1 - 1 5 5 design of goods and services heizer and render principles of operations management, 8e...

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55 Design of Goods and ServicesDesign of Goods and Services

Heizer and Render Heizer and Render Principles of Operations Management, 8ePrinciples of Operations Management, 8e

PowerPoint slides by Jeff Heyl

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Regal Marine

Global market 3-dimensional CAD system

Reduced product development time Reduced problems with tooling Reduced problems in production

Assembly line production JIT

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The objective of the product decision is to The objective of the product decision is to develop and implement a product strategy develop and implement a product strategy

that meets the demands of the marketplace that meets the demands of the marketplace with a competitive advantagewith a competitive advantage

Product Decision

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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

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Product Strategy Options

Differentiation Shouldice Hospital

Low cost Taco Bell

Rapid response Toyota

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Product Life Cycles May be any length from a few hours to decades

The operations function must be able to introduce new products successfully

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Product Life Cycle

Introductory PhaseIntroductory Phase Fine tuning may warrant unusual expenses for

1. Research

2. Product development

3. Process modification and enhancement

4. Supplier development

Growth PhaseGrowth Phase Product design begins to stabilize

Effective forecasting of capacity becomes necessary

Adding or enhancing capacity may be necessary

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Product Life Cycle

Maturity PhaseMaturity Phase

Competitors now established

High volume, innovative production may be needed

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

Decline PhaseDecline Phase

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

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Product Life Cycle Costs

Costs incurred

Costs committed

Ease of change

Concept Detailed Manufacturing Distribution,design design service,

prototype and disposal

Per

cen

t o

f to

tal c

ost

100 –

80 –

60 –

40 –

20 –

0 –

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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

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New Product Opportunities

1. Understanding the customer

2. Economic change

3. Sociological and demographic change

4. Technological change

5. Political/legal change

6. Market practice, professional standards, suppliers, distributors

Brainstorming

is a useful tool

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Disney Attendance

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Product Development System

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Quality Function Deployment

1. Identify customer wants

2. Identify how the good/service will satisfy customer wants

3. Relate customer wants to product hows

4. Identify relationships between the firm’s hows

5. Develop importance ratings

6. Evaluate competing products

7. Compare performance to desirable technical attributes

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QFD House of Quality

Relationshipmatrix

How to satisfycustomer wants

Interrelationships

Co

mp

etit

ive

asse

ssm

ent

Technicalevaluation

Target values

What the customer

wants

Customer importance

ratings

Weighted rating

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House of Quality Example

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

The first action is to construct a House of Quality

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House of Quality Example

Customerimportance

rating(5 = highest)

Lightweight 3Easy to use 4Reliable 5Easy to hold steady 2Color correction 1

What the customer

wants

What the Customer

Wants

RelationshipMatrix

TechnicalAttributes and

Evaluation

How to SatisfyCustomer Wants

Interrelationships

An

alys

is o

fC

om

pet

ito

rs

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House of Quality ExampleWhat the Customer

Wants

RelationshipMatrix


Evaluation


Interrelationships

An

alys

is o

fC

om

pet

ito

rs

Lo

w e

lect

rici

ty r

equ

irem

ents

Alu

min

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on

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Au

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xpo

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Pai

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pal

let

Erg

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Lightweight 3Easy to use 4Reliable 5Easy to hold steady 2Color corrections 1

House of Quality ExampleWhat the Customer

Wants

RelationshipMatrix


Evaluation


Interrelationships

An

alys

is o

fC

om

pet

ito

rs

High relationship

Medium relationship

Low relationship

Relationship matrix

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House of Quality

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House of Quality

Weighted rating

What the Customer

Wants

RelationshipMatrix


Evaluation


Interrelationships

An

alys

is o

fC

om

pet

ito

rs


Our importance ratings 22 9 27 27 32 25

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Co

mp

any

A

Co

mp

any

B

G PG PF GG PP P


Our importance ratings 22 5

How well do competing products meet customer wants

What the Customer

Wants

RelationshipMatrix


Evaluation


Interrelationships

An

alys

is o

fC

om

pet

ito

rs

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What the Customer

Wants

RelationshipMatrix


Evaluation


Interrelationships

An

alys

is o

fC

om

pet

ito

rsTarget values(Technical 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

0.5

A

75%

2’ t

o ∞

2 ci

rcu

its

Fai

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0,00

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Pan

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Completed House of Quality

Lightweight 3

Easy to use 4

Reliable 5

Easy to hold steady 2

Color correction 1

Our importance ratings

Lo

w e

lect

rici

ty r

equ

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ents

Alu

min

um

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Au

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Pai

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Co

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A

Co

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G P

G P

F G

G P

P P

Target values(Technical 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

0.5

A

75

%

2’

to ∞

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22 9 27 27 32 25

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House of Quality Sequence

Figure 5.4

Deploying resources through the organization in response to customer requirements

