Operations
Management
Design of Goods and Services
Chapter 5
Some additions and deletions to this slide set have been made by Ömer Yağız.
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Outline
♦Global Company Profile: Regal Marine
♦Goods and Services Selection
♦
♦
♦
♦
♦
♦Product Development
♦
♦
♦
♦
♦
♦
♦
♦
♦
Purchase of Technology by Acquiring Firm
Joint Ventures
♦ Alliances
♦
♦
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Product life cycle
♦ Product development team
♦ Manufacturabililty and value engineering
♦ Robust design
♦ Time-based competition
♦ Modular design
♦ Computer aided design
♦ Value analysis
♦ Group technology
♦ Configuration management
♦
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Documents for Service
♦Application of Decision Trees to Product
Design
♦Transition to Production
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Learning Objectives
When you complete this chapter, you should
be able to :
♦Identify or Define:
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Make-or-buy Decisions
Group Technology
♦Documents for Production
♦Service Design
♦ Time-Based Competition
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Outline - continued
♦
Robust Design
Modular Design
Computer-Aided Design (CAD)
Value Analysis
Environmentally Friendly Design
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♦Defining the Product
♦Issues for Product Design
♦
Product Development System
Quality Function Deployment (QFD)
Organizing for Product Development
Manufacturability and Value Engineering
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Outline - continued
♦
Product Strategy Options Support Competitive
Advantage
Generation of New Product Opportunities
Product Life Cycles
Life Cycle and Strategy
Product-by-value Analysis
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Learning Objectives
continued
When you complete this chapter, you should be
able to:
♦Explain:
Alliances
Concurrent engineering
♦ Product-by-value analysis
♦ Product documentation
♦
♦
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1
Regal Marine
Humor in Product Design
As the customer
wanted it.
♦Global market
♦3-dimensional CAD
reduced product development time
reduced problems with tooling
♦ reduced problems in production
As Marketing
interpreted it.
♦
♦
♦Assembly line
♦JIT
© 1984-1994 T/Maker Co.
© 1984-1994 T/Maker Co.
As Operations made it.
As Engineering
designed it.
© 1984-1994 T/Maker Co.
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What is a Product?
♦Need-satisfying offering of an organization
♦
Example
♦ P&G does not sell laundry detergent
♦ P&G sells the benefit of clean clothes
♦Customers buy satisfaction, not parts
♦May be a good or a service
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Generation of New Product
Opportunities
© 1984-1994 T/Maker Co.
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Product Strategy Options for
Competitive Advantage
♦Product differentiation
♦
hospital offering hernia repair service
♦
Taco Bell uses low cost strategy (minimum labor)
♦Low cost
♦Rapid response
toyota uses rapid response to changing consumer
demand
♦ fastest auto design in the industry (2 vs. 3 yrs)
♦
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Product Components
♦Economic change
Product
♦Sociological and demographic change
♦Technological change
Brand
(Name)
♦Political/legal change
♦Changes in
♦
♦
♦
Physical
Good
market practice
professional standards
suppliers and distributors
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Product
Idea
Quality
Level
Features
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Package
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Service
(Warranty)
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2
Product Life Cycle
Introduction
Product Life Cycle
♦Introduction
♦Growth
♦Maturity
♦Decline
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♦Fine tuning
research
product development
♦ process modification and enhancement
♦ supplier development
♦
♦
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Product Life Cycle
Growth
♦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
♦Competitors now established
♦High volume, innovative production may be
needed
♦Improved cost control, reduction in options,
paring down of product line
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Product Life Cycle, Sales, Cost,
and Profit
Product Life Cycle
Decline
Cost of
Development
& Manufacture
Sales, Cost & Profit .
♦Unless product makes a special contribution,
must plan to terminate offering
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Sales Revenue
Profit
Cash flow
Loss
(negative cash flow)
Introduction
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Growth
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Time
Maturity
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Decline
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3
Products in Various Stages of Life
Cycle
Percent of Sales From New Products
introduced in the Last 5 Years
Sales
50%
Introduction
40%
30%
Industry Leader
Top Third
Middle Third
Bottom Third
20%
10%
0%
Growth
Maturity
Roller
Blades
Jet Ski
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Time
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Product-by-Value Analysis
Lists products in descending order of their
“individual dollar contribution to the firm.”
