Product, Process, and Service Design

Lecture 6 & 7
Dr. Shahid Iqbal

1
 Overview


Process Design

Designing and Developing Products and Services

Process Planning and Design

Major Factors Affecting Process Design Decisions

Types of Process Designs

Interrelationships Among Product Design, Process
Design, and Inventory Policy

Process Design in Services

Deciding Among Processing Alternatives

Wrap-Up: What World-Class Companies Do
2
 The Design Process

Steps in the Design Process

The following slides outline stages and associated activities of the design
process.

3
 The Design Process

1. IDENTIFYING AND DEFINING THE PROBLEM

The problem must be clearly identified. A statement of the problem should be

short and complete. It must give all the information available about the problem.

4
 The Design Process

2. ANALYSING INFORMATION

This involves listing questions regarding the project. Questions will vary from
project to project. Questions need to be documented in relation to such issues as:

 TIME
 COST
 SAFETY
 MATERIALS
 PROCESSES
 FUNCTION
 APPEARANCE
 ERGONOMICS

5
 The Design Process

3. SYNTHESIS

‘Synthesis’ follows the ‘Analysis’ and provides answers to the questions.

Usually it is impossible to answer all the questions until the project is virtually
completed. Some questions can only be answered when the research section has
been completed. For example, questions on the choice of materials, or the way
ergonomics is applied, must be answered after research is undertaken in such
areas.

6
 The Design Process

4. RESEARCH

Research must be relevant to the project.

Research needs to be undertaken in relation to such maters as:
 Suitable materials
 Ergonomic factors
 Related safety factors
 Existing products
Research may be undertaken by using:
 the library
 the Internet / CD-ROMs/DVDs
 interviews with people with the aim of helping to solve the design problem

7
 The Design Process

5. EVALUATING AND SELECTING APPROPRIATE SOLUTIONS

The evaluation of an appropriate solution draws on the information collected

and presented during research. Documenting the appropriate solution
includes the development of detailed graphical information that will allow the
construction or manufacture of the project .

Often working drawings of the project with a parts list are developed as
apart of the documentation however other forms of documentation may be
developed depending on the nature of the intended project.

8
 The Design Process

6. IMPLEMENTING CHOICES

Construction of the final product from the detailed documentation is

undertaken.
During the construction of the project issues such as time, safety, materials
and processes also need to be simultaneously considered.

9
 The Design Process

7. EVALUATION

What are the criteria for a successful project?

Has the completed project solved the identified problem?
Social issues, health and safety, ethical and environmental issues should be
considered in relation to the final project.

10
 Product/Service Design

Stages of product/service design:


Functional design (form, shape, size, materials, etc.)

Process design (processing technology and tooling)

Production design (production line & plant layout)

11
 Impact of Product/Service Design


Product/service quality

Production/delivery cost

Customer satisfaction

12
 Important Topics in Product/Service Design
and Development

Developing New Products/Services

Sources of Product Innovation

Getting Them to Market Faster

Designing and Developing New Services

Improving Current Products/Services

Designing for Ease of Production

Designing for Quality

13
 Sources of Product/Service Innovation


Customers

Managers

Marketing

Operations

Engineering

Research and Development (R&D)

Basic research

Applied research

14
 Product Development Process

A product development is the

process
entire set of activities required to bring a
new concept to a state of market readiness.

A design is the set of technical

activities
process within a product development
process. It does not include business,
financial, or marketing activities.

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 Product Design Process

• Understanding the Opportunity

• Develop a Concept

• Implement a Concept

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 Understanding the Opportunity
Characterized with four activities


Develop a vision

Market opportunity analysis

Customer/user need analysis

Competitive products analysis

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 Develop a vision
The first step in product development is to have a vision.

What product do we like to be out there?

Why does it not do something we want it to?

What is difficult with the current product we

use?

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 Develop a vision
Visions are a dime a dozen

Every user has thoughts on how they wish their
device would work.

Every research scientist has a vision for how their
technology can be applied.

Every manager has a vision for command of a
market.
The question is whether any vision can be
transformed into a successful realization.
Can it be developed and implemented into a
profitable product?
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 Market opportunity analysis

Go/No-Go decision on a new product


S-Curves

Technical questioning

Mission statement

Product development economic analysis

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 Determining What to Develop

Should a completely new product be designed
(original design or invention)?

Should the existing product be redefined and
modified to better satisfy the customer ( adaptive
design, evolving a known design)?

