Chapter 4

Product and
Service Design

1
 Trends in Product & Service Design

Customer satisfaction
Designing products & services that are user friendly
User friendly software
Reducing time to introduce/produce new product or
service
PhD degree in 6 months

The organizations capabilities to produce or deliver the

right item on time
Compaq could not deliver enough laptops in mid 90s

Environmental concerns
Designing products that use less material
Toyota Prius

2
 Product and Service Design

Major factors in design strategy

Cost
Quality
Time-to-market
Customer satisfaction
Competitive advantage
Product and service design or redesign should be
closely tied to an organizations strategy

3
 Activities of Product or Service Design

Translate customer wants and needs into product

and service requirements
Refine existing products and services
Develop new products and services
Formulate
quality goals
cost targets
Construct and test prototypes
Document specifications

4
 Reasons for Product or Service Design
Economic
Low demand, excessive warranty claims
SUVs easily topple over and have high warranty claims

Social and demographic

Changing tastes, aging population
SUVs for generation X people who age but want to stay dynamic

Political, liability, or legal

Safety issues, new regulations, government changes
SUVs easily topple over and manufacturers are sued

Competitive
New products and services in the market, promotions
SUV sales are increased with promotions.
The profit margins on SUVs are huge so a lot of room for promotions

Cost or availability
Raw materials, components, labor
Technological
Components, production processes 5
 Objectives of Product and Service Design

Main focus
Customer satisfaction
Secondary focus
Function of product/service
Cost/profit
Quality
Appearance
Ease of production/assembly
Ease of maintenance/service

6
 Design For Operations

Taking into account the capabilities of the

organization in designing goods and services
Location of facilities
Suppliers
Transportation fleet
Current workforce
Current technology
Standing contracts
All can all limit the implementation of a new
design
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 Legal, Ethical, and Environmental Issues

Legal
IRS, FDA, OSHA
Product liability: A manufacturer is liable for any injuries or
damages caused by a faulty product.
Uniform commercial code: Products carry an implication of
merchantability and fitness
Ethical
Releasing products with defects
Releasing Software with bugs
Sending genetically altered food to nations suffering food shortages
Environmental
EPA
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 Designers Adhere to Guidelines

Produce designs that are consistent with the

goals of the company
Give customers the value they expect
Make health and safety a primary concern
Consider potential harm to the environment

9
 Forthcoming Aspects of Product Design

Product Life Cycles

Standardization
Mass Customization
Modular Design
Robust Design
Concurrent Engineering
Computer-Aided Design

10
 Other Issues in Product and Service Design

Product/service life cycles

How much standardization
Product/service reliability
Range of operating conditions

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 Life Cycles of Products or Services

Saturation

Maturity
cassettes
Demand

Decline
Growth Compact discs
Design
for low
volume
Introduction Flash memory

Time

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 Standardization

Standardization
Extent to which there is an absence of variety in a
product, service or process
The degree of Standardization?
Standardized products are immediately
available to customers
Calculators & car wash

13
 Advantages of Standardization

Fewer parts to deal with in inventory & manufacturing

Less costly to fill orders from inventory
Reduced training costs and time
More routine purchasing, handling, and inspection
procedures
Opportunities for long production runs, automation
Need for fewer parts justifies increased expenditures
on perfecting designs and improving quality control
procedures.

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 Disadvantages of Standardization

Decreased variety results in less consumer appeal.

Designs may be frozen with too many imperfections
remaining.
High cost of design changes increases resistance to
improvements
Who likes optimal Keyboards?

Standard systems are more vulnerable to failure

Epidemics: People with non-standard immune system stop the
plagues.
Computer security: Computers with non-standard software stop the
dissemination of viruses.

