Total Quality

Introduction to Operations and Supply
Chain Management
Fifth Edition
Chapter 15
Developing Products and
Services
Copyright © 2019, 2016, 2014 Pearson Education, Inc. All Rights Reserved.

Chapter Objectives (1 of 2)
Be able to:
• Explain why product design is important to the success of
a business.
• Describe the six dimensions of product design that are of
particular interest to operations and supply chain
managers.
• Describe the five phases of product and service
development and explain the difference between
sequential development and concurrent engineering.

Chapter Objectives (2 of 2)
Be able to:
• Discuss the different roles played by areas such as
marketing, engineering and suppliers during the
development process.
• Describe some of the most common approaches to
improving product and service designs, including the
Define-Measure-Analyze-Design-Verify (DMADV) process,
quality function deployment (QFD), design for
manufacturability (DFM), and target costing.

Introduction (1 of 2)
• Product Design – The characteristics or features of a
product or service that determine its ability to meet the
needs of the user.
• Product Development Process – A disciplined and
defined set of tasks, steps, and phases that describe the
normal means by which a company repetitively converts
embryonic ideas into salable products or services.
© Product Development and Management Association

Introduction (2 of 2)
• Four Reasons for Developing New Products and
Services
– New products or services can give firms a competitive
advantage in the marketplace.
– New products or services provide benefits to the firm.
– Companies develop new products or services to exploit
existing capabilities.
– Companies can use new product development to block
out competitors.

Operations and Supply Chain Perspectives
on Design (1 of 5)
• Repeatability
– The capability of making products over and over again
in the volumes needed.
• Robust Design
– The design of products to be less sensitive to
variations, including manufacturing variation and
misuse, increasing the probability that they will perform
as intended.

on Design (2 of 5)
• Testability
– The ease with which critical components or functions
can be tested during production.
• Serviceability
– The ease with which parts can be replaced, serviced,
or evaluated.

on Design (3 of 5)
• Production Volumes
– Increased volumes due to developing a new product or
service can be handled by expanding a firm’s own
operations by building new facilities, hiring additional
workers, buying new equipment, or joint planning with
key suppliers.

on Design (4 of 5)
• Product Costs
– Obvious costs – Costs that are the easiest to see and
manage.
– Hidden costs – Costs that are not easy to track but can
have a major impact. Drivers of hidden costs include:
 The number of parts in a product
 Engineering changes
 Transportation costs

on Design (5 of 5)
• Match with Existing Capabilities
– A new product or service that allows a manufacturer to
use existing parts and manufacturing facilities is
usually easier to support than one that requires new
ones.
– Services that exploit existing capabilities are especially
attractive.
– Companies should consider such factors as production
volumes and existing capabilities when designing new
products or services.

The Development Process (1 of 6)
Table 15.1 Phases of Product and Service Development
Functional
Activities
Concept
Development Planning
Design and
Development
Commercial
Preparation Launch
Engineering Propose new
technologies;
develop
product ideas
Identify general
performance
characteristics
for the product
or service;
identify
underlying
technologies
Develop
detailed
product
specifications;
build and test
prototypes
Resolve
remaining
technical
problems
Evaluate
field
experience
with product
or service
Marketing Provide
market-based
input; propose
and
investigate
product or
service
concepts
Define target
customers’
needs; estimate
sales and
margins; include
customers in
development
effort
Conduct
customer
tests; evaluate
prototypes;
plan marketing
rollout
Train sales
force; prepare
sales
procedures;
select
distribution
channels
Fill
downstream
supply chain;
sell and
promote

[Table 15.1 Continued]
Functional
Activities
Concept
Development Planning
Design and
Development
Commercial
Preparation Launch
Operations
and supply
chain
functions
Scan suppliers
for promising
technologies/
capabilities
Develop initial
cost estimates;
identify key
supply chain
partners
Develop
detailed
process maps
of the
operations and
supply chain
flows; test new
processes
Build pilot
units using
new
operations;
train
personnel;
verify that
supply chain
flows work as
expected
Ramp up
volumes;
meet targets
for quality,
cost, and
other
performance
goals
Source: Based on S. Wheelwright and K. Clark, Revolutionizing Product Development (New York: Free Press, 1992).

• Concept development phase – The first phase of a
product development effort where a company identifies
ideas for new or revised products and services.
• Planning phase – The second phase of a product
development effort company where a company begins to
address the feasibility of a product or service.
• Design and development phase – The third phase of a
product development effort where the company starts to
invest heavily in the development effort and builds and
evaluates prototypes.

