OPERATIONS STRATEGY
PRODUCT AND SERVICE DESIGN
The essence of any organization is the products and services it offers. There is an obvious
link between the design of those services and the success of the organization.
Products and services are the main concern for a customer’s judgment about the
organization.
Quality is affected by:
- design;
- degree to which production conforms to the intent of design (manufacturability).
(Both characteristics affect cost – materials, plus labor and equipment).
<why companies develop new designs?>
Product/service design is done:
- for staying competitive on the market (by offering new products/services);
- for business grow and profit increase;
- as alternative to downsizing (increases in productivity results in fewer workers needed;
development of new products can mean adding jobs and retaining people);
- as redesign (due to complains, accidents, excessive warranty claims, low demand; or
for the reduction in labor or materials).
<Small case discussion: Recycling trends in big 3 auto manufacturers of Detroit>
Modern trends in product/service design.
1. Increased emphasis on customer satisfaction. TQM.
2. Reduction of time needed to introduce new products or services.
3. Reduced production times (usually results in reduced cost and increased quality).
4. Greater attention to the capabilities of the organization to produce or deliver the item.
5. Environmental concerns.
6. Stress on design of “user-friendly” products.
<Ford T model was supplied with 64 page brochure on how to cure 140 typical problems
that can occur with a car>
Design is a contradicting issue. Design for consumer satisfaction and “design for
manufacturing” (or, in general, “design for operations”) are frequently incompatible.
Operations people must get involved early in the design process to ensure that the design
will match the organization’s capabilities.
DESIGN PROCESS
Motivation for design.
General motivation: to achieve the goals of the organization.
Secondary motivations: government regulations, appearance of new technologies and
have product/process application, competitive pressure, customer needs.
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Customer is the driving force for product/service design.
Design ideas come from:
- customers (focus groups and surveys);
- R&D;
- plus competitors (reverse engineering).
Opportunities vs. capabilities. Management is about considering the matches or evaluating
the adjustments for the matches to take place.
Operations capability conditions the idea generation process (where either ideas are
adjusted, or the production becomes the subject for update).
Manufacturability is the key concern of operations (ease of fabrication and/or assembly is
important for cost, productivity, and quality; with services, ease of providing the service,
cost, productivity, and quality are of great concern).
Information about the design idea must be mutually understood by all parties of the
design process <see a humorous figure in Stevenson, 142>.
REGULATIONS AND LEGAL CONSIDERATIONS
-
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Regulating authorities in US: Food and Drug Administration, the Environmental
Protection Agency, the National Highway Safety Commission, the Consumer Products
Safety Commission, etc.
Bans on cyclamates, red food dye, phosphates, asbestos, etc.
Automobile pollution standards, safety features (seat belts, air bags, safety glass,
energy-absorbing bumpers and frames, etc.).
Toy design: no sharp edges, small parts, toxic materials.
Lead-free paint, safety glass in entraceways, access to public building for handicapped
persons, standards for insulation, electrical wiring, plumbing.
Product liability – manufacturer is liable for any injuries or damages caused by faulty
product because of poor workmanship or design.
Uniform Commercial Code says that products carry an implication of merchantability and
fitness, that is, a product must be usable for its intended purposes.
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RESEARCH AND DEVELOPMENT (R&D)
R&D involves:
- Basic research (advantage of the state of knowledge without commercial application).
- Applied research (basic research with the objective of achieving commercial
application).
- Development (converts the results of applied research into useful commercial
applications).
Patents lead to royalties, but many discoveries are not patentable.
Kodak spends $2 million a day on R&D.
Automobile manufactures spend even more, but these amounts are still criticized as being
insufficient.
STANDARDIZATION
Standardization refers to the absence of variety in a product, service, or process (2,5%
milk, electronics, or car wash implies that every customer receives the same
product/service).
Advantages.
- Interchangeable parts (e.g. b/w different lines of automobiles – i.e. reduced costs).
- Reduced time and cost of training employees.
- Conformity and compatibility with existing solutions (e.g. Blue-ray vs. HD-DVD choice;
English system of measurement vs. metric; Macintosh vs. PC, etc.).
- <other?>
Disadvantages.
- Reduction in variety (lesser competitive appeal).
- Standards freeze solutions, making changes difficult to implement (leaving
imperfections built into designs).
- <other?>
PRODUCT LIFE CYCLE
PLC must be evaluated from financial standpoint of operations and redesign.
Some products have life cycles of 1 year or less (some toys, novelty items, fashion
products), exhibiting all redesign approaches typical for different stages (e.g. heavy design
efforts at the introduction and decline stages). This phenomenon should be compared with
organizational capabilities.
ROBUST DESIGN
Robust design is a capability of a product to perform in a broad range of conditions. The
more robust is a product, the less likely is its failure and the greater is its market
“tolerance”. (E.g. fine leather shoes are much less robust then in-style boots of composite
materials, ready for mud and snow as well as everyday wear).
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Robust-design production approach is making the process intolerant to the variation in its
performance in relation to the produced product quality.
(e.g. furnace heat unevenly; to prevent the produced product from variation in quality the
product can move in the furnace [or design a superior oven]).
Taguchi’s Approach (based on the robust design; by Genichi Taguchi).
Taguchi’s premise is that 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.
