Goods and Service Design

1
Goods and ServiceDesign

• Chapter 6
• Operations Management Goods, Services, and
  Value Chains, by D. A. Collier and J. R. Evans

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Designing Goods Services

• Design is a strategic decision
• Involves high fixed costs
• Has long term impact
• Major tool in responding to/preempting
  competition
• Good Design Elements
• Understand customer needs and wants
• Support strategy
• Use production / organizational capabilities
• Realize customer benefit package synergies
• GOODS Focus on What to sell
• SERVICES Focus on How to sell
• Experience, servicescape, moments of truth

3
Keys to Effective Design

• New Design Introduction
• Read the market well (missing products)
• Make a market (develop need for product)
• Control Competition
• Redesign - Enhancement
• Continuous monitoring of market response
• Continuous monitoring of market trends
• Respond to / preempt competition

4
Design Process

• Triggers (why need new design)
• Customers, Competition, Environment
• Product on paper
• Marketing Plan - General Features
• Detailed design
• RD
• Prototype
• Simulation / Demonstration Project
• Focus Group - Feedback
• Process design
• Production - Operations
• Preparing Market Introduction
• Supplier Selection - Capacity Allocation -
  Procurement
• Advertising Blitz
• Good - Service delivered to customer

Trial Error
5
Design Speed

• Design Leadtime time from conception of an idea
  to having good or service ready for customer
  delivery
• Up to 90 of production cost is determined by
  early design decisions and cannot be changed by
  better production process design alone
• Concurrent Engineering is a method to streamline
  and speed the design process by working in
  multidisciplinary groups

6
Quality by Design

• Quality Engineering
• Consider all parts of product / service process.
  Are they necessary? Can they be improved?
• Materials used, are there better substitutes?
• Are there non value added steps in service
  process?
• How can waste be reduced / eliminated?
• Design Reviews
• Anticipate problems before they occur.

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Quality by Design

• FMEA - Failure Mode and Effects Analysis
• Failure Too many account balance calls
• Cause Improve ATM / Auto-response usability
• DFM - Design For Manufacturability

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Quality by Design

• Product and Process Simplification
• Modular Design
• Example Personal Computer Components
• Example Common Car Platforms
• DfE - Design for Environment
• Eliminate need for packaging
• Promote tote bags to grocery shop customers
• ISO 14000
• Reverse Logistics

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Reliability

• Reliability probability a good, piece of
  equipment, or system performs as intended during
  its specified lifetime and operating conditions
• Probability
• Performance
• Lifetime
• Operating Conditions

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Reliability
Failure Probability
Time
Bathtub Curve
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Reliability by Design Components in Series
System (Total) Reliability Rs p1 p2 p3 pn
Components are in Series ifeach one needs to be
in operation for the system to work
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Reliability by Design Components in Series

• Example Computer Security
• Safety Measure 1 Avoid attacks (hackers) from
  the internet (Reliability 90)
• Safety Measure 2 Avoid attacks from certified
  users employees (Reliability 95)
• System Reliability (Probability Attack not
  Successful)
• 0.90 x 0.95 0.855

0.95
0.90
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Reliability by DesignComponents in Parallel
System (Total) Reliability Rp 1 - (1-p1) (1-p2)
(1-p3)(1-pn)
Components are in Parallel ifeach one needs to
fail for the system to fail
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Reliability by DesignRedundant Components

• A process is redundant if it is used as back up
• Example Airline Security
• Safety Measure 1 Automated Baggage Inspection
  System (Reliability 95)
• Safety Measure 2 Manual Inspection (Reliability
  90)
• System Reliability (Probability Inspection Does
  Not Stop)
• 0.95 (1 0.95) x 0.90 0.995

0.95
Problem Low Utilization of Back-up Process
0.90
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Service Delivery Design

• Facility location and layout
• Servicescape
• Process and job design
• Technology and information systems
• Organizational structure
• Challenge it is not easy to design services on
  computer / paper.
• Instead of prototypes use (typically more costly)
  demonstration projects

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Servicescape Example

• Kaiser Permanente is the largest health
  maintenance organization in the United States.
  Executives thought that they might have to
  replace existing offices and hospitals with
  expensive, next-generation buildings.
• However, it discovered that patients became
  annoyed well before seeing a doctor.
• However, instead of overhauling its buildings,
  Kaiser realized that it had to overhaul its
  patient experience,
• using more comfortable waiting rooms and a lobby
  with clear instructions on where to go larger
  exam rooms with space for several people and
  curtains for privacy, to make patients
  comfortable and special corridors for medical
  staff to meet and increase their efficiency.

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Service Encounter Design

• Customer contact behavior skills
• High contact systems (front room)
• Low contact systems (back office)
• Service provider
• Selection
• Development
• Empowerment
• Recognition reward
• Service recovery guarantees

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Quality Function Deployment

• A structured decision process used to translate
  customer requirements to design specifications

House of quality for signature pizza