Should the product be expanded to variant forms
to more comprehensively cover the market
(variant design; involves varying parameters, size,
shape, materials,…. )?

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 S-Curves
Technological innovations typically manifest themselves into a market along an
“S-curve” timeline behavior.

The S-curve displays the performance of a product over time with respect
to one variable.

Stage I - characterized by relatively low performance, not

much innovation.
Stage II – rapid growth due to many innovations, many
products introduced into the market.
Stage III – technology tops out, product may become 22
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 Comments on S-Curves

S-Curves show the market behavior of most
technologies

A switch to a better technology is known as jumping
the S-curve.

The newer S-curve is a disruptive technology that
requires changes in the market system to succeed
(VHS, DVD, HDTV, ….)

The industry is constantly jumping the S-curve

Design team should consider the technology
environment in introducing new product.

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Comments on S-Curves and Technology Forecasting
Although most technologies follow this path of market behavior,
there are exceptions. Moore’s Law (transistor density on
microprocessors doubles every 18 months).

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 Technical Questioning and Mission Statement

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 Product development Risks
Any new product development project faces risk from two
independent sources.


Is the product technically feasible? Can we
make it in a reasonable time?

Is the product economically feasible? Will
people buy it at a reasonable profit to us?

Technical Questioning and Mission

Statement are two processes used to answer
these questions.
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 Technical Questions


Technical questions are needed to clarify the task.

To keep focus, one should question the current
understanding of the development.

Questions should be asked and answered, not
once, but continually through the life cycle of the
design process.

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 Example – Design a new fingernail clipper
Existing fingernail clippers in the market

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 Technical Questioning
fingernail clipper example

What is the problem really about?
Clumsy operation of a typical clipper, nail clippings all over

What implicit expectations and desires are involved?
Remain a manual clipper that can be operated by oneself, collect
clippings, ….

Are customer needs, requirements, and constraints truly
appropriate?
Consumer studies have noted clumsy operation. A detailed assessment
will be made post-consumer interviews

What avenues are open for creative design?
Can modify any and all parts, use different materials besides metals.
Add functionality, such as the ability to store and dump nail debris

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 Technical Questioning
fingernail clipper example

What avenues are limited for creative design?
No electrical power, size, weight, cost

What characteristic/properties must the product
have?
Durable, safe, easy to use

What characteristic/properties must the product
not have?
Should not be heavy and bulky

What are the technical conflicts inherit in the
design task?
Compact size vs. large surface area for grasping and large
mechanical advantage.
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 Technical Questioning
fingernail clipper example

What aspects of the design task should be
quantified now?

Customer needs analysis, fingernail characteristics; size and

strength, human hand and finger size and strength, required profit to
cover development cost.

Research, estimates and simple calculations should be performed to

understand these issues.

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 Mission Statement

The tangible result of the technical

questioning should be a precise and clear
statement of the design team’s mission.
Also called, Product Plan, Market Attack
Plan, Vision Statement

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 Mission Statement Template

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 Mission Statement Example

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 Steps in Developing New Products

1. Technical and economic feasibility studies

2. Prototype design
3. Performance testing of prototype
4. Market sensing/evaluation and economic evaluation
of the prototype
5. Design of production model
6. Market/performance/process testing and economic
evaluation of production model
7. Continuous modification of production model

35
 Steps in Developing New Products

1. Technical and Economic Feasibility Studies


Determine the advisability of establishing a project
for developing the product

If initial feasibility studies are favorable, engineers
prepare an initial prototype design

36
 Steps in Developing New Products

2. Prototype Design

This design should exhibit the basic form, fit, and
function of the final product

It will not necessarily be identical to the
production model

37
 Steps in Developing New Products

3. Performance Testing of Prototype


Performance testing and redesign of the prototype
continues until this design-test-redesign process
produces a satisfactorily performing prototype

38
 Steps in Developing New Products

4. Market Sensing/Evaluation and Economic

Evaluation of the Prototype

Accomplished by demonstrations to potential
customers, market test, or market surveys

If the response to the prototype is favorable,
economic evaluation of the prototype is
performed to estimate production volume, costs,
and profits

If the economic evaluation is favorable, the
project enters the production design phase.
39
 Steps in Developing New Products

5. Design of Production Model


The initial design of the production model will not
be the final design; the model will evolve

40
 Steps in Developing New Products

6. Market/Performance/Process Testing and Economic

Evaluation of Production Model

The production model should exhibit:

low cost

reliable quality

superior performance

the ability to be produced in the desired
quantities on the intended equipment

41
 Steps in Developing New Products

7. Continuous Modification of Production Model


Production designs are continuously modified to:
Adapt to changing market conditions


Adapt to changing production technology



Allow for manufacturing improvements



42
Managing New Product Development Projects


About 5% of all new-product ideas survive to
production, and only about 10% of these are
successful.