The central feature of Taguchi’s approach is parameter design. This involves determining
the specification setting for both the product and the process that will result in robust
design in term of manufacturing variations, product deterioration, and conditions during its
use.
TA modifies the conventional statistical methods of experimental design.
TA involves determining which factors are controllable and which are not (or too
expensive to control), and then determining the optimal level of the controllable
factors relative to the product performance.
The value of the approach is its ability to achieve major advances in product or process
design fairly quickly, using relatively small number of experiments.
CONCURRENT ENGINEERING
To achieve smoother transition from product design to production, and to decrease
product development time, many companies are using simultaneous development, or
concurrent engineering.
It, roughly, refers to bringing design and manufacturing engineering people together early
in the design phase to simultaneously develop the product and the processes for
producing the product.
More recently, this concept has been enlarged to include manufacturing personnel (e.g.,
materials specialists) and marketing and purchasing personnel in loosely integrated, crossfunctional teams. In addition, the views of suppliers and customers are frequently thought.
The purpose is to achieve product design that reflect customer wants and manufacturing
capabilities.
Before – “over-the-wall” approach (designer developed a product without any input from
manufacturing and then turned over to the design manufacturing, which would have to
develop a process for making a new product). Such approach created tremendous
challenges. <Discuss the problems, produced by this approach>
Concurrent engineering advantages:
- production capabilities and capacities are identified and matched to the design and
materials requirements; conflicts during production are greatly reduced;
- procurement of critical tooling in advance; shortening lead time;
- early consideration of technical feasibility of a particular design or its portion;
- more efficient resource allocation;
- emphasis on problem resolution instead of conflict resolution.
CE difficulties:
- long-standing existing boundaries between design and manufacturing can be difficult to
overcome;
- extra communication and flexibility must be present for the process to work.
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COMPUTER-AIDED DESIGN
<demonstrate capabilities of 3D design software>
MODULAR DESIGN
MD is a form of standardization in which component parts are subdivided into modules that
are easily replaced or interchanged. (A computer is a very demonstrative example).
<Discuss advantages and disadvantages>.
SERVICE DESIGN
Characteristics of services design (and its difference in comparison to product design).
- Intangibility (e.g., peace of mind, ambiance).
- Production and rendering at the same time. Creates less latitude in finding and
correcting errors before the customer has a chance to discover them. Training, process
design, and customer relations become particularly important.
- Services cannot be inventoried. Capacity design become extremely important.
- Services are highly visible to consumers and must be designed with that in mind; this
adds extra dimension to process design (which is usually not present in product
design).
- Some services have low barriers to entry and exit. This places additional burden on
service design to be innovative and cost-effective.
- Location is important; convenience is the major factor.
Customer contact conditions the complexity of service design and distances it from
product design process. Imagine an educational process conversion from three-credit
course system to 1-, 2-, 3-, and 4-credit system. The product (service) becomes absolutely
inseparable from the process, and without careful process consideration is simply
impossible to implement.
Service design is mostly conditioned by:
- customer contact;
- variability in service requirement.
The more of both factors are present in a service, the more customized it becomes and
vice versa.
Service design guidelines:
- have a single, unifying theme (such as convenience or speed); this will eliminate crosspurposes;
- make sure that the system is capable to handle variability in service requirements;
- included design features and checks to ensure that service will be reliable and will
provide consistently high quality;
- design the system to be user-friendly (especially for self-service systems).
Service blueprinting is a method used in service design to describe and analyze a
proposed service.
SB major steps.
1. Establish boundaries for the process and decide on the level of detail that will be
needed.
—5—
2. Identify the steps involved and describe them. If this is an existing process, get input
from those who do it.
3. Prepare a flowchart of major process steps.
4. Identify potential failure points. Incorporate features that minimize the chances of
failures.
5. Establish a timeframe for service execution, and estimate the variability in processing
time requirements. (Time is the determinant of cost; variability can also impact time;
customers regard service time as a key concern – the shorter the service time, the
better, except time-spending services [leisure, etc.]).
6. Analyze profitability; determine factors that influence profitability (positively and
negatively), and determine how sensitive profitability is to these factors. E.g., customer
waiting time is often a key factor. Concentrate design efforts on key factors. Establish
design features that protect against negative impacts, and maximize positive impacts.
QUALITY FUNCTION DEPLOYMENT
QFD is a structured approach for integrating the “voice of customer” into the product
development process. The purpose is to ensure that customer requirements are factored
into every aspect of the process from the product planning to the production floor.
QFD is based on a set of matrices.
The main matrix relates customer requirements (what) and their corresponding technical
requirements (how).
<page 155, figure 4-5>
QFD main matrix example in customer-driven management in hospitality education:
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“House of Quality” matrix is an extended main matrix with some additions.
(Below is an example of the matrix, produced in “Acclaro” software).
At the bottom go: Weightings, Target Values, and Technical Evaluation (similar to
competitive evaluations at the very right).
<See other sources!>
OPERATIONS STRATEGY RECOMMENDATIONS
1. Invest more in R&D.
2. Shift some emphasis away from short-term performance to the long-term.
3. Work toward continual (albeit gradual) improvements instead of using “big bang”
approach.
4. Work to shorten the product development time.
RELIABILITY
Discuss: probability of failure, parallel and sequential events, redundancy, bathtub curve,
mean time between failures (exponential distribution), lifetime normal distribution.
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