysis of
What the What the
Relationship Relationship
Customer Customer
Matrix Matrix
Wants Wants
High relationship Technical
Attributes and
Technical
Attributes and
Evaluation Evaluation
Medium relationship
rements
Relationships
Low relationship between the
things we can do
nts
Aluminum componen
Low electricity requir
Lightweight 3
Ergonomic design
Easy to use 4
Reliable 5
Auto exposure
Easy to hold steady 2
Paint pallet
Color corrections 1 Auto focus
Relationship matrix
© 2011 Pearson Education, Inc. publishing as Prentice Hall 5 - 33 © 2011 Pearson Education, Inc. publishing as Prentice Hall 5 - 34
Interrelationships
Interrelationships How to Satisfy
House of Quality Example How to Satisfy
Customer Wants House of Quality Example Customer Wants
Competitors
Analysis of
What the
Relationship
Competitors
Analysis of
Customer
What the Matrix
Relationship Wants
Customer
Matrix
Wants
Technical
Attributes and
Company B
Company A
Technical Evaluation
Attributes and
Evaluation
How well do
Lightweight 3 competing products
Easy to use 4 meet customer wants
C
C
Reliable 5
Lightweight 3 G P
Easy to hold steady 2
Easy to use 4 G P
Color corrections 1
Reliable 5 F G
Our importance ratings 22 9 27 27 32 25
Easy to hold steady 2 G P
Color corrections 1 P P
Weighted
rating Our importance ratings 22 5
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6

7. 10/16/2010
Interrelationships
How to Satisfy
House of Quality Example
Customer Wants
House of Quality Example
Competitors
Analysis of
Low electricity requirements
What the
Relationship
Customer
Matrix
Wants
Aluminum components
Ergonomic design
Technical
Attributes and
Auto exposure
Failure 1 per 10,000
Evaluation
Company A
Company B
Paint pallet
Auto focus
Completed
Panel ranking
House of Lightweight
Easy to use
3
4
G P
G P
Target
g
Quality
p
Reliable
R li bl 5 F G
values
2 circuits
Easy to hold steady 2 G P
(Technical Color correction 1 P P
2’ to ∞
attributes)
0.5 A
Our importance ratings 22 9 27 27 32 25
75%
Failure 1 per 10,000
Target values
Panel ranking
Company A 0.7 60% yes 1 ok G (Technical
attributes)
2 circuits
Technical
2’ to ∞
evaluation Company B 0.6 50% yes 2 ok F
0.5 A
75%
Us 0.5 75% yes 2 ok G Company A
Technical Company B
0.7 60% yes
0.6 50% yes
1
2
ok
ok
G
F
evaluation
Us 0.5 75% yes 2 ok G
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House of Quality Sequence Organizing for Product
Development
Deploying resources through the
organization in response to Historically – distinct departments
customer requirements
Duties and responsibilities are
Quality
plan
l
defined
Production
process
Difficult to foster forward thinking
Production
Specific
House
process
components
components
House 4
A Champion
Specific
Design
characteristics
characteristics
3
House
Design
2 Product manager drives the product
requirements
Customer
House
1 through the product development
system and related organizations
Figure 5.4
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Organizing for Product Manufacturability and
Value Engineering
Development
Team approach Benefits:
Cross functional – representatives 1. Reduced complexity of products
from all disciplines or functions 2. Reduction of environmental impact
Product development teams, design 3. Additional standardization of products
3 Addi i l d di i f d
for manufacturability teams, value 4. Improved functional aspects of product
engineering teams 5. Improved job design and job safety
Japanese “whole organization” 6. Improved maintainability (serviceability) of
the product
approach
7. Robust design
No organizational divisions
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8. 10/16/2010
Cost Reduction of a Bracket Issues for Product
via Value Engineering Development
Robust design
Modular design
Computer-aided
Computer aided design (CAD)
Computer-aided manufacturing (CAM)
Virtual reality technology
Value analysis
Environmentally friendly design
Figure 5.5
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Robust Design Modular Design
Products designed in easily
Product is designed so that small
segmented components
variations in production or
assembly do not adversely affect Adds flexibility to both p
y production
the product and marketing
Typically results in lower cost and Improved ability to satisfy customer
higher quality requirements
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Computer Aided Design Extensions of CAD
(CAD) Design for Manufacturing and Assembly
(DFMA)
Using computers to
design products and Solve manufacturing problems during the
prepare engineering design stage
documentation 3D
3-D Object Modeling
Shorter development Small prototype