♦ Also lists “total annual dollar contribution to the
firm”
♦
♦Helps management evaluate alternative
strategies.
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Product Development Stages
Scope of product development team
♦Objective - to select the new product ideas
that show the greatest promise
♦Based on the “Pareto Principle” - vital or
critical few as opposed to the trivial many
♦Method:
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Boeing
727
Virtual
Reality
Position of Firm in Its
Industry
Decline
♦Idea generation
♦Assessment of firm’s ability to carry out
♦Customer Requirements
♦Functional Specification
Scope of design for
♦Product Specifications
manufacturability and
♦Design Review
value engineering teams
♦Test Market
♦Introduction to Market
♦Evaluation
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Quality Function Deployment
♦
♦
♦
♦
♦
♦
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SIX BASIC STEPS OF QFD:
Identify customer wants
Identify how the good/service will satisfy
customer wants (characteristics, features,
attributes)
Relate customer wants to product hows
Identify relationships between the firm’s
hows
Develop importance ratings
Evaluate competing products
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Figure 5.5
Idea Generation Stage
♦ Provides basis for entry into market
♦ Sources of ideas
♦
Market need (60-80%); engineering & operations (20%);
technology; competitors; inventions; employees
♦ Follows from marketing strategy
♦
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Customer Requirements Stage
♦
Stated in core benefits proposition (CBP)
Example: Long lasting with more power
(Sears’ Die Hard Battery)
♦ Identifies detailed list of product
attributes desired by customer
♦
Focus groups or
1-on-1 interviews
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House of Quality
Product
Characteristics
Customer
Requirements
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Product Specification Stage
Computer-Aided
Design (CAD)
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House of Quality
Component
Specifications
Product
Product
Characteristics
Characteristics
5-29
♦
Example: printer noise (dB)
House of Quality
♦ Prioritizes engineering
characteristics
♦ May rate product compared
to competitors’
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Product
Characteristics
Customer
Customer
Requirements
Requirements
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Quality Function Deployment
♦
♦ Example: Dimensions, material etc.
♦
Functional Specification Stage
♦ Product design process using
cross-functional teams
♦ Determines how product will be made
♦ Gives product’s physical specifications
♦ Defined by engineering
drawing
♦ Done often on computer
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♦ Defines product in terms of how the
product would meet desired
attributes
♦ Identifies product’s engineering
characteristics
♦ Identifies & positions key product benefits
♦
Identifies, defines, & selects best market opportunities
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Marketing, engineering, manufacturing
♦ Translates customer preferences into specific
product characteristics
♦ Involves creating 4 tabular ‘Matrices’ or
‘Houses’
♦
Breakdown product design into increasing levels of
detail
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5
To Build House of Quality
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House of Quality Example
You’ve been assigned
temporarily to a QFD team.
The goal of the team is to
develop a new camera
design. Build a House of
Quality.
Quality
Plan
Design
Characteristics
Specific
Components
Design
Characteristics
Specific
Components
House
3
Production
Process
Production
Process
Customer
Requirements
♦Identify customer wants
♦Identify how the good/service will satisfy
customer wants.
♦Relate the customer’s wants to the product’s
hows.
♦Identify relationships between the firm’s
hows.
♦Develop importance ratings
♦Evaluate competing products
House of Quality Sequence
House
4
House
2
House
1
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House of Quality Example
Customer
Requirements
Customer
Importance
Importance Rating
© 1984-1994 T/Maker Co.
