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Reading 5 – Designing Products & Services
DKI Jul 2016 1
| | When products are designed the detailed characteristics of each product are established |
| | The characteristics of a product directly affect how a product can be produced |
| | How the product is produced determines the design of the production system |
Six (6) Steps in new product/service development:
Idea
Research (basic and applied)
Design product/service
Design production processes
Feasibility study (go/no go)
Prototype
Prototypes exhibit the basic form, fit, and function of the final product.
Product design goals:
Rapid development for marketplace
Low cost
Reliability
Superior performance
Approximately 5% of all new-product ideas make it to the marketplace
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Enterprises must design, develop, and introduce products faster and faster
Performance, reliability, quality, and cost of products and services must be
continuously improved
Toyota Example: A continuous product improvement process was undertaken to
refine product designs to reduce costs.
| | Taillights were redesigned to be connected by a single connector versus two: savings of $0.42 per light Smaller plastic clips for weather-stripping: savings of $1.05 per clip |
| |
Toyota manufactures 10+ million vehicles per year. These seemingly small,
incremental improvements, year after year, results in huge savings.
Designing products for ease of manufacturing is a key way for U.S. manufacturers
to compete globally
Designing for ease of manufacturing requires the 3 Ss:
Specifications
Standardization
Simplification
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Specification = precise information about a material, part or product
Standardization = the design activity that reduces variation (waste)
This results in:
Higher volume
Lower production cost per unit
Higher quality
Ease of automation
Lower inventory investment
Simplification = elimination of complex features
Designing for Quality:
Quality cannot be inspected into products.
Inspection is very costly – sorting “bad” from “good” is wasteful
100% Inspection does not exist
Quality is determined by the customer’s perception, not the producer’s. Perception
is reality. Do not ever forget this.
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Thinking Time:
Does “quality” require added cost to the operation or is it “free”? Be prepared to
explain your answer. (Reference Phillip Crosby’s book)
Three Dimensions of Service Design:
Degree of standardization of the service
Degree of customer contact in delivering the service – high or low
Mix of physical goods and services (fast food)
The degree of customer contact is a major factor in designing the production
process for any service
Thinking Time:
Why do McDonalds, Wendy’s, and Burger King have different approaches to the
way customers approach their counters?
Go get a cup of coffee or some other source of staying awake
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Two (2) Types of Product Designs
1. Product-Focused: Production departments are organized according to the
type of product/service being produced.
Sometimes product-focused design is called assembly line or continuous
production. (Think automobiles)
2. Process-Focused:
Production operations are grouped according to type of processes.
| | Also commonly called job shops – products move together from department to department in batches (jobs). |
In process-focused production, jobs spend the majority of their time
waiting to be processed.
Examples of Process Focus operations:
Hospitals, auto repair shops, education, team athletics
Can you think of others?
Two product design decisions:
Determining the type of product design – custom or standard
| | Deciding on finished-goods inventory policy: Produce-to-Stock or Produce-to-Order |
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Can you give examples of Produce to Stock and Produce to Order? Be prepared to
do so.
What costs are associated with carrying inventory? List at least five (5).
Two (2) Types of Production Processes for Services
Customer as a participant:
Examples of this approach are automated teller machines, self check out, selfserve gas stations, and salad bars
Customer as product
Examples include medical clinics and hair salons. Customized service and a high
degree of customer contact are provided.
Each type of process design requires different amounts of capital.
Capital costs are usually fixed costs
Fixed costs are the costs that exist when the production volume is zero (0)
Buildings and equipment are examples of fixed costs
Variable costs vary in total with the volume of products produced
Examples are materials and direct labor
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Break-Even (BE) Analysis: Commonly used to help operations managers to choose
between cost alternatives
Problem Time: Fixed costs = $ 7500; variable costs per unit of production = $0.25;
selling price = $1.00. What is my break-even production volume, expressed in units?
Formula:
BE units: FC ÷ (SP per unit – VC per unit)
Assembly Charts:
| | Typically used to provide a view of how materials and subassemblies are fit together |
| | Assembly charts are sometimes called “gozinto charts” (from words “goes into”). |
| | Some called a “parts explosion”. On the chart, the finished product is “exploded” into all the parts and subassemblies |
| | Many times an assembly chart is included inside the shipping container of a retail product – one requiring “some assembly” |
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Process Charts:
Provide greater detail than do assembly charts
| | Sometimes called “check charts” because the operator “checks off” each the steps as they are performed |
Very useful tools for quality control and cost accounting
We have come to the end of this reading.
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