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 Mass Customization

Mass customization:
A strategy of producing standardized goods or
services, but incorporating some degree of
customization
Modular design
Delayed differentiation

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Mass Customization I: Customize Services
Around Standardized Products
Warranty for contact lenses: Source: B. Joseph Pine

DEVELOPMENT PRODUCTION MARKETING DELIVERY

Deliver customized services as

well as standardized products
and services
Market customized services with standardized
products or services
Continue producing standardized products or services
Continue developing standardized products or services

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 Mass Customization II: Create Customizable
Products and Services
Gillette sensor adjusting to the contours of the face:

DEVELOPMENT PRODUCTION MARKETING DELIVERY

Deliver standard (but

customizable) products
or services
Market customizable products or services

Produce standard (but customizable) products or services

Develop customizable products or services

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Mass Customization III: Provide Quick
Response Throughout Supply Chain
Skiing parkas manufactured abroad vs in USA

DEVELOPMENT PRODUCTION MARKETING DELIVERY

Reduce Delivery Cycle Times

Reduce selection and order processing cycle
times
Reduce Production cycle time

Reduce development cycle time

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Mass Customization IV: Provide Point of
Delivery Customization
Paint mixing:

DEVELOPMENT PRODUCTION MARKETING DELIVERY

Point of delivery
customization

Deliver standardize portion

Market customized products or services

Produce standardized portion centrally

Develop products where point of delivery customization is feasible

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 Delayed Differentiation
Delayed differentiation is a postponement tactic
Producing but not quite completing a product or service until customer
preferences or specifications are known
Postponing the completion until customer specification are
known
Examples: Wheeled loaders

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 Postponement Case Study: Hewlett & Packard
H&P produces printers for Europe market. Product manuals (different
languages), labels and power supplies (plugs are different for UK, Continental
EU and US) were used to be packaged along with printers in US.
HP postpones commitment of a printer to a certain geographic market by
producing universal printers and then applying power supplies and labels (the
parts that differentiate printers for local markets) at the last stage once demand
is more certain
Packaging was postponed to local distribution centers in each European
country. Packaging is closer to demand (in location and time) so H&P can
respond faster and redistribute the supply:
Ireland has 1600 with demand 1100
Portugal has 800 with demand 1000
Send 200 from Ireland to Portugal
For more read: H.L. Lee and C. Billington, "Evolution of Supply Chain Management
Models and Practice at Hewlett-Packard Company," Interfaces, 25, 5, 1995: 42-63.

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 Delayed Differentiation=Postponement
Postponement is delaying customization step as much as
possible. Producing but not quite completing a product or
service until customer preferences or specifications are
known.
(Salad) + (Dressings ={1000 Islands, Vinaigrette, })
Need:
Indistinguishable products before customization
Customization step is high value added
Unpredictable, negatively correlated demand for finished products
Flexible processes to allow for postponement

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 Modular Design

Modular design is a form of standardization in

which component parts are subdivided into
modules that are easily replaced or
interchanged. It allows:
easier diagnosis and remedy of failures
easier repair and replacement
simplification of manufacturing and assembly
Disadvantage: variety decreases

24
 Modular Design

Modular design is a form of standardization in which

component parts are subdivided into modules that
are easily replaced or interchanged.
A bad example: Earlier Ford SUVs shared the lower
body with Ford cars

Due to standardization, it allows:

easier diagnosis and remedy of failures
easier repair and replacement
simplification of manufacturing and assembly

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Types of Modularity for Mass Customization

Component Sharing Modularity, Dell

Cut-to-Fit Modularity,
Gutters that do not require
seams

Bus Modularity, E-books

+ = Mix Modularity, Paints

Sectional Modularity, LEGO

26
 Mass Customization V: Modularize
Components to Customize End Products
Computer industry, Dell computers:

DEVELOPMENT PRODUCTION MARKETING DELIVERY

Deliver customized product

Market customized products or services

Produce modularized components

Develop modularized products

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 Reliability

Reliability: The ability of a product, part, or

system to perform its intended function under a
prescribed set of conditions
Failure: Situation in which a product, part, or
system does not perform as intended
Normal operating conditions: The set of
conditions under which an items reliability is
specified
A regular car is not to be driven at 200 mph
A bed is not to be used as a trampoline
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 Improving Reliability
Good component design improve system reliability
Production/assembly techniques
Testing
To figure out defectives / weak units
Dell tests each computers electric circuitry after the assembly
Redundancy/backup
Exactly why your car has a spare tire
Preventive maintenance procedures
Medical check-ups to discover potential diseases
User education
System design