Pro

du

ctio

n

pro

cess

Quality plan

House 4

Sp

ecif

ic

com

po

nen

ts

Production process

House 3

Des

ign

ch

arac

teri

stic

s

Specific components

House 2

Cu

sto

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ents

Design characteristics

House 1

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Organizing for Product Development Historically – distinct departments

Duties and responsibilities are defined Difficult to foster forward thinking

A Champion Product manager drives the product through the

product development system and related organizations

Team approach Cross functional – representatives from all

disciplines or functions Product development teams, design for

manufacturability teams, value engineering teams Japanese “whole organization” approach

No organizational divisions

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Manufacturability and Value Engineering

Benefits:1. Reduced complexity of products

2. Reduction of environmental impact

3. Additional standardization of products

4. Improved functional aspects of product

5. Improved job design and job safety

6. Improved maintainability (serviceability) of the product

7. Robust design

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Issues for Product Development

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

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Robust Design Product is designed so that small variations in

production or assembly do not adversely affect the product

Typically results in lower cost and higher quality

Modular Design

Products designed in easily segmented components

Adds flexibility to both production and marketing

Improved ability to satisfy customer requirements

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Using computers to design products and prepare engineering documentation

Shorter development cycles, improved accuracy, lower cost

Information and designs can be deployed worldwide

Issues for Product Development Computer Aided Design (CAD)

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

design stage 3-D Object Modeling

Small prototype development

CAD through the internet

International data exchange through STEP


Extensions of CAD

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Computer-Aided Manufacturing (CAM) Utilizing specialized computers and program to

control manufacturing equipment

Often driven by the CAD system (CAD/CAM)

Benefits of CAD/CAM Product quality

Shorter design time

Production cost reductions

Database availability

New range of capabilities

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Issues for Product Development 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

Value Analysis Focuses on design improvement during production Seeks improvements leading either to a better product or

a product which can be produced more economically with less environmental impact

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Ethics, Environmentally Friendly Designs, and Sustainability

It is possible to enhance productivity and deliver goods and services in an environmentally and ethically responsible manner

In OM, sustainability means ecological stability

Conservation and renewal of resources through the entire product life cycle

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Ethics, Environmentally Friendly Designs, and Sustainability

Design

Polyester film and shoes

Production

Prevention in production and packaging

Destruction

Recycling in automobiles

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The Ethical Approach

View product design from a systems perspective 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 Goals

1. Developing safe end environmentally sound practices

2. Minimizing waste of resources

3. Reducing environmental liabilities

4. Increasing cost-effectiveness of complying with environmental regulations

5. Begin recognized as a good corporate citizen

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Guidelines for Environmentally Friendly Designs

1. Make products recyclable

2. Use recycled materials

3. Use less harmful ingredients

4. Use lighter components

5. Use less energy

6. Use less material

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Laws and Industry StandardsFor Design …For Design … Food and Drug Administration

Consumer Products Safety Commission

National Highway Safety Administration

Children’s Product Safety Act

Occupational Safety and Health Administration

Environmental Protection Agency

Professional ergonomic standards

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

Vehicle Recycling Partnership

Increasingly rigid laws worldwide

For Manufacture/Assembly …For Manufacture/Assembly …

For Disassembly/Disposal …For Disassembly/Disposal …

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Time-Based Competition

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

Developing new products faster can result in a competitive advantage

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Product Development Continuum

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Acquiring Technology By Purchasing a Firm

Speeds development

Issues concern the fit between the acquired organization and product and the host

Through Joint Ventures Both organizations learn

Risks are shared

Through Alliances Cooperative agreements between independent

organizations

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Defining A Product

First definition is in terms of functions

Rigorous specifications are developed during the design phase

Manufactured products will have an engineering drawing

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

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Engineering drawing Shows dimensions, tolerances, and

materials Shows codes for Group Technology

Bill of Material Lists components, quantities and where

used Shows product structure

Defining A Product: Product Documents

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Engineering Drawings

Figure 5.8

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Bills of MaterialBills of Material

