ICCT COLLEGES

V.V. Soliven Ave II, Cainta, 1800 Rizal

CHAPTER III: THE DESIGN OF GOODS AND

SERVICES

RATINGS

Submitted By:

DEANVER ADOLFO ROLDAN

MARK JASON MARBELLA

MARIEL MARIE QUINTO

ROBERT MONEDERO

MARIGAY LABITAG

JASPER DAVIS

ZOREN LERIO

RENZ BALAIS
GOODS AND SERVICES SELECTION

Product Strategy Options Support Competitive Advantage

Differentiation – by offering distinctly unique and high quality products/services

Low-Cost Strategy-by designing a product/services that can be produced with a minimum

costs;

Rapid Response-executing te fastest and shortest time to get a product/services to market

before customer tastes change and to do so with the latest technology and innovations.

Product Life Cycles and Strategy

Introductory Phase or Market Development-When a new product is first brought to

market. (This is work out of the kinks)

Growth Phase - Demand begins to accelerate and the size of the total market expands rapidly.
(Adjust to volume)

Maturity Phase or Market Maturity - Demand levels off and grows for the most part, only at the
replacement and new family formation rate. (Turn the Crank)

Decline Phase or Market Decline - Product begins to lose customer appeal and sales drift
downward. (Juggling Act)

Product-By-Value Analysis

A product value report allows management to evaluate possible strategies for each
product. These may include:

1. Increasing cash flow (for example, increasing contribution by raising selling price or
lowering cost)
2. Increasing market penetration (improving quality and/or reducing cost or price
3. Reducing costs (improving the production process)
GENERATING NEW PRODUCT

New Product Opportunities

1. Understanding the customer is the premier issue in new-product development.

2. Economic change brings increasing levels of affluence(prosperity) in the long run but
economic cycles and price changes in the short run.
3. Sociological and Demographic change may appear in such factors as decreasing
family size
4. Technological change makes possible everything from hand-held computers to cellular
phones to artificial heart.
5. Political/legal change brings about new trade agreements, tariffs and government
contract requirements.
6. Other changes may be brought about through market practice, professional standards,
suppliers, and distributors.

Importance of New Products

Despite constant efforts to introduce viable new products, many new products do not
succeed. Product selection, definition, and design occur frequently perhaps hundreds of times
for each financially successful product.

Product Development System

Sources of Ideas

A. Marketing people see the need for something their customers want
B. Production people see opportunities to improve methods and processes
C. Everyone in an organization is a potential source of ideas.
Quality Circles – to stimulate ideas
D. Outside the company, as from its customers, or the public, or from sources within the firm
not directly responsible for new product ideas like its employees.

Stages in Developing a Marketable Product

1. Initiation of an idea
2. Gathering of necessary data on the marketability of the product
3. Screening of the gathered by the preliminary product review committee consisting of
specialists from the sales, administration, production, and design departments.
4. Determination of the immediate and ultimate marketing objectives of the product after
through scrutiny
5. Development of the product with the combined efforts of the market research. Product
design and manufacturing departments.
6. Checking of the product development results and pre-testing for marketability.
 7. Organizing the manufacture of the first product, prototype, or pilot project.
8. Field test of the product on its marketability
9. Review of the design based on the test results and from the point of view of economic
manufacture.
10. Standardization of the product criteria and the method of manufacturing.

Quality Function Deployment (QFD)

Refers to;

a. Determining what will satisfy the customer.

b. Translating that customer desires into the target design.

One of the tools of QFD is the house of quality, a graphic technique for defining the
relationship between customer desires and product or service. The seven basic steps are.

1. Identify customer wants in the product or service.

2. Identify how the good/service will satisfy customer wants. Identify specific product
characteristics, features, or attributes and show how they will satisfy customer wants.
3. Relate customer wants to product how. Build a matrix that shows this relationship.
4. The Identify relationships between the firm’s how.
5. Evaluate competing ratings.
6. Evaluate competing products.
7. Determine the desirable technical attributes, your performance, and the competitor’s
performance against these attributes.

Organizing for Product Development (APPROACHES)

A. Traditional US approach to product development is an organization with distinct

departments.
1. A research and development department to do the necessary research
2. An engineering department to design the product.
3. A manufacturing engineering department to design a product that can be
reproduced.
4. A production department that produces the product.
B. Assign a product manager to “champion” the product through the product
development system and related organizations.
C. Use of teams. This is perhaps the best used in US. Such teams are variously known as the
product development teams, design for manufacturability teams and value engineering
teams.
D. Japanese approach. They bypass the team issue by not subdividing into the
organizations into research and development, engineering, production, and so forth.
In addition to immediate, obvious cost reduction, design for manufacturability and value
engineering may produce other benefits including;

 Reduced complexity of the product.

 Additional standardization of components.
 Improvement of functional aspects of the product.
 Improved job design and job safety.
 Improved maintainability (serviceability) of the product.
 Robust design.

Value Engineering

Value Engineering (usually done by design engineers) or value analysis (usually done by the
purchasing department) means that everything that is made or purchased is thought of as
being made or brought to serves particular purpose. Value engineering answers:

a. Would another lower-cost design work as well?

b. Could another less costly item fill the need?
c. Would less expensive material do the job?
d. On purchased items, are the vendors’ prices as low as they could be for the level
of quality and delivery dated required?

Value engineering can be divided into five phases:

1. An information Phase – getting all the available facts concerning the item being studied
and answering them.
2. Creative Phase – checklists are
3. Evaluation Phase – Ideas are refined
4. Program Planning – with certain approach selected, the next step is to develop the more
promising ideas.
5. Reporting Phase – when the value engineers have fully developed their
recommendations, they are ready to report the results to management, to design and
manufacturing engineers, and to others directly concerned.