It is best to cancel unpromising new-product/service
development projects early!

Employees often become emotionally caught up in
these projects and are overly optimistic

An impartial management review board is needed for
periodic reviews of the progress of these projects.

43
 Getting New Products to Market Faster


Speed creates competitive advantages

Speed saves money

Tools to improve speed:

Autonomous design and development teams

Computer-aided design/computer-aided
manufacturing (CAD/CAM)

Simultaneous (concurrent) engineering

44
 Tools to Improve Speed to Market


Autonomous Design and Development Teams

Teams are given decision-making responsibility
and more freedom to design and introduce new
products/services

Time-to-market has been slashed dramatically

Enormous sums of money have been saved

Teams do not have to deal with the bureaucratic
red tape ordinarily required to obtain approvals

45
 Tools to Improve Speed to Market


Computer-Aided Design/Computer-Aided
Manufacturing (CAD/CAM)

Engineers, using CAD/CAM, can generate many
views of parts, rotate images, magnify views, and
check for interference between parts

Part designs can be stored in a data base for use on
other products

When it is time for manufacturing, the product
design is retrieved, translated into a language that
production machinery understands, and then the
production system can be automatically set up.

46
 Tools to Improve Speed to Market

Simultaneous Product/
(Concurrent) Service Ideas
Engineering Continuous
Interaction
Economic and Technical
Feasibility Studies

Product/Service Design Production Process Design

Produce and Market

New Product/Service
47
 Improving the Design
of Existing Products/Services

Focus is improving performance, quality, and cost

Objective is maintaining or improving market share
of maturing products/services

Little changes can be significant

Small, steady (continuous) improvements can add up
to huge long-term improvements

Value analysis is practiced, meaning design features
are examined in terms of their cost/benefit (value).

48
 Designing for Ease of Production


Ease of Production (Manufacturability)

Specifications - Precise information about the
characteristics of the product

Tolerances - Minimum & maximum limits on a
dimension that allows the item to function as
designed

Standardization - Reduce variety among a group of
products or parts

Simplification - Reduce or eliminate the complexity
of a part or product
49
 Designing for Quality


Crucial element of product design is its impact on
quality

Quality is determined by the customer’s perception of
the degree of excellence of the product/service’s
characteristics

Chapter 7 covers the principles of designing
products/services for quality

50
 Designing and Developing New Services

Three general dimensions of service design are:


Degree of Standardization of the Service

Custom-fashioned for particular customers or
basically the same for all customers?

Degree of Customer Contact in Delivering the Service

High level of contact (dress boutique) or low level
(fast-food restaurant)?

Mix of Physical Goods and Intangible Services

Mix dominated by physical goods (tailor’s shop) or
by intangible services (university)?

51
 Designing and Developing New Services


Differences Between New Service and New Product
Development

Unless services are dominated by physical goods,
their development usually does not require
engineering, testing, and prototype building.

Because many service businesses involve
intangible services, market sensing tends to be
more by surveys rather than by market tests and
demonstrations.

52
 Process
Planning and Design

53
 Process Planning and Design System

Inputs:
• Product/Service Information
• Production System Information
• Operations Strategy

Process Planning & Design:

• Process-Type Selection
• Vertical Integration Studies Outputs:
• Process Technology
• Process/Product Studies
• Facilities
• Equipment Studies
• Personnel Estimates
• Production Procedures Studies
•Process plans
• Facilities Studies
54
 Major Factors Affecting Process Designs


Nature of product/service demand

Degree of vertical integration

Production flexibility

Degree of automation

Product/Service quality

55
 Nature of Product Demand

Demand

fluctuates over time and

is affected by product price, so pricing decisions and the
choice of processes must be synchronized.

Therefore,

Production processes must have adequate capacity to
produce the volume of the products that customers need.

Provisions must be made for expanding or contracting
capacity to keep pace with demand patterns.

Some types of processes are more easily expanded and
contracted than others.

56
 Degree of Vertical Integration

Vertical integration is the amount of the production
and distribution chain that is brought under the
ownership of a company.

