PRODUCTION AND
OPERATIONS
MANAGEMENT
Ch. 6: Design of Goods and
Services
POM - J. Galván
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Learning Objectives

How should products/services be
designed systematically?
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Humor in Product Design
As the customer
wanted it.
As Marketing
interpreted it.
© 1984-1994 T/Maker Co.
As Operations
made it.
© 1984-1994 T/Maker Co.
As Engineering
designed it.
© 1984-1994 T/Maker Co.
© 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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Product Strategy Options
• Product differentiation
• Low cost
• Rapid response
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Generation of New Product
Opportunities





Economic change
Sociological and demographic change
Technological change
Political/legal change
Changes in
• market practice
• professional standards
• suppliers and distributors
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Product Components
Product
Brand
(Name)
Physical
Good
Product
Idea
Features
Quality
Level
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Package
Service
(Warranty)
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Product Life Cycle

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
Introduction
Growth
Maturity
Decline
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Product Life Cycle
Introduction

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
Decline

Unless product makes a special
contribution, must plan to terminate
offering
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Product Life Cycle, Sales, Cost,
and Profit
Sales, Cost & Profit .
Cost of
Development
& Manufacture
Sales Revenue
Net Revenue
Loss
Time
Introduction
Growth
Maturity
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Decline
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Percent of Sales From New
Product
50%
40%
Industry
Leader
Top Third
30%
20%
Middle Third
10%
Bottom Third
0%
Position of Firm in Its
Industry
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Products in Various Stages of
Life Cycle
Sales
Introduction
Growth
Maturity
Roller
Blades
Jet Ski
Decline
Boeing
727
Virtual
Reality
Time
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Few Successes
Number
2000
Ideas
1750
Design review,
Testing, Introduction
Market requirement
1500
1000
1000
Functional
specification
500
500
0
Product
specification
100
25
Development Stage
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Product Development Stages









Idea generation
Assessment of firm’s ability to
carry out
Customer Requirements
Functional Specification Scope of design for
Product Specifications manufacturability and
value engineering
Design Review
teams
Test Market
of product
Introduction to Market Scope
development team
Evaluation
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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
•
Identifies, defines, & selects best market
opportunities
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Customer Requirements Stage
¨ Identifies & positions key product benefits
¨ Stated in core benefits proposition (CBP)
¨ Example: Long lasting with more power
(Sears’ Die Hard Battery)
House of Quality
¨ Identifies detailed list of product
attributes desired by customer
Customer
¨ Focus groups or
Requirements
1-on-1 interviews
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Product
Characteristics
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Functional Specification Stage




Defines product in terms of how the product would
meet desired attributes
Identifies product’s engineering characteristics
• Example: printer noise (dB)
Prioritizes engineering characteristics
House of Quality
May rate product compared
to competitors’
Product
Characteristics
Customer
Requirements
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Product Specification Stage


Determines how product will be made
Gives product’s physical specifications
•


Example: Dimensions, material etc.
Defined by engineering
House
of
Quality
drawing
Done often on computer
Component
Computer-Aided
Design (CAD)
Specifications
•
Product
Characteristics
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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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Issues for Product Development

Robust design
• Product is designed so that small variations in production or
assembly do not adversely affect the product

Time-based competition
• Product life cycles are becoming shorter

Modular design
• Products designed in easily segmented components

Computer-aided design
• Designing products at a computer terminal or work station

Value analysis
• Seeks improvements leading either to a better product or a
product which can be more economically produced

Product-by-value analysis
• Lists products in descending order of their individual dollar
contribution to the firm
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Product Documents


Engineering drawing
• Shows dimensions,
tolerances, & materials
• Shows codes for Group
Technology
Bill of Material
• Lists components,
quantities & where used
• Shows product structure
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What documents are needed for
production?



Depends on the production
technology/machinery available
Adapted to the manufacturing
process implemented
What, who, when, how should be
done with our machines
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Gate Valve
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“Exploded” Drawing of the Gate
Valve
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Engineering Drawing of the Gate
Valve
Provide part
specifications and
dimensions in
sufficient detail for
manufacturing
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Parts List of the Gate Valve
The parts list provides a
listing of the component
parts of a product. In
addition to make or buy
decisions, a parts list
includes part number, part
name, number of parts
per product, and drawing
references
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Bill of Materials for the Gate Valve
Bill of materials is also
referred to as a structured
parts list since it includes
all of the information
typically included in the
parts list, as well as
information concerning
the structure of the
product.
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Make-or-Buy Decisions


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
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Group Technology
Characteristics

Parts grouped into families
•

Uses coding system
•

Similar, more standardized
parts
Describes processing &
physical characteristics
Part families produced
in manufacturing cells
•
Mini-assembly lines
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Group Technology Code Example
4mm x 45° chamfer
80mm
60mm
Round Rod
Product Code:
1 5 3 1
112mm
Part function (round rod)
Material (steel)
Max. length (50 < L < 150)
Primary machine (lathe)
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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
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Production Documents




Assembly
Drawings
Assembly chart
Route sheet
Work order
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Assembly Drawing

Shows exploded view of product
Head
Neck
Handle
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End
Cap
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Assembly Chart
1
Tuna Fish
SA1
2
3
Tuna
Assy
A1
Sandwich
Mayonaise
FG
Bread
A2
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Assembly Chart I
It is an analog model of the
assembly process. Circles with
a single link denote basic
components, circles with
several links denote assembly
operations/subassemblies,
and squares represent
inspection operations.
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Assembly Chart II
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Route Sheet

Lists all operations
R o u te S h e e t fo r B ra c k e t
Sequence
M a c h in e
O p e ra tio n
1
Shear # 3
2
Shear # 3
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°
4
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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
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Information Gathering
Information about process :
- Route sheet (equipment and operation times)
- Precedence Diagram (prerequisite assembly steps
before new assembly step)
- Operation process chart (processing operations,
assembly operations, and inspections)
Route Sheet for one Component of the
Gate Valve
Route sheet summarizes
whether a part will be
purchased or produced,
how the production of a
part will be achieved,
what equipment will be
used, and how long it take
to perform each
operation.
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Precedence Diagram for Assembling the
Gate Valve
A precedence diagram establishes the prerequisite assembly steps
that must be completed before performing a given assembly step.
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Operations Process
Chart
By superimposing the route
sheets and the assembly chart,
a chart results that gives an
overview of the flow within the
facility. This chart is the
operations process chart.
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Work Order
Authorizes producing a given item, usually to a schedule
© 1984-1994 T/Maker Co.
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Engineering Change Notice
(ECN)

A correction or modification of an
engineering drawing or bill of
material
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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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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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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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Documents in the design of
services



Are they needed?
Whenever rules must be applied in
many different sites (e.g.
Mcdonald’s)
Whenever procedures must be
followed to fullfil requirements
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McDonald’s manuals
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McDonald’s manuals
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What do you need to implement
this reception message?
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