• Commercial preparation phase – The fourth phase of a
product development effort where firms start to invest
heavily in the operations and supply chain resources
needed to support the new product or service.
• Launch phase – The final phase of a product
development effort. For products, this means “filling up” the
supply chain with products. For services, it can mean
making the services broadly available to the target
marketplace.

• Sequential development – A process in which a product
or service idea must clear specific hurdles before it can go
on to the next development phase.
• Concurrent engineering – An alternative to sequential
development in which activities in different development
stages are allowed to overlap with one another, shortening
the total development time.

Figure 15.1 Concurrent Engineering

Organizational Roles in Product and Service
Development (1 of 2)
• Engineering – Provide the expertise.
• Marketing – Understand the marketplace and apply that
knowledge.
• Accounting – Play the role of “scorekeeper.”
• Finance – Judge the financial impact and determine how
to acquire the needed capital.
• Designers – Handle product design and create “identities”
for companies, environments, and service experiences.

Organizational Roles in Product and Service
Development (2 of 2)
• Purchasing – Identify the best suppliers and sign them up
early in the process and act as a consultant for material
supply markets.
• Suppliers – Bring opportunities for improvement, reduce
financial risks, help in the development process.

Approaches to Improving Product and
Service Designs (1 of 11)
• DMADV (Define – Measure – Analyze – Design – Verify)
– Define the project goals and customer deliverables.
– Measure and determine customer needs and
specifications.
– Analyze the product or process options to meet the
customer needs.
– Design the product or process.
– Verify the new product or process.

• Quality Function Deployment (QFD) – A graphical tool
used to help organizations move from vague notions of
what customers want to specific engineering and
operational requirements. Also called the House of Quality
– Left side – Lists customer requirements and their
relative importance to target customers.
– Along the top – Lists specific product characteristics.
– Main body – Shows how each of the product
characteristics does or does not support the customer
requirements.
– Roof – Shows synergies between some of the features.

• QFD matrices
– First matrix: Customer requirements → Product characteristics
– Second matrix: Product characteristics → Product specifications
– Third matrix: Product specifications → Process characteristics
– Fourth matrix: Process characteristics → Process specifications

Figure 15.2 QFD Matrix for a Smartphone

Figure 15.3 Using QFD Matrices to move from Customer Requirements
to Process Specifications

• Computer-aided design (CAD) system – An information
system that allows engineers to develop, modify, share,
and even test designs in a virtual world.
• Computer-aided design/computer-aided manufacturing
system (CAD/CAM) – An extension of CAD where CAD-
based designs are translated into machine instructions,
which are then fed automatically into computer-controlled
manufacturing equipment.

• Design for manufacturability (DFM) – The systematic
consideration of manufacturing issues in the design and
development process, facilitating the fabrication of the
product’s components and their assembly into the overall
product.
– Parts standardization
– Modular architecture.
• Design for maintainability (DFMt) – The systematic
consideration of maintainability issues over the product’s
projected life cycle in the design and development
process.

• Design for Six Sigma (DFSS) – An approach to product
and process design which seeks to ensure that the
organization is capable of providing products or services
that meet Six Sigma quality levels.
– In general, no more than 3.4 Defects Per Million
Opportunities (DPMO)
• Design for the environment (DFE) – An approach to new
product design that addresses environmental, safety, and
health issues over the product’s projected life cycle during
the design and development process.

• Target costing – The process of designing a product to
meet a specific cost objective.
– Setting the planned selling price and subtracting the
desired profit as well as marketing and distribution
costs, thus leaving the required target cost (design to
cost)
• Value analysis – The process that involves examining all
elements of a component, an assembly, an end product, or
a service to make sure it fulfills its intended function at the
lowest total cost.
– Value = function/cost

• Typical questions asked by Value Analysis Team
1. Is the cost of the final product proportionate to its
usefulness?
2. Does the product need all its features or internal
parts?
3. Is there a better production method to produce the
item or product?
4. Can a lower-cost standard part replace a customized
part?
5. Are we using the proper tooling, considering the
quantities required?

6. Will another dependable supplier provide material,
components, or subassemblies for less?
7. Are there equally effective but lower-cost materials
available?
8. Are packaging cost reductions possible?
9. Is an item properly classified for shipping purposes to
receive the lowest transportation rates?
10. Are design or quality specifications too tight, given
customer requirements?
11. If we are making an item now, can we buy it for less
(and vice versa)?

Developing Products and Services Case
Study
Design for Supply Chain Programs

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