cycles, improved development
accuracy, lower cost CAD through the
Information and internet
designs can be International data
deployed worldwide exchange through STEP
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9. 10/16/2010
Computer-
Computer-Aided Benefits of CAD/CAM
Manufacturing (CAM)
1. Product quality
Utilizing specialized computers
and program to control 2. Shorter design time
manufacturing equipment
f t i i t 3. Production cost reductions
Often driven by the CAD system 4. Database availability
(CAD/CAM)
5. New range of capabilities
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Virtual Reality Technology Value Analysis
Computer technology used to Focuses on design improvement
develop an interactive, 3-D model of during production
a product from the basic CAD data
Seeks improvements leading either
p g
Allows people to ‘see’ the finished
All l t ‘ ’ th fi i h d to a better product or a product
design before a physical model is which can be produced more
built economically with less
Very effective in large-scale designs environmental impact
such as plant layout
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Ethics, Environmentally Ethics, Environmentally
Friendly Designs, and Friendly Designs, and
Sustainability Sustainability
It is possible to enhance productivity Design
and deliver goods and services in an
Polyester film and shoes
environmentally and ethically
responsible manner Production
In OM, sustainability means ecological Prevention in production and
stability packaging
Conservation and renewal of resources Destruction
through the entire product life cycle
Recycling in automobiles
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10. 10/16/2010
Ethics, Environmentally
Friendly Designs, and The Ethical Approach
Sustainability
View product design from a
systems perspective
Inputs, processes
Inputs processes, outputs
Costs to the firm/costs to society
Consider the entire life cycle of
the product
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The Ethical Approach Guidelines for Environmentally
Friendly Designs
Goals
1. Developing safe end environmentally 1. Make products recyclable
sound practices
2. Use recycled materials
2. Minimizing waste of resources
3. Reducing environmental liabilities 3. Use less harmful ingredients
4. Increasing cost-effectiveness of 4. Use lighter components
complying with environmental 5. Use less energy
regulations
5. Begin recognized as a good 6. Use less material
corporate citizen
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Laws and Industry Laws and Industry
Standards Standards
For Design … For Manufacture/Assembly …
Food and Drug Administration Occupational Safety and Health
Administration
Consumer Products Safety Commission
Environmental Protection Agency
National Highway Safety Administration
Professional ergonomic standards
Children’s Product Safety Act
State and local laws dealing with
employment standards, discrimination, etc.
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11. 10/16/2010
Laws and Industry Time-
Time-Based Competition
Standards
Product life cycles are becoming
For Disassembly/Disposal … shorter and the rate of
technological change is
Vehicle Recycling Partnership increasing
Increasingly rigid laws worldwide
Developing new products faster
can result in a competitive
advantage
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Product Development Acquiring Technology
Continuum
EXTERNAL DEVELOPMENT STRATEGIES
Alliances
By Purchasing a Firm
Figure 5.6
Joint ventures Speeds development
Purchase technology or expertise
by acquiring the developer Issues concern the fit between the acquired
organization and product and the host
INTERNAL DEVELOPMENT STRATEGIES Through Joint Ventures
Migrations of existing products
Enhancements to existing products Both organizations learn
New internally developed products Risks are shared
Internal Cost of product development Shared Through Alliances
Lengthy Speed of product development Rapid and/
or Existing Cooperative agreements between
High Risk of product development Shared independent organizations
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Defining The Product Product Documents
First definition is in terms of Engineering drawing
functions Shows dimensions, tolerances, and
materials
Rigorous specifications are
developed during the design phase Shows codes for Group Technology
Manufactured products will have an Bill of Material
engineering drawing Lists components, quantities and
where used
Bill of material (BOM) lists the
components of a product Shows product structure
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