4-1 Product and Service Design
Operations Management
William J. Stevenson
8th edition
4-2 Product and Service Design
CHAPTER
2.1
Product and
Service Design
McGraw-Hill/Irwin
Operations Management, Eighth Edition, by William J. Stevenson
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
4-3 Product and Service Design
What Does Product and Service Design Do?

Translate customer wants and needs into product
and service requirements
 Refine existing products and services.
 Develop new products/services.
 Formulate quality goals
 Formulate cost targets.
 Construct and test prototypes.
 Translate product and service specifications into
process specifications.
4-4 Product and Service Design
Product and Service Design

Major factors in design strategy

Cost
 Quality
 Time-to-market
 Customer satisfaction
 Competitive advantage
Product and service design – or redesign – should be
closely tied to an organization’s strategy
4-5 Product and Service Design
Product or Service Design Activities

Translate customer wants and needs into
product and service requirements
 Refine existing products and services
 Develop new products and services
 Formulate quality goals
 Formulate cost targets
 Construct and test prototypes
 Document specifications
4-6 Product and Service Design
Reasons for Product or Service Design

Economic (e.g.. low demand, need to reduce
costs)

Social and demographic (e.g. shifts in population
parameters)

Political, liability, or legal (e.g. new regulations,
safety issues)

Competitive (e.g. new improved products)

Technological (e.g. product components,
processes)

Cost/availability (e.g. of raw materials or labor)
4-7 Product and Service Design
Objectives of Product and Service Design

Main focus


Customer satisfaction
Secondary focus

Function of product/service
 Cost/profit
 Quality
 Appearance
 Ease of production/assembly
 Ease of maintenance/service
4-8 Product and Service Design
Issues in Product Design

Legal and Ethical Factors
 Environmental Factors
 Human Factors
 Cultural Factors
4-9 Product and Service Design
Regulations & Legal Considerations

Designers must be careful to take into account a
wide array of legal and ethical considerations.

Product Liability - A manufacturer is liable for
any injuries or damages caused by a faulty
product.

Uniform Commercial Code - Products carry an
implication of merchantability and fitness i.e. a
product must be usable for its intended purpose.
4-10 Product and Service Design
Human Factors

Human factor issues often arise in the design of
consumer products.
 Safety and liability are two critical issues and must
be carefully considered.
 Another issue to take into account is adding new
features to their products or services.
4-11 Product and Service Design
Cultural Factors

Designers in global companies must also take into
account any cultural differences across regions
related to the product.
4-12 Product and Service Design
Environmental Factors

Cradle to grave assessments: The assessment of
the environmental impact of a product or service
throughout its useful life.
 End of life programs: Managing the disposal of
products that have reached the end of their useful
life.
 Reduce, Reuse, Recycle through value analysis,
remanufacturing and recycling.
4-13 Product and Service Design
Other Issues in Product and Service Design

Strategies for product life cycle stages
 Degree of standardization
 Designing for mass customization
 Reliability
 Robust Design
 Degree of Newness
4-14 Product and Service Design
Life Cycles of Products or Services
Figure 4.1
Saturation
Deman
d
Maturity
Decline
Growth
Introduction
Time
4-15 Product and Service Design
Standardization

Standardization


Extent to which there is an absence of variety
in a product, service or process
Standardized products are immediately
available to customers
4-16 Product and Service Design
Advantages of Standardization

Fewer parts to deal with in inventory &
manufacturing

Design costs are generally lower

Reduced training costs and time

More routine purchasing, handling, and
inspection procedures
4-17 Product and Service Design
Advantages of Standardization (Cont’d)

Orders fillable from inventory

Opportunities for long production runs and
automation

Need for fewer parts justifies increased
expenditures on perfecting designs and
improving quality control procedures.
4-18 Product and Service Design
Disadvantages of Standardization

Designs may be frozen with too many
imperfections remaining.

High cost of design changes increases
resistance to improvements.

Decreased variety results in less consumer
appeal.
4-19 Product and Service Design
Mass Customization
•
Mass customization:

A strategy of producing standardized goods
or services, but incorporating some degree
degree of customization
 Delayed differentiation
 Modular design
4-20 Product and Service Design
Delayed Differentiation
•
Delayed differentiation is a postponement
tactic

Producing but not quite completing a product
or service until customer preferences or
specifications are known
4-21 Product and Service Design
Modular Design
Modular design is a form of standardization in
which component parts are subdivided into
modules that are easily replaced or
interchanged. It allows:

easier diagnosis and remedy of failures

easier repair and replacement

simplification of manufacturing and assembly
4-22 Product and Service Design

Reliability
Reliability: The ability of a product, part, or system
to perform its intended function under a prescribed
set of conditions

Failure: Situation in which a product, part, or
system does not perform as intended

Normal operating conditions: The set of
conditions under which an item’s reliability is
specified
4-23 Product and Service Design
Improving Reliability
• Component design
• Production/assembly techniques
• Testing
• Redundancy/backup
• Preventive maintenance procedures
• User education
• System design
4-24 Product and Service Design
Robust Design

Some products or services will function
only within a narrow range of conditions,
while others will perform as designed over
a much broader range of conditions
 Robust Design: Design that results in
products or services that can function over
a broad range of conditions.
 Robust design decreases the likelihood of
product failure due to a change in the
environment in which the product is used.
4-25 Product and Service Design

