operations management msom306.001 lecture 6 – product and service design al baharmast, ph.d

Operations ManagementMSOM306.001

Lecture 6 – Product and Service Design

Al Baharmast, Ph.D.

Some lecture content courtesy of Prentice Hall, Rights Reserved

Regal Marine

Global market 3-dimensional CAD system

Reduced product development timeReduced problems with toolingReduced problems in production

Assembly line production JIT


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

Product Decision


Product Strategy Options

DifferentiationDifferentiation Shouldice HospitalShouldice Hospital

Low costLow cost Taco BellTaco Bell

Rapid responseRapid response ToyotaToyota


Product Life Cycles

May be any length from a few May be any length from a few hours to decadeshours to decades

The operations function must The operations function must be able to introduce new be able to introduce new products successfullyproducts successfully


Product Life Cycles

Negative cash flow

IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

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low Cost of development and productionCost of development and production

Cash Cash flowflow

Net revenue (profit)Net revenue (profit)

Sales revenueSales revenue

LossLoss

Figure 5.1Figure 5.1


Product Life Cycle Costs

Costs incurredCosts incurred

Costs committedCosts committed

Ease of changeEase of change

ConceptConcept DetailedDetailed ManufacturingManufacturing Distribution,Distribution,designdesign designdesign service,service,

prototypeprototype and disposaland disposal

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80 –80 –

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0 –0 –


Product Life Cycle

IntroductionIntroduction

Fine tuningFine tuning ResearchResearch

Product developmentProduct development

Process modification and Process modification and enhancementenhancement

Supplier developmentSupplier development


Product Life Cycle

GrowthGrowth

Product design begins to Product design begins to stabilizestabilize

Effective forecasting of Effective forecasting of capacity becomes necessarycapacity becomes necessary

Adding or enhancing capacity Adding or enhancing capacity may be necessarymay be necessary


Product Life Cycle

MaturityMaturity

Competitors now establishedCompetitors now established

High volume, innovative High volume, innovative production may be neededproduction may be needed

Improved cost control, Improved cost control, reduction in options, paring reduction in options, paring down of product linedown of product line


Product Life Cycle

DeclineDecline

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


Importance of New Products

Industry Industry leaderleader

Top Top thirdthird

Middle Middle thirdthird

Bottom Bottom thirdthird


Percentage of Sales from New ProductsPercentage of Sales from New Products50%

40%

30%

20%

10%

Position of Firm in Its IndustryPosition of Firm in Its Industry


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


Product-by-Value Analysis

Individual Contribution ($)

Total Annual Contribution ($)

Love Seat $102 $36,720

Arm Chair $87 $51,765

Foot Stool $12 $6,240

Recliner $136 $51,000

Sam’s Furniture FactorySam’s Furniture Factory


New Product Opportunities

Brainstorming is a useful tool

1.1. Understanding the customerUnderstanding the customer

2.2. Economic changeEconomic change

3.3. Sociological and demographic Sociological and demographic changechange

4.4. Technological changeTechnological change

5.5. Political/legal changePolitical/legal change

6.6. Market practice, professional Market practice, professional standards, suppliers, distributorsstandards, suppliers, distributors


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

QFDHouse of Quality

What the Customer

Wants

RelationshipMatrix

TechnicalAttributes and

Evaluation

How to SatisfyCustomer Wants

Interrelationships

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House of Quality Example

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

The first action is The first action is to construct a to construct a House of QualityHouse of Quality



CustomerCustomerimportanceimportance

ratingrating(5 = highest)(5 = highest)

Lightweight 3Easy to use 4Reliable 5Easy to hold steady 2No double exposures 1

What the What the customer customer

wantswants

What the Customer

Wants

RelationshipMatrix


Evaluation


Interrelationships

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House of Quality ExampleWhat the Customer

Wants

RelationshipMatrix


Evaluation


Interrelationships

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Wants

RelationshipMatrix


Evaluation


Interrelationships

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High relationshipHigh relationship

Medium relationshipMedium relationship

Low relationshipLow relationship

Relationship matrixRelationship matrix



What the Customer

Wants

RelationshipMatrix


Evaluation


Interrelationships

An

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Relationships Relationships between the between the things we can dothings we can do



Weighted Weighted ratingrating

What the Customer

Wants

RelationshipMatrix


Evaluation


Interrelationships

An

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Our importance ratings 22 9 27 27 32 25


Co

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Our importance ratings 22 5

How well do How well do competing products competing products meet customer wantsmeet customer wants

