Developing Products and Services

Chapter 15

Text: Quality Management 5th edition

Authors: David Goetsch & Stanley Davis

Where appropriate reference text page numbers will be on bottom of slides

Developing Products and Services

• Why bother?

• New product development process

• What is good design?

– An operations and supply chain perspective

Why Bother?

External benefits

Internal benefits

Exploit strengths/core competencies

Block competitors

External Benefits

Competitive Advantage

Internal Benefits

Shorter cycle time, less cost, less waste, …

For example:

• NCR 2760:– Only 15 “components”

– 85% fewer parts / 65% fewer vendors

– Snaps together

– Lifetime cost for a SINGLE fastener: $12,500

Exploit Strengths and Core Competencies

• Honda – Motorcycles Automobiles

• John Deere– Farm equipment Lawn equipment

• Hewlett-Packard– Color printers Digital photography

Block Competitors

Gillette

• “made a point of designing its Sensor razor so that it … would be difficult for competitors to copy”

Microsoft

• bundling Windows and Explorer

Finally ...

• 30% of revenues and profits come from products introduced in the last 5 years

• Development time decreasing:– Typically 31 months in 1992– Less than 24 months now– Less than 18 months for many high-tech

products

Operations and Supply Chain Operations and Supply Chain PerspectivesPerspectives

• Repeatability, testability and Repeatability, testability and serviceability of the designserviceability of the design

• Product volumesProduct volumes

• Product costsProduct costs

• Match with existing capabilitiesMatch with existing capabilities

Repeatability, Testability and Repeatability, Testability and ServiceabilityServiceability

• Repeatability– Consistent production – Tolerance to manufacturing variations (robustness)

• Testability– Non-value added activity, so should be easy and

inexpensive to do

• Serviceability– Ease of repair, critical for products expected to be

serviced or repaired (autos)

Product Volumes and CostProduct Volumes and Cost

• Determines process strategies– Types of equipment – Level of automation– Staffing required

• Determines level of customization

• Determines level of after-sales support

‘Hidden’ Costs

• Number of parts in a product– Increased handling, tracking, and other

inventory costs– More procedures required

• Engineering changes– Affect entire supply chain

• Transportation costs– Logistics becoming a significant cost– Size, shape, weight, packaging are concerns

Match with Existing Capabilities

• Product design flexibilityEasy to add features?Easy to upgrade?

Examples: PCs, home theater systems

• Process flexibilityShare processes / parts?Will upgrades make current operations

obsolete?

The Development ProcessThe Development Process

PlanningDesign and

DevelopmentPreparationand Launch

ConceptDevelopment

Time

Survival rateof an idea

$ spenton idea

Model of Development Process

Concept Development

Planning Design and Development

Commercial Preparation

Launch

Propose new technologies

Develop product or service ideas

Identify general performance characteristics

Identify underlying technologies

Develop detailed specifications

Build and test prototypes

Resolve remaining technical problems

Evaluate field experience

Analyze warranty returns

Engineering Functional Activities

Concept Development

Planning Design and Development

Commercial Preparation

Launch

Provide market input

Propose and investigate product or service concepts

Define target customer needs

Estimate sales and margins

Include customer 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

Marketing Functional Activities

Concept Development

Planning Design and Development

Commercial Preparation

Launch

Scan suppliers for promising technologies and capabilities

Develop initial cost estimates

Identify key supply chain partners

Develop detailed process maps of operations and supply chain flows

Test new processes

Build pilot units using new operations

Train personnel

Verify supply chain flows

Ramp up volumes

Meet cost targets

Meet quality and other performance target goals

Operations and Supply Chain Functional Activities

Concurrent Engineering

CONCEPTDEVELOPMENT

PLANNING

DESIGN ANDDEVELOPMENT

COMMERCIALPREPARATION

LAUNCH

DEVELOPMENT TIME

Overlapping development phases requires tight coordination, but shrinks overall development time

Design Players

• Engineering• Marketing• Accounting• Finance• Designers• Purchasing — presourcing• Suppliers — gray and black box

design participation

Design Approaches

• DMADV (Define-Measure-Analyze-Design-Verify)

• QFD (Quality Function Deployment)• CAD (Computer-Aided Design)• CAD/CAM (Computer-Aided Design / Computer-

Aided Manufacturing)• DFM (Design for Manufacturability)• DFMt (Design for Maintainability)• DFSS (Design for Six Sigma)• DFE (Design for the Environment)

DMADV

Steps

• Define goals and deliverables

• Measure and determine needs and specifications

• Analyze product or process options

• Design product or process

• Verify results

Quality Function Deployment

INEXPENSIVE

RUGGED

GOOD LOOKING

MORE MEMORYFUNCTIONS

IMPORTANCE

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QFD Linkages

PRODUCT CHARACTERISTICS

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PRODUCT SPECIFICATIONS

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Customer requirements product characteristics product specifications

process characteristics process specifications

Design for Manufacturing (DFM)

What are the manufacturing costsof the proposed design?

What Impact?Costs OK?

Reducecomponent

costs

Reduceoperations

costs

Reducedistribution

costs

NO

NO

NOYES

Acceptable DesignGo Ahead

Modular Design

• Allows higher level of customization

• Retains lower-cost advantage of higher volumes for core components

• Easier assembly

• Facilitates servicing and repairs

• Allows for upgrades

Modular Design Examples

• Balley Engineered Structures– 7 different kinds of panels

– “Customized” walk-in coolers

– From these, assembles almost endless variety of finished products

• Personal Computer Manufacturers

• Manufactured Home Builders

DFMt, DFSS, DFE

• DFMt — focuses on long-term serviceability of the product or service

• DFSS — focuses on achieving Six Sigma quality levels less than 3.4 defects per one million opportunities

• DFE — focuses on reducing environmental effects of product or process (Hewlett-Packard design guidelines, page 166)

Target Costing:Value Analysis

Goals:• Maximize function / cost• How can we increase this ratio?• Focus on secondary functions

– Packaging– Shipping– Custom parts and tooling – Use of standard parts– Make versus buy

“A good cookie, a great razor” Case Studies

Nabisco and Gillette: Two contrasting approaches to

product design