Hard Rock Cafe’s Hickory BBQ Bacon Cheeseburger

DESCRIPTION QTY

Bun 1Hamburger patty 8 oz.Cheddar cheese 2 slicesBacon 2 stripsBBQ onions 1/2 cupHickory BBQ sauce 1 oz.Burger set Lettuce 1 leaf Tomato 1 slice Red onion 4 rings Pickle 1 sliceFrench fries 5 oz.Seasoned salt 1 tsp.11-inch plate 1HRC flag 1

Figure 5.9 (b)

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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

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1. Improved design

2. Reduced raw material and purchases

3. Simplified production planning and control

4. Improved layout, routing, and machine loading

5. Reduced tooling setup time, work-in-process, and production time

Group Technology Benefits

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Documents for Production

Assembly drawing Assembly chart Route sheet Work order Engineering change notices (ECNs)

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Documents: Assembly Drawing

Shows exploded view of product

Details relative locations to show how to assemble the product

Figure 5.11 (a)

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Documents: Assembly Chart

1

2

3

4

5

6

7

8

9

10

11

R 209 Angle

R 207 Angle

Bolts w/nuts (2)

R 209 Angle

R 207 Angle

Bolt w/nut

R 404 Roller

Lock washer

Part number tag

Box w/packing material

Bolts w/nuts (2)

SA1

SA2

A1

A2

A3

A4

A5

Leftbracket

assembly

Rightbracket

assembly

Poka-yoke inspection

Figure 5.11 (b)

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

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Documents: Route Sheet

Lists the operations and times required to 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

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Documents: Work Order

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

Work Order

Item Quantity Start Date Due Date

Production DeliveryDept Location

157C 125 5/2/08 5/4/08

F32 Dept K11

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Documents: Engineering Change Notice (ECN)

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

Bill of material

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

rapidly changing technologies

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Documents: Configuration Management

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

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

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Product Life-Cycle Management (PLM)

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

CAD/CAM, DFMA

Product routing

Materials

Assembly

Environmental

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Service Design Service typically includes direct interaction with the

customer

Increased opportunity for customization

Reduced productivity

Cost and quality are still determined at the design stage

Delay customization

Modularization

Reduce customer interaction, often through automation

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Moments of Truth

Concept created by Jan Carlzon of Scandinavian Airways

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

There may be many of these moments

These are opportunities to gain or lose business

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Moments-of-Truth Computer Company Hotline

Figure 5.13

• 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

Best

• 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

Better

• 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

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Documents for Services

High levels of customer interaction necessitates different documentation

Often explicit job instructions for moments-of-truth

Scripts and storyboards are other techniques

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First Bank Corp. Drive-up Teller Service Guidelines

Be especially discreet when talking to the customer through the microphone.

Provide written instructions for customers who must fill out forms you provide.

Mark lines to be completed or attach a note with instructions. Always say “please” and “thank you” when speaking through

the microphone. Establish eye contact with the customer if the distance allows it. If a transaction requires that the customer park the car and

come into the lobby, apologize for the inconvenience.

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Application of Decision Trees to Product Design

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

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Application of Decision Trees to Product Design

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

2. Enter payoffs at end of branch

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

ProceduresProcedures

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(.6)

Low sales

(.4)

High sales

(.6) Low sales

(.4)

High sales

Decision Tree Example

Purchase CAD

Hire and train engineers

Do nothing

Figure 5.14

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(.6) Low sales

(.4)

High sales


Purchase CAD

(.6)

Low sales

(.4)

High sales


Do nothing

Figure 5.14

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

- 500,000 CAD cost$1,000,000 Net

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

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

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(.6) Low sales

(.4)

High sales


Purchase CAD

(.6)

Low sales

(.4)

High sales


Do nothing

Figure 5.14


- 500,000 CAD cost$1,000,000 Net


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

= $388,000

$388,000

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(.6)

Low sales

(.4)

High sales

(.6) Low sales

(.4)

High sales


Purchase CAD$388,000

Hire and train engineers$365,000

Do nothing $0

$0 Net

$800,000 Revenue- 400,000 Mfg cost ($50 x 8,000)- 375,000 Hire and train cost

$25,000 Net


- 375,000 Hire and train cost$875,000 Net


- 500,000 CAD cost$1,000,000 Net


Figure 5.14

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Transition to Production

Know when to move to production Product development can be viewed as

evolutionary and never complete Product must move from design to production

in a timely manner

Most products have a trial production period to insure producibility

Develop tooling, quality control, training Ensures successful production

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Transition to Production

Responsibility must also transition as the product moves through its life cycle

Line management takes over from design

Three common approaches to managing transition

Project managers Product development teams Integrate product development and

manufacturing organizations