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House of Quality Example
Customer
Importance
Aluminum
Parts
Auto
Focus
Auto
Exposure
Light weight
Easy to use
Reliable
5-34
L: Low Relationship
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House of Quality Example
Customer
Requirements
Customer
Importance
Light weight
Easy to use
Reliable
3
4
5
Aluminum
Parts
Auto
Focus
Auto
Exposure
Importance Rating
Importance Rating
H: High relationship M: Medium relationship
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Average customer
importance rating
What the customer desires
(‘wall’)
Customer
Requirements
H: High relationship M: Medium relationship
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L: Low Relationship
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H: High relationship M: Medium relationship
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L: Low Relationship
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House of Quality Example
House of Quality Example
Relationship between
customer attributes &
engineering characteristics
(‘rooms’)
Customer
Requirements
Customer
Importance
Light weight
Easy to use
Reliable
3
4
5
Target values for engineering
characteristics (‘basement’);
key output
Aluminum
Parts
M
☺
Auto
Focus
Auto
Exposure
Customer
Requirements
Customer
Importance
M
M
M
M
Light weight
Easy to use
Reliable
3
4
5
Importance Rating
Importance Rating
H: High relationship M: Medium relationship
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L: Low Relationship
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Aluminum
Parts
M
9
H: High relationship M: Medium relationship
Auto
Focus
Auto
Exposure
M
M
M
M
27
27
L: Low Relationship
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House of Quality Example
☺
Customer
Requirements
Customer
Importance
Light weight
Easy to use
Reliable
3
4
5
Importance Rating
Aluminum
Parts
M
9
H: High relationship M: Medium relationship
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Auto
Focus
Auto
Exposure
M
M
M
M
27
27
L: Low Relationship
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Concurrent Engineering
(Eş-zamanlı Mühendislik)
♦Use of teams which work concurrently
(simultaneously) in the design and
development of new products or services.
♦Results in speedier design and development
♦Very helpful in “beating the competition”
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Design for Manufacturability and
Value Engineering
♦Benefits:
reduced complexity of products
additional standardization of products
♦ improved functional aspects of product
♦ improved job design and job safety
♦ improved maintainability of the product
♦ robust design
♦
♦
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Cost Reduction of a Bracket via
Value Engineering
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(b) Revised design
One-piece base &
elimination of fasteners
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(a) The original design
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Assembly using
common fasteners
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Issues for Product Development
♦Robust design
♦Modular design
♦Computer-aided design (CAD)
♦Value analysis
♦Environmentally friendly design
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Robust Design
Modular Design
♦Product is designed so that small variations
in production or assembly do not adversely
affect the product
An everyday example -- power supplies in
PC’s are made to withstand power surges up
to a limit, say, 260 volts.
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Computer Aided Design (CAD)
♦ Designing products at
a computer terminal or
work station
♦
♦
♦Parts or components of a product are
subdivided into modules that are easily
interchanged or replaced
♦Products designed in easily segmented
components.
♦Adds flexibility to both production and
marketing
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Computer Aided Manufacturing
♦Use of information technology to control
machinery and facilities used for
manufacturing.
Design engineer
develops rough
sketch of product
Uses computer to
draw product
♦
♦
CNC machines (computer numerically controlled)
Robots for painting and welding (kaynak)
♦ Often used with CAM
© 1995 Corel Corp.
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Benefits of CAD/CAM
♦ Shorter design time
♦ Database availability
♦ New capabilities
♦
Example: Focus more on product ideas
♦ Improved product quality
♦ Reduced production costs
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Value Analysis
♦Same as “value engineering” but takes place
during the production process
♦Focuses on design improvement during
production
♦Seeks improvements leading either to a
better product or a product which can be
more economically produced.
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Environmentally Friendly Designs
♦Benefits
Green Manufacturing
Sensitivity to environmental issues in
production processes
Make products recyclable
Use recycled materials
♦ Use less harmful ingredients
♦ Use lighter components
♦ Use less energy
♦ Use less material
♦
Safe and environmentally sound products
♦ Minimum raw material and energy waste
♦ Product differentiation
♦ Environmental liability reduction
♦ Cost effective compliance with environmental
regulations
♦ Recognition as good corporate citizen
♦
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♦
BMW example – many parts of the car are
made from recycled plastic material and are
recyclable
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Product - Process Matrix
Time-based Competition
♦Means “competition based on time”
♦Product life cycles are becoming shorter.
∴Faster developers of new products gain on
slower developers and obtain a competitive
advantage
♦Concurrent Engineering (eş-zamanlı
mühendislik)
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High
Few
Multiple
Volume,
Major
Products, Products,
High
Low
Higher StandardVolume Volume
ization
Low
Volume
One of a
Kind
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I.
Job
Shop
Flexibility (High)
Unit Cost (High)
Commercial
Printer
French Restaurant
II.
Batch
Heavy
Equipment
Coffee Shop
III.
Assembly
Line
Automobile
Assembly
Burger King
IV.
Continuous
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Sugar
Refinery
Flexibility (Low)
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UnitRiver,Cost
(Low)
Management,
(Heizer &and
Render)
Modified from
Robert6EHayes
Steven Wheelwright, Restoring5-58
Our Competitive Edge: Competing through Manufacturing (New
ohn Wiley & Sons, 1984). p. 209.