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 Robust Design

Design that can function over a broad range of conditions

Taguchis Approach:
Design a robust product
Insensitive to environmental factors either in manufacturing or in use.
Columbia parkas with fleece inside
For skiing and rainy weather: Take out the fleece use the outer shell
For dry cold air: Wear the fleece without the outer shell
For a snow storm: Wear the fleece with the shell
When you put on weight: Ease the belts for a relaxed fit
When you are sweating: Open air ducts for breathing your body
Central feature is Parameter Design. How to set design parameters?
Design of experiments a Statistics concept
Determines:
factors that are controllable and those not controllable
their optimal levels relative for good product performance

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 Phases in Product Development Process

1. Idea generation
2. Feasibility analysis (Demand, cost/profit, capacity)
3. Product specifications (customer requirement)
4. Process specifications (produce in economic way)
5. Prototype development
6. Design review
7. Market test
8. Product introduction (promotion)
9. Follow-up evaluation

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 Idea Generation

Supply chain based

Ideas Competitor based

Research based

32
Sources of Ideas for Products and Services

Internal
Employees
Marketing department
R&D department
External
Customers, sometimes misleading
Competitors
Reverse engineering is the dismantling and inspecting
of a competitors product to discover product improvements.
Benchmarking is comparing and contrasting product and process
characteristics against those of competitors
Both can be classified as environmental scanning activity
Suppliers & Customers,
Ford helps its suppliers in designing components

33
 Research & Development (R&D)

Organized efforts to increase scientific knowledge or

product innovation & may involve:
Basic Research advances
Universities, IBM research centers
Applied Research
Motorola, Alcatel
Development
All companies

34
 Manufacturability

Manufacturability is the ease of

fabrication and/or assembly which is
important for the following aspects:
Cost
Productivity
Quality

35
 Design for Manufacturing

Beyond the overall objective to achieve customer

satisfaction while making a reasonable profit is:
Design for Manufacturing (DFM) : The designers
consideration of the organizations manufacturing
capabilities when designing a product.
The more general term design for operations
encompasses transportation, services as well as
manufacturing

36
 Over the Wall Approach vs
Concurrent Engineering

New
Product

Mf Desig
g n
37
 Concurrent Engineering

Concurrent engineering: Bringing

engineering design and manufacturing
personnel together early in the design
phase.
Manufacturing personnel helps to identify production
capabilities, selecting suitable materials and process, the conflicts
during production can be reduced.
Early consideration of technical feasibility.
Shortening the product development process.
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 Product design

Design for manufacturing (DFM)

Design for assembly (DFA)
number of parts, methods, sequence.
Design for recycling (DFR)
Remanufacturing
Design for disassembly (DFD)

39
 Computer-Aided Design

Computer-Aided Design (CAD) is product design using

computer graphics.
increases productivity of designers, 3 to 10 times
creates a database for manufacturing information on product
specifications
Simplifies communication of a design. Design teams at various
locations can work together.
provides possibility of engineering and cost analysis on proposed
designs
Transonic Systems Inc. manufactures customized medical devices;
pomps, blood vessel, blood pressure measurement equipment.
Design to manufacturing was long, problematic, designers and manufacturing
engineers could not work on designs simultaneously, some of the previous
designs were lost (talking of knowledge management).
Savior: CAD

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 Recycling-Remanufacturing
Recycling: recovering materials for future use
Recycling reasons
Cost savings
Environment concerns
Environment regulations
Remanufacturing: replacing worn out parts in
used products
Kodak cameras
Design for disassembly is considering ease of
disassembly while designing a product
Reverse supply chains
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 Quality Function Deployment

Quality Function Deployment

Voice of the customer
House of quality

QFD: An approach that integrates the voice of the

customer into the product and service development
process.

