Chap 6

COLLIER/EVANS
OM
6
Goods and
Service
Design
Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
LEARNING OUTCOMES
1 Describe the steps involved in designing
goods and services
2 Explain the concept and application of
quality function deployment
3 Describe how the Taguchi loss function,
reliability, design for manufacturability,
and design for sustainability are used for
designing manufactured goods
Copyright 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
OM5 | CH6
LEARNING OUTCOMES (continued)
4 Explain the five elements of service

delivery system design
5 Describe the four elements of service
encounter design
6 Explain how goods and service design
concepts are integrated at LensCrafters
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Introduction
Every design project is a series of
trade-offs between:
Technology and functionality
Ambition and affordability
Desires of the people creating the
object and needs of the people using it
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Steps Involved in Designing Goods

and Services
Strategic mission and vision
Strategic and market analysis, and
understanding competitive
priorities
Customer benefit package design
and configuration
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Steps Involved in Designing Goods

and Services
Detailed goods, service, and
process design
For manufactured goods
- Manufactured design and
development
- Process selection and design
For services
- Service and service delivery design
- Service encounter design
Market introduction/deployment
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Customer-Focused Design
Customer requirements - Wants
and needs are reflected through
the design of good or service
Voice of the customer: Customer
requirements, as expressed in the
customers own terms
Quality function deployment(QFD):
Approach to guide the design,
creation, and marketing of goods and
services by:
- Integrating the voice of the customer
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Building the House of Quality

Determine customer requirements
through the voice of the customer
(VOC)
Define technical requirements of
the product
Determine interrelationships
between the technical
requirements
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Building the House of Quality

Relationship matrix defines what
technical requirements satisfy VOC
needs
Customer priorities and
competitive evaluation help select
which VOC requirements the
product should focus on
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Exhib
6.2
it
The House of Quality
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10
Tolerance Design
Determining the acceptable
tolerance
For manufactured goods, design
blueprints specify a target
dimension (nominal), along with a
range of permissible variation
(tolerance)
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11
Exhib
6.3
it
Traditional Goal Post View

of Conforming to
Specifications
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12
Taguchi Loss Function

Genichi Taguchi, a Japanese
engineer, maintained traditional
practice of setting design
specifications is flawed
Argument The smaller the variation
about the nominal specification, the
better the quality
In turn, products are more consistent,
fail less frequently, and will be less
costly in the long run
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13
Taguchi Loss Function

L(x) = k(x T )2
Where
- L(x) - Monetary value of the loss
associated with deviating from the
target, T
- x - Actual value of the dimension
- k - Constant that translates the
deviation into dollars
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14
Exhib
6.4
it
Nominal-Is-Best Taguchi
Loss Function
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15
Design for Reliability

Reliability: Probability that goods
and services performs its intended
function for stated period of time
under specified operating
conditions
Probability - Value between 0 and 1
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16

Series system - If one component
fails, the entire system fails
Reliability of a series system - Product
of the individual probabilities of each
process in a system
- Rs = (p1)(p2)(p3). . . (pn)
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17
Exhib
6.7
it
Structure of a Serial System
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18

Parallel systems - Functions are
independent and the entire system
will fail only if all components fail
Rp = 1 (1 p1)(1 p2)(1 p3). . . (1
pn)
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19
Exhib
6.8
it
Structure of a Parallel
System
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20
Design for Manufacturability

(DFM)
Process of designing a product for
efficient production at the highest
level of quality
Product simplification: Process of
trying to simplify designs to reduce
complexity and costs
- Improves:
Productivity
Quality
Flexibility
Customer satisfaction
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21
Design for Sustainability

Design for environment (DfE):
Explicit consideration of
environmental concerns during the
design of goods, services, and
processes
Designing for recycling
Disassembly
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22
Service Delivery System Design

Includes
Facility location and layout

Servicescape
Process and job design
Technology and information support
systems
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23
Facility Location and Layout

Location affects a customers
travel time
Important competitive priority in a
service business
Layout affects process flow, costs,

and customer perception and
satisfaction
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24
Servicescape
Physical evidence that customer
can use to form an impression
Provides the behavioral setting where
service encounters take place
Standardization - Enhances
efficiency, especially for multiple
site organizations
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25
Dimensions and Types of

Servicescape
Dimensions
Ambient conditions
Spatial layout and functionality
Signs, symbols, and artifacts
Types
Lean servicescape environment:
Provide service using simple designs
Elaborate servicescape
environment: Provide service using
more complicated designs and service
systems
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26
Service Process Design

Activity of developing an efficient
sequence of activities to:
Satisfy internal and external customer
requirements
Develop procedures to ensure that:

Things are done right the first time
Interactions between customers and
service providers are simple and quick
Human error is avoided
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27
Technology and Information