Taguchi’s Approach: it is often easier to design a
product that is insensitive to environmental
factors, either in manufacturing or in use, than to
control the environmental factors.
4-26 Product and Service Design
Degree of Newness
Product or service design change can range
from modification of an existing product or
service to an entirely new product or service.
1. Modification of an existing product/service
2. Expansion of an existing product line or
service
3. Clone of a competitor’s product/service
4. New product/service
4-27 Product and Service Design
Phases in Product Development Process
1.
2.
3.
4.
5.
6.
7.
8.
9.
Idea generation
Feasibility analysis
Product specifications
Process specifications
Prototype development
Design review
Market test
Product introduction
Follow-up evaluation
4-28 Product and Service Design
Idea Generation
Supply chain based
Ideas
Competitor based
Research based
4-29 Product and Service Design
Reverse Engineering
Reverse engineering is the
dismantling and inspecting
of a competitor’s product to discover
product improvements.
4-30 Product and Service Design
Research & Development (R&D)

Organized efforts to increase scientific
knowledge or product innovation & may
involve:

Basic Research advances knowledge about a
subject without near-term expectations of
commercial applications.
 Applied Research achieves commercial
applications.
 Development converts results of applied
research into commercial applications.
4-31 Product and Service Design
Feasibility Analysis

Feasibility analysis entails market analysis
(demand), economic analysis (development cost
and production cost, profit potential), and
technical analysis (capacity requirements and
availability.
4-32 Product and Service Design
Product Specifications

This involves detailed descriptions of what is
needed to meet (or exceed) customer wants, and
requires collaboration between legal, marketing,
and operations.
4-33 Product and Service Design
Process Specifications

Once product specifications have been set,
attention turns to specifications for the process that
will be needed to produce the product.
 Alternatives must be weighed in terms of cost,
availability of resources, profit potential, and
quality.
4-34 Product and Service Design
Prototype Development

With product and process specifications complete,
one (or a few) units are made to see if there are
any problems with the product or process
specifications.
4-35 Product and Service Design
Design Review

At this stage, any necessary changes are made or
the project is abandoned.
 All departments collaborate to determine whether
to proceed or to abandon.
4-36 Product and Service Design

Market Test
This is done to determine the extent of customer
acceptance.
 The product returns to the design review phase if
unsuccessful.
 This is handled by marketing.
4-37 Product and Service Design
Introduction and Follow up Evaluation

The new product is launched and promoted.
 Based on user feedback, changes may be made or
forecasts refined.
 These are handled by marketing.
4-38 Product and Service Design
Designing for Manufacturing

These include design techniques that have greater
applicability for the design of products than the
design of services.
 These include:

Concurrent engineering
 Computer assisted design
 Designing for assembly and disassembly
 The use of components for similar products
4-39 Product and Service Design
Concurrent Engineering
Concurrent engineering
is the bringing together
of engineering design and
manufacturing personnel
early in the design phase.
4-40 Product and Service Design
Computer-Aided Design

Computer-Aided Design (CAD) is product
design using computer graphics.

increases productivity of designers, 3 to 10
times

creates a database for manufacturing
information on product specifications

provides possibility of engineering and cost
analysis on proposed designs
4-41 Product and Service Design
Designing for assembly and disassembly

A good design must take into account not
only how a product will be fabricated but
also how it will be assembled.
 Design for assembly focuses on reducing the
number of parts in an assembly, as well as
on the assembly methods and sequence that
will be employed.
 Manufacturability is the ease of fabrication
and/or assembly.
4-42 Product and Service Design
Component commonality

Companies can realize significant benefits
when a part can be used in multiple products.
 In addition to savings in design time,
companies reap benefits through standard
training for assembly and installation,
increased opportunities for savings by buying
in bulk, and commonality of parts in repair,
which reduces inventory levels.
4-43 Product and Service Design
Service Design

Service is an act, something that is done to or
for a customer.
 It is provided by a service delivery system,
which includes facilities, processes, and skills
needed to provide the service.
 Many services are bundled with products.
4-44 Product and Service Design
Service Design

Service design involves

The physical resources needed
 The goods that are purchased or consumed by
the customer
 Explicit services
 Implicit services
4-45 Product and Service Design
Service Design

Service design begins with the choice of a
service strategy, which determines the nature
and focus of the service, and the target market.
 Two key issues in service design are the
degree of variation in service requirements and
the degree of customer contact and customer
involvement in the service delivery system.
 The lower the degree of contact and service
requirement variability, the more standardized
the service can be.
4-46 Product and Service Design
Differences Between Product
and Service Design
Tangible – intangible
 Services created and delivered at the same
time
 Services cannot be inventoried
 Services highly visible to customers
 Services have low barrier to entry
 Location important to service

4-47 Product and Service Design
Phases in Service Design
1.
2.
3.
4.
5.
Conceptualize
Identify service package components
Determine performance specifications
Translate performance specifications into
design specifications
Translate design specifications into delivery
specifications
4-48 Product and Service Design
Service Blueprinting

Service blueprinting


A method used in service design to describe and
analyze a proposed service
A useful tool for conceptualizing a service
delivery system
4-49 Product and Service Design
Major Steps in Service Blueprinting
1.
2.
3.
4.
Establish boundaries for the service and
decide on the level of detail required.
Identify and determine the sequence of
customer and service actions and
interactions. Preparing a flowchart is useful.
Determine time estimates for each phase of
the process, as well as time variability.
Identify potential failure points and develop
a plan to minimize them and a develop a
plan to respond to service errors.
4-50 Product and Service Design
Characteristics of Well Designed
Service Systems
1.
2.
3.
4.
5.
6.
7.
8.
9.
Consistent with the organization mission
User friendly
Robust
Easy to sustain
Cost effective
Value to customers
Effective linkages between back operations
Single unifying theme
Ensure reliability and high quality
4-51 Product and Service Design
Challenges of Service Design

Variable requirements
 Difficult to describe
 High customer contact
 Service – customer encounter
4-52 Product and Service Design
Guidelines for effective service design

Define the service package in detail.
 Focus on operations from the customers’
perspective.