Chapter 6

The Product
Development
Process

New Product Development

The case of Tata Nano

A good Product Development exercise

has several feature

unambiguous objectives for project

involvement of multiple stakeholders
role of suppliers in cutting time
cost and value engineering
We see several examples of these in
the Nano project

The product development team at Tata

Motors had to meet three
requirements for the new vehicle:

it should be low-cost,
adhere to regulatory requirements, and
achieve performance targets such as
fuel efficiency and acceleration capacity

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Product Development Process

Operations management addresses the issue of innovation by

enabling firms with distinctiveness in the offering through product
development process
Product development process is

A broad set of tools, techniques and concepts that

Enables firms to bring out new products & services
faster and at a lower cost

Organisations have experienced several tangible benefits from a

good product development process.

While Japanese manufacturers such as Honda and Toyota introduced as

much as 85 models between 1982 and 1989, the American counterparts
were able to introduce only 49 models.
By introducing products six months ahead of the competitors, a firm can
gain as much as three times of the cumulative profit over the life of the
product, compared to introducing the product along with the competitors

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Product Development Process

Possible outcomes/benefits
Dimensions

PotentialBenefits/Outcomes
Provides unique benefits and features for the
customers

CustomerDimensions

Meets customer expectations better than

existing products
Provides better quality as perceived by the
customers
Results in innovative offerings to the customers
Simplifies product use and maintenance

SustainedPerformance

Reduces the cost of use over the life time

Addresses environmental issues pertaining to
manufacture, use and disposal
Simplifies the manufacturing process

OperationalAdvantages

Simplifies the assembly process

Minimizes the need for revisions and changes
after introduction
Enables faster new product introduction

StrategicAdvantages

Reduces the cost of the product

Provides capabilities for mass customization

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Product Development Process

Four Stages

Concept Generation: understanding what the

customer needs are and translating them into
alternative ideas for products that services that can
be developed
Design: detailed specifications are first drawn about
the product/service
Development: physical development of the product;
during this stage, the details arrived at the drawing
board are physically transferred to reality
Production: physical development of the product.
During this stage, the details arrived at the drawing
board are physically transferred to reality

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Product Development Process

Sequential Decision Points

Design

Concept Generation

Idea
Generation

Feasibility
Study

Preliminary
Design

No

Yes
Product
feasible?

Process
Planning
Cost
Planning

No

Design
OK?
Yes

Production

Final
Design & Manfg.
Specifications
Commercial
Production

Yes

Prototype
OK?

Prototype
Development
& Testing

No

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Development

Product Development Funnel

Stage-Gates
Gate 1

Concept
Generation

Gate 2

Product
Design

Gate 3

Development

12

Time (Months)

Prototype
Testing

20

24

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Production

Organization for Product Development

Process: Traditional Approach

Customers

Marketing

Suppliers

Design

Planning

Procurement

Production

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Finance

Organization for Product Development

Process: Concurrent Engineering

Planning

Pro
cur
em
ent

Concurrent Engineering
Team Structure
Des
ign

Suppliers

Production

Marketing

s
Cu

rs
e
to m

ce
n
a
n
Fi

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Tools for efficient product development

Understanding customers needs
Market Research
Focus Groups
In-depth qualitative
interviews

Hierarchy of
Customer Needs

Quantitative Analysis
Statistical analysis
Hypothesis Testing

Qualitative Analysis
Reproduce customers
own words

Translate

Create Bundles of
Customer Attributes

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Tools for efficient product development

Quality Function Deployment

5. Tradeoffs

House of Quality
2. Importance

1. Customer
requirements

3. Product
characteristics

4. Relationship
matrix

7. Technical assessment &

target values
Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

6. Benchmarks

House of
Quality

An
illustration
for a
Restaurant

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Tools for Efficient Product Development

Value Engineering

Value engineering
Refers to a set of activities undertaken to
investigate the design of components in a
product development process
Strictly from a cost value perspective
To alert the product development team to
alternatives that
could either bring down the cost or
increase the value
By improving on the functionalities and
performance without increasing the cost

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Value Engineering

Agenda for brainstorming

Can we eliminate certain features from the design?
Are there instances of over-design in certain components
increasing the cost? If so, how can rationalise these aspects?
Are there certain features of design that cost more than
what it is worth?
Is it possible to replace the proposed method of manufacture
with a less costly one?
Is it possible for someone else (suppliers) to produce certain
components cheaper, faster and better?
Can we eliminate parts and replace them with more universal
parts?
Are there opportunities for cost cutting by development of
import substitution methods?