Monterey Jack Brand Cheese
Defining the Product
(a) U.S. grade AA. Monterey cheese shall conform to the following
requirements:
(1)Flavor. Is fine and highly pleasing, free from undesirable flavors and
odors. May possess a very slight acid or feed flavor.
(2)Body and texture. A plug drawn from the cheese shall be reasonably
firm. It shall have numerous small mechanical openings evenly
distributed throughout the plug. It shall not possess sweet holes,
yeast holes, or other gas holes
(3)Color. Shall have a natural, uniform, bright and attractive
appearance.
(4)Finish and appearance - bandaged and paraffin-dipped. The rind
shall be sound, firm, and smooth providing a good protection to the
cheese
Product Documents
♦ Engineering drawing
♦
♦
Shows dimensions, tolerances, &
materials
Shows codes for Group Technology
♦ Bill of Material
♦
♦
Lists components, quantities &
where used
Shows product structure
Code of Federal Regulation, Parts
53 to 109,. Revised as of Jan. 1,
1985, General Service
Administration
© 1984-1994 T/Make
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Engineering Drawing Example - Show
Dimensions, Materials, Tolerances,
etc.
13/16
diameter
1
13/32
diameter
Engineering Drawings - Show
Dimensions, Materials, Tolerances,
etc.
2-1/2
1/4 R
2-1/4
13/16
45°
3/8
5/16
13/16
1-5/8
Bracket
Scale: FULL
Drawn: J. Thomas
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Bill of Material Example
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Examples of Bills of Materials
© 1995 Corel Corp.
Bill of Material
1000
P/N:
Name: Bicycle
P/N
Desc
Qty
1001
Handle Bars
1
1002
Frame Assy
1
1003
Wheels
2
1004
Frame
1
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Units Level
Each
1
Each
1
Each
2
Each
2
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Bill of Materials – Manufacturing
Plant and Fast-Food Restaurant
Bill of Material for a Panel Weldment
Number
A60-71
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Make-or-Buy Decisions
Hard Rock Café’s Hickory BBQ Bacon
Cheeseburger
Description
Qty
Panel Weldm’t
1
A 60-7
R 60-17
R 60-428
P 60-2
Lower Roller Assembly
Roller
Pin
Locknet
1
1
1
1
60-72
R 60-57-1
A 60-4
02-50-1150
Guide Assem. Rear
Support Angle
Roller Assem.
Bolt
1
1
1
1
A 60-73
A 60-74
R 60-99
02-50-1150
Guide Assm, Front
Support Weldm’t
Wear Plate
Bolt
1
1
1
1
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Description
Qty
Bun
Hamburger Patty
Cheddar Cheese
Bacon
BBQ Onions
Hickory BBQ Sauce
Burger Set
Lettuce
Tomato
Red Onion
Pickle
French Fries
Seasoned Salt
11-inch Plate
HRC Flag
1
8 oz.
2 slices
2 strips
½ cup
1 oz.
♦Decide whether or not you want (or need) to
produce an item
♦May be able to purchase the item as a
“standard item” from another manufacturer
1 leaf
1 slice
4 rings
1 slice
5 oz.
1 tsp
1
1
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Group Technology Characteristics
Group Technology Code Example
♦ Parts grouped into families
♦
4mm x 45° chamfer
Similar, more standardized parts
80mm
♦ Uses coding system
♦
Describes processing & physical
characteristics
Mini-assembly lines
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Product Code:
1 5 3 1
60mm
112mm
Part function (round rod)
Material (steel)
Max. length (50 < L < 150)
Primary machine (lathe)
♦ Part families produced
in manufacturing cells
♦
Round Rod
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© 1984-1994 T/Maker Co.
