mgt

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PRODUCTION AND OPERATIONS MANAGEMENT

• Ch. 6 Design of Goods and Services

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Learning Objectives

• How should products/services be designed
  systematically?

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Humor in Product Design
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What is a Product?

• Need-satisfying offering of an organization
• Example
• PG does not sell laundry detergent
• PG 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
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Product Life Cycle

• Introduction
• Growth
• Maturity
• Decline

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Product Life CycleIntroduction

• Fine tuning
• research
• product development
• process modification and enhancement
• supplier development

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Product Life CycleGrowth

• Product design begins to stabilize
• Effective forecasting of capacity becomes
  necessary
• Adding or enhancing capacity may be necessary

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Product Life CycleMaturity

• 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 CycleDecline

• Unless product makes a special contribution, must
  plan to terminate offering

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Product Life Cycle, Sales, Cost, and Profit
Cost of Development Manufacture
Sales Revenue
Net Revenue
Loss
Time
Introduction
Maturity
Decline
Growth
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Percent of Sales From New Product
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Products in Various Stages of Life Cycle
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Few Successes
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Product Development Stages

• Idea generation
• Assessment of firms ability to carry out
• Customer Requirements
• Functional Specification
• Product Specifications
• Design Review
• Test Market
• Introduction to Market
• Evaluation

Scope of design for manufacturability and value
engineering teams Scope of product development
team
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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)
• Identifies detailed list of product
  attributes desired by customer
• Focus groups or 1-on-1 interviews

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Functional Specification Stage

• Defines product in terms of how the product would
  meet desired attributes
• Identifies products engineering characteristics
• Example printer noise (dB)
• Prioritizes engineering characteristics
• May rate product compared
• to competitors

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Product Specification Stage

• Determines how product will be made
• Gives products physical specifications
• Example Dimensions, material etc.
• Defined by engineering drawing
• Done often on computer
• Computer-Aided
• Design (CAD)

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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