What the Customer

Wants

RelationshipMatrix


Evaluation


Interrelationships

An

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Wants

RelationshipMatrix


Evaluation


Interrelationships

An

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rsTechnical 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

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Completed Completed House of House of QualityQuality


House of Quality Sequence

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Design characteristics

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Quality plan

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Deploying resources through the Deploying resources through the organization in response to organization in response to customer requirementscustomer requirements


Organizing for Product Development

Historically – distinct departmentsDuties and responsibilities are definedDifficult to foster forward thinking

Today – team approachCross functional – representatives from all

disciplines or functionsConcurrent engineering – cross functional

team


Manufacturability and Value Engineering

Benefits:1. Reduced complexity of products

2. Additional standardization of products

3. Improved functional aspects of product

4. Improved job design and job safety

5. Improved maintainability of the product

6. Robust design


Cost Reduction of a Bracket through Value Engineering



Issues for Product Development

Robust design Modular design Computer-aided design (CAD) Computer-aided manufacturing (CAM) Virtual reality technology Value analysis Environmentally friendly design


Robust Design

Product is designed so that small Product is designed so that small variations in production or variations in production or assembly do not adversely affect assembly do not adversely affect the productthe product

Typically results in lower cost and Typically results in lower cost and higher qualityhigher quality


Modular Design

Products designed in easily segmented components

Adds flexibility to both production and marketing

Improved ability to satisfy customer requirements


Using computers to design products and prepare engineering documentation

Shorter development cycles, improved accuracy, lower cost

Information and designs can be deployed worldwide

Computer Aided Design (CAD)


Design for Manufacturing and Assembly (DFMA)Solve manufacturing problems during the

design stage

3-D Object ModelingSmall prototype development

International data exchange through STEP

Extensions of CAD


Computer-Aided Manufacturing (CAM)

Utilizing specialized computers Utilizing specialized computers and program to control and program to control manufacturing equipmentmanufacturing equipment

Often driven by the CAD systemOften driven by the CAD system


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


Ethics and Environmentally Friendly Designs

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

The Ethical ApproachThe Ethical Approach

1.1. View product design from a systems View product design from a systems perspectiveperspective

2.2. Consider the entire life cycle of the Consider the entire life cycle of the productproduct


Goals for Ethical and Environmentally Friendly Designs

1.1. Develop safe and more environmentally Develop safe and more environmentally sound productssound products

2.2. Minimize waste of raw materials and energyMinimize waste of raw materials and energy

3.3. Reduce environmental liabilitiesReduce environmental liabilities

4.4. Increase cost-effectiveness of complying Increase cost-effectiveness of complying with environmental regulationswith environmental regulations

5.5. Be recognized as a good corporate citizenBe recognized as a good corporate citizen


Legal and Industry Standards

For Design …For Design …

Federal Drug AdministrationFederal Drug Administration

Consumer Products Safety CommissionConsumer Products Safety Commission

National Highway Safety AdministrationNational Highway Safety Administration

Children’s Product Safety ActChildren’s Product Safety Act



For Manufacture/Assembly …For Manufacture/Assembly …

Occupational Safety and Health Occupational Safety and Health AdministrationAdministration

Environmental Protection AgencyEnvironmental Protection Agency

Professional ergonomic standardsProfessional ergonomic standards

State and local laws dealing with State and local laws dealing with employment standards, discrimination, etc.employment standards, discrimination, etc.



For Disassembly/Disposal …For Disassembly/Disposal …

Vehicle Recycling PartnershipVehicle Recycling Partnership

Increasingly rigid laws worldwideIncreasingly rigid laws worldwide


Time-Based Competition

Product life cycles are becoming Product life cycles are becoming shorter and the rate of shorter and the rate of technological change is technological change is increasingincreasing

Developing new products faster Developing new products faster can result in a competitive can result in a competitive advantageadvantage


Product Development Continuum

External Development StrategiesExternal Development StrategiesAlliancesAlliances

Joint VenturesJoint VenturesPurchase Technology or ExpertisePurchase Technology or Expertiseby Acquiring the Developerby Acquiring the Developer

Internal Development StrategiesInternal Development StrategiesMigrations of Existing ProductsMigrations of Existing Products

Enhancement to Existing ProductsEnhancement to Existing ProductsNew Internally Developed ProductsNew Internally Developed Products

InternalInternal Cost of Product Development Cost of Product Development SharedSharedLengthyLengthy Speed of Product DevelopmentSpeed of Product Development Rapid and/Rapid and/

or Existingor ExistingHighHigh Risk of Product DevelopmentRisk of Product Development Shared Shared