Group Technology Schemes
Enable Grouping of Parts
Group Technology Benefits
♦ Improved product design
♦ Reduced purchases
♦ Reduced work-in-process inventory
♦ Improved routing & machine loading
♦ Reduced setup & production times
♦ Simplified production planning & control
♦ Simplified maintenance
Cellular Manufacturing
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Group Technology Manufacturing Cells
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Documents for Production
♦Assembly Drawings
♦Assembly chart
♦Route sheet
♦Work order
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Assembly Chart for
A Tuna Sandwich
Assembly Drawing
♦ Shows exploded view of product
1
Head
Tuna Fish
Neck
2
End
Cap
Handle
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Tuna
Assy
SA1
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A1
Sandwich
Mayonaise
FG
Bread
A2
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© 1984-1994 T/Maker Co
Assembly Drawing and Assembly
Chart
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Assembly (Gozinto) Chart
4
5
6
7
Flow Process Chart Symbols
Lockring
Operation
Spacer, detent spring
SA-2
Rivets (2)
A-2
Transportation
Spring-detent
A-5
Component/Assy Operation
Inspection
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Inspection
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Delay
Storage
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Flow Process Chart
Time
(min)
Description
of
process
1
Unload apples from truck
2
Move to inspection station
3
Weigh, inspect, sort
4
Move to storage
5
Wait until needed
6
Move to peeler
7
Apples peeled and cored
15
8
Place in conveyor
5
10
Move to mixing area
11
Weigh, inspect, sort
Total
M a c h in e
O p e ra tio n
100 ft
1
Shear # 3
50 ft
2
Shear # 3
20 ft
3
D rill
p re s s
B ra k e
p re s s
S h e a r to
le n g th
Shear 45°
c o rn e rs
D rill b o th
h o le s
Bend 90°
360
20
5-79
R o u te S h e e t fo r B r a c k e t
Sequence
30
Soak in water until needed
Page 1 0f 3
♦ Lists all operations
20
9
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Route Sheet
Distance
(feet)
Process: Apple Sauce
Step
Location: Niğde
Analyst: ÖY
Operation
Transport
Inspect
Delay
Storage
Date: 13/03/99
4
S e tu p
T im e
5
O p e ra tio n
T im e /U n it
.0 3 0
8
.0 5 0
15
3 .0 0 0
10
.0 2 5
20 ft
30
480
190 ft
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Work Order
Route Sheet - another example
Authorizes producing a given item, usually to a schedule
Part name
Part no.
Usage Table
Assembly No.
Oper No.
10
20
30
40
50
Table leg
2410
Dat
Dept Oper
437
Description
Saw to rough length
Plane to size 043
Saw to finished length
Measure dimensions
Sand
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ng
Manufacturi e
Dept.
041
Machine Time
Tools
Appro
041
051
052
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♦A correction or modification of an
engineering drawing or bill of material
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M
ved: J
© 1984-1994 T/Maker Co.
Engineering Change Notice (ECN)
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Work Order
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Configuration Management
♦A system by which a product’s planned and
changing components are accurately
identified and for which control and
accountability of change are maintained
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Service Design Nature of Customer Participation
Improving Customer Relations at
a Drive-up Window
♦ Be especially discreet when talking with 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”
♦ Establish eye contact with the customer if the distance allows it
♦ If the transaction requires that the customer park the car and
come into the lobby, apologize for the inconvenience.
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SERVICE BLUEPRINTING & FAILSAFING
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SERVICE BLUEPRINTING & FAILSAFING
Customer
customer control
Service manager
service manager
Garage
garage activities
internal accounting
Accounting
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detract: to diminish, to
decrease
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Moment-of-Truth
Experience Detractors
Experience Enhancers
Standard Expectations
I had to call more than once to
get through.
Only one local number needs to
be dialed
A recording spoke to me rather
than a person
I never get a busy signal
While on hold, I get silence,and
wonder if I am disconnected.
The operator sounded like he
was reading a form routine
questions.
The operator sounded
uninterested
I felt the operator rushed me.
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 operator is able to explain
to me what I can expect to take
place
Customer contacts service call center at a
computer company
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The operator was
sincerely concerned and
apologetic about my
problem
He asked intelligent
questions that allowed
me to feel confident in
his abilities
The operator offered
various times to have
work done, to suit my
schedule
Ways to avoid future
problems were
suggested
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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.
♦Considerations:
Include all possible alternatives and states of nature including “doing nothing”
♦ Enter payoffs at end of branch
♦ Approach determining expected values by “pruning”
tree
♦
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15
Transition to Production
♦First issue: knowing when to move to
production!
♦Second: must view product development as
evolutionary, not responsibility of single
individual/department
♦Third: expect to need a trial production
period to work the bugs out
♦Fourth: recognize that responsibility must
also transition
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