42
 The House of Quality

Correlation
matrix

Design
requirements

Customer
Relationship Competitive
require-
matrix assessment
ments

Specifications
or
target values

43
 Quality Function Deployment
A structured and disciplined process that provides a means to
identify and carry the voice of the customer through each stage
of product or service development and implementation

QFD is for:
Communication
Documentation
Analysis
Prioritization breakthroughs

44
House of Quality Example for a Car Door

Correlation:
X Strong positive
Positive
X X
X Negative
X X
* Strong negative
Im

Water resistance
Accoust. Trans.
Energy needed

Energy needed
po Engineering

to close door
Competitive evaluation

to open door
Check force
rta

resistance
Door seal
Characteristics
n ce X = Us

Window
on level
ground
t oC
A = Comp. A
B = Comp. B
Customer us (5 is best)
Requirements t. 1 2 3 4 5

X AB
Easy to close 7
Stays open on a hill X AB
5
Easy to open 3 XAB

A XB
Doesnt leak in rain 3
No road noise 2 X A B

Importance weighting 63 63 45 27 6 27 Relationships:

Strong = 9
level to 7.5 ft/lb
Reduce energy

Reduce energy
Reduce force
current level

current level
current level
to 7.5 ft/lb. Medium = 3
Target values
Maintain

Maintain
Maintain
Small = 1
to 9 lb.

5 BA BA
B B BXA
B X
Technical evaluation 4
A
X
A X
3
(5 is best) 2 X A
X
1
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 The QFD and Kano Model
Japanese QFD Results
Design time reduced by to
Problems with initial quality decreased
Comparison and analysis of competitive products became possible
Communication between divisions improved

The Kano Model

Product Characteristics:
Must have = Order qualifiers
Expected = Order qualifiers, winners
Excitement = Order winners

1. Make sure that you have the order qualifiers

2. Determine the level of order winners with a cost/benefit analysis 46
 Service Design

Service is an act
Service delivery system
Facilities
Processes
Skills
Explicit services
Core of the service: Hair styling
Implicit services
Excitement characteristics: Courtesy

Many services are bundled with products

Maintenance services
Conecpt of selling solutions: Products and Services
E.g. IBM

47
 Phases in Service Design
1.Conceptualize
2.Identify service components
3.Determine performance specifications
4.Translate performance specifications into
design specifications
5.Translate design specifications into delivery
specifications

48
 Service Blueprinting
Service blueprinting: A method used in service
design to describe and analyze a proposed service
A useful tool for conceptualizing a service delivery
system
Major Steps in Service Blueprinting
1. Establish boundaries
2. Identify steps involved
3. Prepare a flowchart, see the next page, source in justice-flowchart.pdf
4. Identify potential failure points
5. Establish a time frame
6. Analyze profitability
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50
 Characteristics of Well Designed
Service Systems
You be the judge for
the justice system
How do you rate the
system in terms of
1. Consistent with the organization mission 1.
2. User friendly: Do we understand it? 2.
3. Robust: Can it function under various conditions? 3.
4. Easy to sustain: Requires to much effort? 4.
5. Cost effective: Does it cost too much? 5.
6. Value to customers: Who are the customers? 6.
7. Effective linkages between back-office operations 7.
8. Single unifying theme: What does the justice system do? 8.
9. Ensure reliability and high quality 9.
10. Consistency. 10.
11. Up-to-date: Does it evolve? 11. 51
 Challenges of Service Design

Variable requirements
Criminals and the cases are different
Difficult to describe
How do you describe a criminal action?
We need the court system.
Descriptions are not exact because they are based on words.
This is exactly why lawyers make a living; or perhaps more.
High customer contact
Service cannot be inventoried
Service customer encounter

52
 Differences Between Product
and Service Design

Most often product and services are provided together.