Support Systems
Hard and soft technology is an
important factor in designing
services
Ensure:
Speed
Accuracy
Customization
Flexibility
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28
Service Encounter Design

Focuses on the interaction, directly
or indirectly, between the service
provider and the customer
Principal elements
- Customer contact behavior and skills
- Service provider selection,
development, and empowerment
- Recognition and reward
- Service recovery and guarantees
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29
Customer Contact Behavior

Physical or virtual presence of the
customer in the service delivery
system during a service experience
Measured by the percentage of time
the customer must be in the system
relative to the total time it takes to
provide the service
- High-contact systems
- Low-contact systems
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30
Customer Contact Requirements

Measurable performance levels
that define the quality of customer
contact with representatives of an
organization
Technical requirements as response
time
Service management skills such as
cross-selling other services
Behavioral requirements
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31
Service Provider Selection,

Development, and Empowerment
Recruit and train employees to
exceed customer expectations
Empowerment: Giving people
authority to make decisions based
on:
Intuition
Control over the work
Taking risks and learning from
mistakes
Promoting change
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32
Recognition and Reward

Key motivational factors
Recognition
Advancement
Achievement
Nature of the work
Good compensation system can help
to attract, retain, and motivate
employees
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33
Service Guarantees
Promise to reward and compensate
a customer if a service upset
occurs during the service
experience
Service upset: Problem that a
customer has faced with the
service delivery system
Service failure
Error
Defect
Mistake
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34
Service Recovery
Process of correcting a service upset
and satisfying the customer
Steps
Begin immediately after a service upset
Document the process and train employees
Listen to the customer and respond
sympathetically
Resolve the problem quickly, provide an
apology, offer compensation
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35
An Integrative Case Study of

LensCrafters
Steps 1 and 2 - Strategic mission,
market analysis and competitive
priorities
Step 3 - Customer benefit package
design and configuration
Steps 4a and b - Manufactured
good design and process selection
Step 4c - Service-delivery system
design
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36

LensCrafters
Step 4d - Service encounter design
Steps 5 and 6 - Market
introduction/deployment and
evaluation
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37

LensCrafters
Mission statement - Focused on being
the best by:
Creating customers for life by delivering
legendary customer service
Developing and energizing associates and
leaders in the worlds best work place
Crafting perfect quality in about an hour
Delivering superior overall value to meet
each customers individual needs
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38
Exhib
6.11
One Example View of
it
LensCrafters Customer
Benefit Package
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39

LensCrafters
Manufactured good design and
process selection
Manufacturing process is integrated
into the service facility to provide
rapid order response, yet not sacrifice
quality
Equipment used in labs is
technologically advanced in the
industry
Eyewear is manufactured to
specifications in a clean, modern and
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40
Exhib
it
6.12
A Schematic View of a Typical LensCrafters

Store Layout
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41

LensCrafters
Service encounter design
Each job requires both technical and
service management skills
Associates are well trained, friendly,
and knowledgeable about their jobs
Lab technicians are certified in all work
tasks and processes
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42

LensCrafters
Market introduction/deployment
and evaluation
Develop processes to introduce
changes into all existing locations
- To maintain operational consistency
and achieve its strategic objectives
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43
SUMMARY
To design and improve goods and
services, most companies use the
steps involved in designing goods
and services
Taguchi loss function: L(x) = k(x T
)2
Essential to know the elements of
service delivery system design and
elements of service encounter
design
LensCrafters manufacturing and
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44
KEY TERMS
Customer contact
Design for environment (DfE)
Design for manufacturability
(DFM)
Elaborate servicescape
environment
Empowerment
High-contact systems
Lean servicescape environment
Low-contact systems
Product simplification
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45
KEY TERMS
Quality function deployment
(QFD)
Reliability
Service delivery system design
Service encounter design
Service guarantee
Service process design
Service recovery
Service upset
Servicescape
Voice of the customer
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46
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47

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COLLIER/EVANS

LEARNING OUTCOMES (continued)

4 Explain the five elements of service

Steps Involved in Designing Goods

Steps Involved in Designing Goods

Building the House of Quality

Building the House of Quality

The House of Quality

Traditional Goal Post View

Taguchi Loss Function

Taguchi Loss Function

Design for Reliability

Design for Reliability

Structure of a Serial System

Design for Reliability

Design for Manufacturability

Design for Sustainability

Service Delivery System Design

Facility location and layout

Facility Location and Layout

Layout affects process flow, costs,

Dimensions and Types of

Service Process Design

Develop procedures to ensure that:

Technology and Information

Service Encounter Design

Customer Contact Behavior

Customer Contact Requirements

Service Provider Selection,

Recognition and Reward

An Integrative Case Study of

An Integrative Case Study of

An Integrative Case Study of

An Integrative Case Study of

A Schematic View of a Typical LensCrafters

An Integrative Case Study of

An Integrative Case Study of

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