This determines how many production processes need
to be planned and designed.

Decision of integration is based on cost, availability
of capital, quality, technological capability, and more.

Strategic outsourcing (lower degree of integration) is
the outsourcing of processes in order to react quicker
to changes in customer needs, competitor actions, and
technology.

57
 Production Flexibility


Product flexibility -- ability of the production (or
delivery) system to quickly change from producing
(delivering) one product (or service) to another.

Volume flexibility -- ability to quickly increase or
reduce the volume of product( or service) produced
(or delivered).

58
 Degree of Automation


Advantages of automation

Improves product quality

Improves product flexibility

Reduces labor and related costs

Disadvantages of automation

Equipment can be very expensive

Integration into existing operations can be difficult

59
 Product/Service Quality


Old viewpoint

High-quality products must be made in small
quantities by expert craftsmen

New viewpoint

High-quality products can be mass-produced using
automated machinery

Automated machinery can produce products of
incredible uniformity

The choice of design of production processes is
affected by the need for superior quality.
60
 Types of Process Designs


Product-Focused

Process-Focused

Group Technology/Cellular Manufacturing

61
 Product-Focused


Processes (conversions) are arranged based on the
sequence of operations required to produce a product
or provide a service

Also called “production line,” “assembly line,” and
flow line

Two general forms

Discrete unit – automobiles, dishwashers

Process (Continuous) – petrochemicals, paper

62
 Product-Focused

Raw Material Components

2 4 Su
Co ba
m ss
po em
n. .
Assemblies Fin. Goods
1 3 5 7
Raw Material Components Subassem.

es
b li
se m
Purchased
Product/Material
1 Flow

As
6
Production Operation Components,
Subassemblies

63
 Product-Focused


Advantages

Lower labor-skill requirements

Reduced worker training

Reduced supervision

Ease of planning and controlling production

Disadvantages

Higher initial investment level

Relatively low product flexibility

64
 Process-Focused


Processes (conversions) are arranged based on the
type of process, i.e., similar processes are grouped
together

Products/services (jobs) move from department
(process group) to department based on that particular
job’s processing requirements

Also called “job shop” or “intermittent production”

Examples

Machine shop

Auto body repair

Custom woodworking shop
65
 Process-Focused

Custom Woodworking Shop

Cutting Planing Shaping Assembly Sanding Finishing
1 2 5 6 7

Job A 2 3

Job B 3 4

1 4 5 6

Drilling Turning

66
 Process-Focused


Advantages

High product flexibility

Lower initial investment level

Disadvantages

Higher labor-skill requirements

More worker training

More supervision

More complex production planning and controlling

67
 Group Technology/Cellular Manufacturing


Group Technology

Each part produced receives a multi-digit code that
describes the physical characteristics of the part.

Parts with similar characteristics are grouped into
part families

Parts in a part family are typically made on the
same machines with similar tooling

68
 Group Technology/Cellular Manufacturing


Cellular Manufacturing

Some part families (those requiring significant
batch sizes) can be assigned to manufacturing
cells.

The organization of the shop floor into cells is
referred to as cellular manufacturing.

Flow of parts within cells tend to be more like
product-focused systems

69
 Group Technology/Cellular Manufacturing


Advantages (relative to a job shop)

Process changeovers simplified

Variability of tasks reduced (less training needed)

More direct routes through the system

Quality control is improved

Production planning and control simpler

Automation simpler

70
 Group Technology/Cellular Manufacturing


Disadvantages

Duplication of equipment

Under-utilization of facilities

Processing of items that do not fit into a family
may be inefficient

71
 Group Technology/Cellular Manufacturing


Candidates for GT/CM are job shops having:

A degree of parts standardization

Moderate batch sizes

72
 Product/Process Design & Inventory Policy


Standard Products and Produce to Stock

Sales forecasts drive production schedule

Maintain pre-determined finished-goods levels

MRP forecast drives material ordering


Custom Products and Produce to Order

Orders set production schedule and drive material
deliveries

Design time (pre-production planning) may be required
before production can be scheduled

73
 Process Design in Services


Some of the factors important in process design for
products are also important in services:

Nature (level and pattern) of customer demand

Degree of vertical integration

Production flexibility

Degree of automation

Service quality

74
 Process Design in Services


Three schemes for producing and delivering services

Quasi-Manufacturing

Customer-as-Participant

Customer-as-Product

75
 Process Design in Services


Quasi-Manufacturing

Physical goods are dominant over intangible
service

Production of goods takes place along a production
line

Operations can be highly automated

Almost no customer interaction

Little regard for customer relations

Example – McDonald’s kitchen operation

76
 Process Design in Services


Customer-as-Participant

Physical goods may be a significant part of the
service

Services may be either standardized or custom

High degree of customer involvement in the
process

Examples: ATM, self-service gas station, grocery

77
 Process Design in Services


Customer-as-Product

Service is provided through personal attention to
the customer

Customized service on the customer

High degree of customer contact

There is a perception of high quality

Customer becomes the central focus of the process
design

Examples: medical clinic, hair salon

78
 Process Reengineering


The concept of drastically changing an existing
process design

Not merely making marginal improvements to the
process

A correctly reengineered process should be more
efficient

A smaller labor force is often the result

79
 Deciding Among Processing Alternatives

1. Batch Size vs. Product Variety

2. Capital Requirements
3. Economic Analysis
1. Cost Functions of Alternative Processes
2. Break-Even Analysis
3. Financial Analysis

80
 Process Design Depends
on Product Diversity and Batch Size
Product
Large

Focused,
Dedicated
Systems
Batch Size

Product
Focused,
Batch
System
Cellular
Manufacturing Process-Focused,
Small

Job Shop

Few Number of Product Designs Many

81
 Capital Requirements


The amount of capital required tends to differ for
each type of production process

Generally, the capital required is greatest for product-
focused, dedicated systems

Generally, the capital required is lowest for process-
focused, job shops

The amount of capital available and the cost of capital
are important considerations

82
 Economic Analysis


Cost Functions of Processing Alternatives

Fixed Costs

Annual cost when production volume is zero

Initial cost of buildings, equipment, and other
fixed assets

Variable Costs

Costs that vary with production volumes

Labor, material, and variable overhead

83
 Cost Functions of Processing Alternatives

Annual Cost of Production ($000)

h op u f.
b S Ma n
J o a r
e llu l
C

e m b ly L ine
s s
2,000 Autom. A
Automated
1,500 Assembly Line
Preferred
Cellular
1,000
Manufacturing
Job
Preferred Units
500 Shop
Preferred Produced
Per Year
100,000 250,000
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 Cost Functions of Processing Alternatives


Example
Three production processes (A, B, and C) have
the following cost structure:
Fixed Cost Variable Cost
Process Per Year Per Year
A $120,000 $3.00
B 90,000 4.00
C 80,000 4.50
What is the most economical process for a volume of
8,000 units per year?
85
 Cost Functions of Processing Alternatives


Example
TC = FC + v(Q)
A: TC = 120,000 + 3.00(8,000) = $144,000 per year
B: TC = 90,000 + 4.00(8,000) = $122,000 per year
C: TC = 80,000 + 4.50(8,000) = $116,000 per year
The most economical process at 8,000 units is
Process C, with the lowest annual cost.

86
 Economic Analysis


Break-Even Analysis

Widely used to analyze and compare decision
alternatives

Can be displayed either algebraically or
graphically

Disadvantages:

Cannot incorporate uncertainty

Costs assumed over entire range of values

Does not take into account time value of money

87
 Break-Even Analysis


Example
Break-Even Points of Processes A, B, and C,
assuming a $6.95 selling price per unit
Q = FC / (p-v)
A: Q = 120,000 / (6.95 - 3.00) = 30,380 units
B: Q = 90,000 / (6.95 - 4.00) = 30,509 units
C: Q = 80,000 / (6.95 - 4.50) = 32,654 units
Process A has the lowest break-even point.

88
 Economic Analysis


Financial Analysis

A great amount of money is invested in production
processes and these assets are expected to last a
long time

The time value of money is an important
consideration

Payback period

net present value

internal rate of return

Profitability index

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 Deciding Among Processing Alternatives


Assembly Charts (Gozinto Charts)

Macro-view of how materials are united

Starting point to understand factory layout needs,
equipment needs, training needs

Process Charts

Details of how to build product at each process

Includes materials needed, types of processes
product flows through, time it takes to process
product through each step of flow

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 Wrap-Up: World Class Practice


Fast new product introduction

Design products for ease of production

Refine forecasting

Focus on core competencies ... less vertical
integration

Lean production

Flexible automation

Job shops move toward cellular manufacturing

Manage information flow ..... automate and simplify!

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Thanks
Thanks

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