Products vs. Services are
Tangible intangible
Services created and delivered at the same time
Services cannot be inventoried
Services highly visible to customers
Services have low barrier to entry
Location important to service
Ambiance
Convenience

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 Service Variability & Customer
Influence Service Design
Figure 4-3 High Customized
Clothing
Variability Moderate
in
Dept. Store
Service Purchase
Require- Low Telephone
ments Purchase
None Internet
Purchase
None Low Moderate High

Degree of Contact with

Customer
Where are medical services, internet law consultants?

54
 Operations Strategy

Shorten time-to-market
Package products and services
Sell solutions not products
Increase emphasis on component commonality
Use multiple-use platforms
Consider tactics for mass customization
Look for continual improvement

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 Summary: Product design

Remanufacturing-recycling
Robust design
Design for manufacturing (DFM)
Design for assembly (DFA)
Design for disassembly (DFD)
Design for recycling (DFR)
Reliability

56
 Practice Questions
True/ False:
1.One of the main advantages of standardization is
that it increases the potential variety of products.
2. Product failures can be easier to remedy with
modular design.
3. Quality function deployment (QFD) is based on
a set of standards which relate customer
requirements to company capabilities.
1.Answer: False Page: 127
2.Answer: True Page: 129
3.Answer: False Page: 143
57
 Practice Question
Multiple-Choice:
4. The term standardization is closely associated
with:
A) customization
B) high cost
C) longer lead times
D) variety
E) interchangeability
Answer: E Page: 127
58
 Practice Question
4. A formal way to document customer
requirements is:
A) consumer surveys
B) quality function deployment (QFD)
C) focus groups
D) Delphi technique
E) sales/marketing matrix
Answer: B Page: 142

59
 Practice Question
6. The stage in a product or service life cycle
where some firms adopt a defensive research
posture is:
A) incubation
B) growth
C) maturity
D) saturation
E) decline
Answer: E Page: 126
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 Reliability

Reliability: The ability of a product, part, or system to perform its intended

function under a prescribed set of conditions
Failure: Situation in which a product, part, or system does not perform as
intended
Normal operating conditions: The set of conditions under which an items
reliability is specified

Reliability is a Probability, that the product or system will:

Function when activated
Function for a given length of time
Independent events
Redundancy; Why to have spare tires on the car?

61
 Parallel vs Serial Components
A product is composed of several components. Suppose components fail/work
independently.

If all components must function for the product to function, components are
serial. Example: Laptop and projector.
A B
Water flowing from left to right analogy. P(System works)=P(A works) P(B works)

If at least one component must function for the

product to function, components are A
parallel. Example: Two batteries of a laptop.
P(System fails)=P(A fails) P(B fails)
B

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 Example: Reliability Diagram
Determine the reliability of the system shown

.90 .92

.98

.90 .95

Compare this diagram to that of Example S-1

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 Example

The system can be reduced to a series of three components

By collapsing parallel components

0.98 1-(0.10)(0.10) 1-(0.05)(0.08)

0.98 x 0.99 x 0.996

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 Failure Rate:
Personal life expectancy Strike life expectancy
Figure 4S-1

Infant Failures due

Few (random) failures
mortality to wear-out
Time, T

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 Exponential Distribution for Life X

X ~ Expo( ), f ( x) e x , E ( X ) 1 / MTBF , P( X T ) e T

pdf f(x)

Reliability=P(x>T)=1-F(T)

cdf F(T)=P(X<T)

T Time
66
 Use Exponential Distribution
to Model Lifetime
Exponential distribution is a simple density
used to model lifetimes
Its failure rate is constant
So does not apply to human life. Insurers use more
complicated densities.
The reliability of each part in a system
Reliability=P(Part works at T)=1-F(T)
Once reliabilities are computed for all parts,
combine parts according to whether serial or
parallel
67
 Improving Reliability

Component design
Production/assembly techniques
Testing
Redundancy/backup
Preventive maintenance procedures
User education
System design

How much of reliability is good? Cost-benefit analysis.

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