Defining The Product

First definition is in terms of First definition is in terms of functionsfunctions

Rigorous specifications are Rigorous specifications are developed during the design phasedeveloped during the design phase

Manufactured products will have an Manufactured products will have an engineering drawingengineering drawing

Bill of material (BOM) lists the Bill of material (BOM) lists the components of a productcomponents of a product


Engineering drawingShows dimensions, tolerances, and materialsShows codes for Group Technology

Bill of Material Lists components, quantities and where usedShows product structure

Product Documents


Monterey Jack Cheese

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

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

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

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

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

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


Engineering Drawings



Bills of Material (BOM)Bills of Material (BOM)Panel WeldmentPanel Weldment

NUMBERNUMBER DESCRIPTIONDESCRIPTION QTYQTY

A 60-71A 60-71 PANEL WELDM’TPANEL WELDM’T 11

A 60-7A 60-7 LOWER ROLLER ASSM.LOWER ROLLER ASSM. 11R 60-17R 60-17 ROLLER ROLLER 11R 60-428R 60-428 PIN PIN 11P 60-2P 60-2 LOCKNUT LOCKNUT 11

A 60-72A 60-72 GUIDE ASSM. REARGUIDE ASSM. REAR 11R 60-57-1R 60-57-1 SUPPORT ANGLE SUPPORT ANGLE 11A 60-4A 60-4 ROLLER ASSM. ROLLER ASSM. 1102-50-115002-50-1150 BOLT BOLT 11

A 60-73A 60-73 GUIDE ASSM. FRONTGUIDE ASSM. FRONT 11A 60-74A 60-74 SUPPORT WELDM’T SUPPORT WELDM’T 11R 60-99R 60-99 WEAR PLATE WEAR PLATE 1102-50-115002-50-1150 BOLT BOLT 11 Figure 5.9Figure 5.9


Bills of Material (BOM)Bills of Material (BOM)BBQ Bacon CheeseburgerBBQ Bacon Cheeseburger

DescriptionDescription QtyQty

BunBun 11Hamburger pattyHamburger patty 8 oz.8 oz.Cheddar cheeseCheddar cheese 2 slices2 slicesBaconBacon 2 strips2 stripsBBQ onionsBBQ onions 1/2 cup1/2 cupHickory BBQ sauceHickory BBQ sauce 1 oz.1 oz.Burger setBurger set LettuceLettuce 1 leaf1 leaf TomatoTomato 1 slice1 slice Red onionRed onion 4 rings4 rings PicklePickle 1 slice1 sliceFrench friesFrench fries 5 oz.5 oz.Seasoned saltSeasoned salt 1 tsp.1 tsp.11-inch plate11-inch plate 11HRC flagHRC flag 11



Parts grouped into families with similar characteristics

Coding system describes processing and physical characteristics

Part families can be produced in dedicated manufacturing cells

Group Technology


Group Technology Scheme


(a) Ungrouped Parts(b) Grouped Cylindrical Parts (families of parts)

Grooved Slotted Threaded Drilled Machined


• 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

Group Technology Benefits


Documents for Production

Assembly drawing

Assembly chart

Route sheet

Work order

Engineering change notices (ECNs)


Assembly Drawing

Shows exploded Shows exploded view of productview of product

Details relative Details relative locations to locations to show how to show how to assemble the assemble the productproduct

Figure 5.11 (a)Figure 5.11 (a)


Assembly Chart

1

2

3

4

5

6

7

8

9

10

11

R 209 AngleR 209 Angle


Bolts w/nuts (2)Bolts w/nuts (2)



Bolt w/nutBolt w/nut

R 404 RollerR 404 Roller

Lock washerLock washer

Part number tagPart number tag

Box w/packing materialBox w/packing material

Bolts w/nuts (2)Bolts w/nuts (2)

SA1

SA2

A1

A2

A3

A4

A5

LeftLeftbracketbracket

assemblyassembly

RightRightbracketbracket

assemblyassembly

Poka-yoke Poka-yoke inspectioninspection

Figure 5.11 (b)Figure 5.11 (b)

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


Route Sheet

Lists the operations and times required Lists the operations and times required to produce a componentto produce a component

Setup OperationProcess Machine Operations Time Time/Unit

1 Auto Insert 2 Insert Component 1.5 .4 Set 562 Manual Insert Component .5 2.3

Insert 1 Set 12C3 Wave Solder Solder all 1.5 4.1

components to board

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


Work Order

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

Work Order

Item Quantity Start Date Due Date

Production DeliveryDept Location

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

F32 Dept K11


Engineering Change Notice (ECN)