ISSUES FOR PORDUCT DESIGN

Robust Design

This means that the product is designed so that small variations in productions or
assembly do not adversely affect the product.

Modular Design

Products Designed in easily segmented components are known as modular design.

Modular designs offer flexibility to both production and marketing. The production department
typically finds modularity helpful because it makes products development, production, and
subsequent changes easier. Moreover, marketing may like modularity because it adds flexibility
to the ways customers are satisfied.

Computer-Aided Design (CAD)

CAD is the use of computers to interactively design products and prepare engineering
documentation. Although the use and variety of CAD software is extensive, most of it is still used
for drafting and three-dimensional drawings.

1. Design for Manufacture and Assembly (DFMA) – Software that allows designers to look at
the effect of the design on the manufacturing of the product.
2. 3-D Object Modeling – An extension of the CAD that builds small prototypes.
3. Standard for the Exchange of Product Data (STEP) – This provides a format allowing the
electronic transmittal of three dimensional data.

Computer-Aided Manufacturing (CAM)

CAM refers to the use of a specialized computer programs to direct and control
manufacturing equipment.

 Product Quality – CAD permits the designer to investigate more alternatives,

potential problems, and dangers.
 Shorter Design Time – A shorter design phase lowers cost and allows a more rapid
response to the market.
 Production Cost Reduction – Reduced inventory, more efficient use of personnel
through improved scheduling, and faster implementation of design changes lower
costs.
 Database Availability – Provides information for other manufacturing software and
accurate product data so everyone is operating from the same information, resulting
in dramatic cost reduction.
 New Range of Capabilities – CAD/CAM removes substantial detail work, allowing
designers to concentrate on the conceptual and imaginative aspects of their tasks.

Virtual Reality

A visual form of communication in which images is substitute for reality and typically
allow the user to respond interactively.

Value Analysis

This is a review of successful products that takes place during the production process. It
seeks improvements that lead to either a better product or a product made more
economically. Value analysis asks more fundamental questions like:
  What does it do?
 What does it cost?
 What else does the same thing?
 That does the alternative cost?
 Which is less costly?

Ethics and Environmentally Friendly Designs

An operations manager’s most ethical, and an environmentally sound activity is to

enhance productivity while delivering desired goods and services.

Goals for ethical and environmentally friendly design;

1. Developing safe and more environmentally sound products.

2. Minimizing waste of raw materials and energy.
3. Reducing environmental liabilities.
4. Increasing cost-effectiveness of complying with the environmental regulations.
5. Being recognized as a good corporate citizen.

Green manufacturing means sensitivity to environmental issues in product design,

manufacture and disposal.

Legal and Industry Standards

Laws and industry standards can help operations managers make ethical and socially
responsible decisions to guide them in product design, manufacture/assembly and
disassembly/disposal.

TIME BASED COMPETITION

This is competition based on time; rapidly developing products and moving them to
market. Much of the current competitive battlefield is focused around the speed of product to
market.

Joint Ventures

They are combine ownership, usually between two firms, to form a new entity.

Alliances

Cooperative agreements that allow firms to remain independent, but that pursue
strategies consistent with their individual missions.
DEFINING THE PRODUCT

Once new goods or services are selected for introduction, they must be defined in terms
of its functions that is, what it is to do.

Make-or-buy

This distinguishes between what the firm wants to produce and what it wants to
purchase.

Group Technology

This is a product and component coding system that specifies the type of processing and
the parameters of the processing.

 Improve design ( because more design time can be devoted to fewer components)
 Reduce raw material and purchases.
 Simplified production planning and control.
 Improved layout, routing, and machine loading.
 Reduce tooling setup time, and work-in-process and production time.

DOCUMENTS FOR PRODUCTION

Documents

1. Assembly Drawing – This is an exploded view of the product, usually via a three-
dimensional or isometric drawing.
2. Route Sheet – This is a listing of the operations necessary to produce the component with
the specified in the bill of material.
3. Work Order – This is an instruction to make a given quantity of a particular item, usually to
a given schedule.
4. Engineering Change Notices – This is a correction or modification of an engineering
drawing or bill of material.
5. Configuration Management – is a system by which a product planned and changing
components are accurately identified and for which control and accountability of
change are maintained.

Product Life-Cycle Management

This is a suite or umbrella of software programs that attempts or ties together phases of
product design and manufacture.
SERVICE DESIGN

Designing services is challenging because they often have unique characteristics.

1. One technique is to design the product that customization is delayed as late in the
process as possible.
2. To modularize the product so that customization takes the form of changing modules.
3. Another approach to the design of services is to divide into small parts and identity those
parts that lend themselves to automation or reduced customer interaction.
4. Because of the high customer interaction in many service industries a fourth technique is
to focus design on the so-called moment of truth when the relationship between the
provider and the customer is crucial.

Documents for Services

The documentation for a service will often take the form of explicit job instruction that
specify what is to happen at the moment of truth.

1. Be especially discreet when talking to the customer through the microphone.

2. Provide written instructions for customers who must fill out form you provide.
3. Mark lines to be completed or attach a note with instructions.
4. Always say “please” and “thank you” when speaking through microphone.
5. Establish eye contact with the customer if the distance allows it.

APPLICATION OF DECISION TREES TO PRODUCT DESIGN

1. Be sure that all possible alternatives and states of nature are included in the tree. This
includes an alternative of doing nothing.
2. Payoffs are entered at the end of appropriate branch.
3. The objective is to determine the expected value of each course of action.

TRANSITION TO PRODUCTION

If conflicting pressures exist, management must make a decision more development or

production. When the product is deemed both marketable and producible, line management
will assume responsible.