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Tools for Efficient Product Development

Design for Manufacturability (DFM)
A structured approach to
Ensure that manufacturing requirements and
preferences are considered fairly early in the
design
Without the need for excessive coordination
between the two

Facilitates Designing a product for easy &

economical production
Identifies easy-to-manufacture productdesign characteristics

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

DFM Guidelines

Addresses three major areas

Variety Reduction
Minimize the number of
parts
Minimize sub-assemblies
Avoid separate fasteners
Use standard parts when
possible
Design parts for multi-use
Develop a modular design
Use repeatable &
understood processes

Operational Convenience
Simplify operations
Eliminate adjustments
Avoid tools
Design for minimum
handling
Design for top-down
assembly
Design for efficient &
adequate testing

Cost Reduction
Analyze failures
Rigorously assess value
Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Tools for Efficient Product Development:

Mass Customisation methods
Standardisation
uses commonly available parts
reduces costs & inventory

Modular design
combines standardized building
blocks/modules into unique products

Product Platforms

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Standardisation
An Example

Sl. No.
Part No.
1
375 PH 02321
2
CHH 18 01615
3
CHH 18 01616

Description
Hose
Hose
Hose

Remarks
These hoses can be substituted with
one variety after careful examination
of the assemblies

4
5

375 PH 02046
CHH 04 00805

Hose
Hose

These hoses can be substituted with

one variety after careful examination
of the assemblies

6
7

375 PH 02184
375 PH 02281

Tube Str. (LH)

Tube Str. (RH)

LH and RH parts can be avoided

after suitable redesign

8
9

375 PH 02176
375 PH 02168

Tube Str. (LH)

Tube Str. (RH)

LH and RH parts can be avoided

after suitable redesign

10
11

375 PH 02208
375 PH 02257

Tube Str. (LH)

Tube Str. (RH)

LH and RH parts can be avoided

after suitable redesign

12
13

375 PH 02216
375 PH 02265

Tube Str. (LH)

Tube Str. (RH)

LH and RH parts can be avoided

after suitable redesign

14
15

375 LL 31583
375 LL 31575

Corner Tooth (LH)

Cornet Tooth (RH)

Both these teeth can be substituted

with a straight teeth

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Product Platforms
Platform is a collection of assets that are
shared by a set of products

components (part designs, fixtures, tools)

processes (for manufacture, assembly)
knowledge (know how, techniques, methods)
people & relationships (design teams, suppliers)

A way to achieve successful mass

customisation

Source: Planning for Product Platforms, Robertson & Ulrich, SMR, Summer 1998.
Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Product Platforms
Fundamental issues

Customers care about distinctiveness

Differentiating Attributes (noise level inside an
automobile)

Costs are favourably influenced by the

degree of commonality
Chunks - major physical elements of a product
(engine compartment in automobiles)

Balancing distinctiveness & commonality is

both a requirement and a challenge for
firms

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Product Platforms
Trade-off issues
Products distinctive
Fewer common parts

Distinctiveness

Products not distinctive

Fewer common parts

Products distinctive
Many common parts

Products not distinctive

Percentage of common parts Many common parts

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Produce Development Process

Performance Measures
Costbasedmeasures

Target costs achievement status

Quantum of value engineering efforts
Cost of first production run
Cost overrun of prduct development project
Percentage of standard parts & processes
Time to return to normal quality

Designeffectiveness

Number of Revisions in the product design

Cost of field repair/service during first year after
introduction
Time overrun of product development project
Time to market
Concept to market

StrategicMeasures

Number (or rate) of new products introduced

Percent of new products in the overall product
portfolio
Total Product Cost

Marketimpact

Market share of the new product

Total Product Sales in the first two years after
introduction

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Life Cycle Costing

Unifies design & costing functions

Concept
Generation

Preliminary
Design

Detailed
Design

Production

Source: Target costing for effective cost management, Management & Accounting Research, Jan. Mar. 1999
Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Target Costing

Unifies several functional areas

Sales: Selling Price,
Specifications, Sales
Expenses
Purchasing:
Sourcing
decisions, Joint
cost reduction
efforts with
the supplier

Engineering: Design for

manufacturability, VE,
Specifications for the project

Finance: Overall co-ordination

of the exercise, Profit & Loss
Summary
Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Manufacturing:
Process
Planning,
Value Engg.
(VE), Process
Costs

Software Product Development

Stages

The process followed to design, develop and

deliver a software product, from the inception
of an idea to the delivery of final software to
customer is called software product
development
A software development process consists of
four stages:

Requirement analysis
Design
Development (coding)
Testing

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Product Development Process

Chapter Highlights

Operations management addresses the issue of innovation

through the product development process
Product development process consists of a structured set
of activities including concept generation, design,
development and production
Concurrent engineering is an approach to build a crossfunctional team of professionals cutting across various
departments and suppliers to accelerate the new product
development process
Quality Function Deployment (QFD) is a process by which
the qualitative attributes of customer needs are translated
into a bundle of quantitative attributes pertaining to
design, process planning and manufacturing specifications

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education

Product Development Process

Chapter Highlights

Design for Manufacturability (DFM) principles outline a

set of guidelines that help organisations reduce variety
and cost and improve operational convenience of
manufacturing while designing new products.
Controlling part proliferation through standardisation,
modular design and product platforming are the tools of
mass customisation.
Management accounting provides tools such as target
costing and life cycle costing for efficient new product
development.
A software development process consists of four stages;
requirements analysis, design, development (coding),
and testing and delivery.

Mahadevan (2010), Operations Management: Theory & Practice, 2nd Edition Pearson Education