A correction or modification to a A correction or modification to a product’s definition or product’s definition or documentationdocumentation Engineering drawingsEngineering drawings

Bill of materialBill of material

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

rapidly changing technologies


Configuration Management

The need to manage ECNs has led The need to manage ECNs has led to the development of configuration to the development of configuration management systemsmanagement systems

A product’s planned and changing A product’s planned and changing components are accurately components are accurately identified and control and identified and control and accountability for change are accountability for change are identified and maintainedidentified and maintained


Product Lifecycle Management

Integrated software that brings Integrated software that brings together most, if not all, elements of together most, if not all, elements of product design and manufactureproduct design and manufacture Product designProduct design

CAD/CAM, DFMACAD/CAM, DFMA

Product routingProduct routing

MaterialsMaterials

AssemblyAssembly

EnvironmentalEnvironmental


Service Design Service typically includes direct Service typically includes direct

interaction with the customerinteraction with the customer Increased opportunity for customizationIncreased opportunity for customization

Reduced productivityReduced productivity

Cost and quality are still determined at Cost and quality are still determined at the design stagethe design stage Delay customizationDelay customization

ModularizationModularization

Reduce customer interaction, often Reduce customer interaction, often through automationthrough automation


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

Service Design

Figure 5.12

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

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


Moments of Truth

Concept created by Jan Carlzon of Concept created by Jan Carlzon of Scandinavian AirwaysScandinavian Airways

Critical moments between the Critical moments between the customer and the organization that customer and the organization that determine customer satisfactiondetermine customer satisfaction

There may be many of these momentsThere may be many of these moments

These are opportunities to gain or These are opportunities to gain or lose businesslose business


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

Moments-of-Truth Computer Company Hotline

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



Documents for Services

High levels of customer High levels of customer interaction necessitates different interaction necessitates different documentationdocumentation

Often explicit job instructions for Often explicit job instructions for moments-of-truthmoments-of-truth

Scripts and storyboards are Scripts and storyboards are other techniquesother techniques


Application of Decision Trees to Product Design

Particularly useful when there are a Particularly useful when there are a series of decisions and outcomes series of decisions and outcomes which lead to other decisions and which lead to other decisions and outcomesoutcomes


Application of Decision Trees to Product Design

Include all possible alternatives and Include all possible alternatives and states of nature - including “doing states of nature - including “doing nothing”nothing”

Enter payoffs at end of branchEnter payoffs at end of branch

Determine the expected value of each Determine the expected value of each branch and “prune” the tree to find branch and “prune” the tree to find the alternative with the best expected the alternative with the best expected valuevalue

ProceduresProcedures


(.6)(.6)

Low salesLow sales

(.4)(.4)

High salesHigh sales

(.6) (.6) Low salesLow sales

(.4)(.4)


Decision Tree Example

Purchase CAD

Hire and train engineers

Do nothing




(.4)(.4)



Purchase CAD

(.6)

Low salesLow sales

(.4)

High sales


Do nothing


$2,500,000$2,500,000 RevenueRevenue- 1,000,000- 1,000,000 Mfg cost Mfg cost ($40 x 25,000)($40 x 25,000)

- 500,000- 500,000 CAD costCAD cost$1,000,000$1,000,000 NetNet

$800,000$800,000 RevenueRevenue- 320,000- 320,000 Mfg cost Mfg cost ($40 x 8,000)($40 x 8,000)- 500,000- 500,000 CAD costCAD cost- $20,000- $20,000 Net lossNet loss

EMV (purchase CAD system) = (.4)($1,000,000) + (.6)(- $20,000)



(.4)(.4)



Purchase CAD$388,000

(.6)

Low salesLow sales

(.4)

High sales


Do nothing





EMV (purchase CAD system) = (.4)($1,000,000) + (.6)(- $20,000)

= $388,000


(.6)(.6)

Low salesLow sales

(.4)(.4)



(.4)(.4)



Purchase CAD$388,000

Hire and train engineers$365,000

Do nothing $0

$0 $0 NetNet

$800,000$800,000 RevenueRevenue- 400,000- 400,000 Mfg cost Mfg cost ($50 x 8,000)($50 x 8,000)- 375,000- 375,000 Hire and TrainHire and Train

$25,000$25,000 NetNet


- 375,000- 375,000 Hire and TrainHire and Train$875,000$875,000 NetNet





operations management msom306.001 lecture 6 – product and service design al baharmast, ph.d

Documents

product line slide

industry slide

necessary slide

alternative strategies

cash flow cost of development

value analysis lists

individual dollar contribution

innovative production