Design of Goods and Services

3.1 Idea Generation

3.2 Legal and Ethical Considerations
3.3 Global Product and Service Design
3.4 Environmental Factors
Reporter: Kristine Eloy
 I. Idea Generation
• Translate customer wants and needs into
product and service requirements
• Refine existing products and services
• Develop new products and services
• Formulate quality goals
• Formulate cost targets
• Construct and test prototypes
• Document specifications
 Factors to consider . . .
• Is there demand for it? Are they willing to buy
it?
• What is the potential size of the market?
• What is the expected demand profile?
• Will it grow quickly or slowly?
 Factors to consider . . .

• Can we do it?
• Do we have the necessary skills,
knowledge, equipment, capacity and supply
chain capability?
– For products, it is called Manufacturability
– For services, it is known as Serviceability
 Factors to consider . . .
• What level of quality is appropriate?
• What do customers expect?
• What level of quality do competitors provide
for the similar items?
• Does it make sense from an economic
standpoint?
• What are the potential liability issues, ethical
considerations, sustainability costs,
profitability concerns?
 II. Legal & Ethical Considerations
• Legal
– FDA , OSHA, IRS
– Product liability
– Uniform commercial code
• Ethical
– Releasing products with defects
• Environmental
– EPA
 Legal Considerations
• FDA-is a government agency that oversees a majority of the
organization's obligations involving food, drugs, cosmetics, animal
food, dietary supplements, medical devices, biological goods and
blood products.

• OSHA- with the responsibility of ensuring safety at work and a

healthful work environment. OSHA's mission is to prevent work-
related injuries, illnesses and deaths.

• IRS/BIR- tasked with the enforcement of income tax laws and

oversees the collection of such.

• UCC-law with the goal of harmonizing the laws of sales and other
commercial transactions.
• Product Liability - A manufacturer is liable for
any injuries or damages caused by a faulty
product.
Example: Mitsubishi Montero with defect
on pedal displacement design
 Ethical Considerations
• Produce designs that are consistent with the
goals of the organization.
• Give customers the value they expect.
• Make health and safety a primary concern.
III. Global Product and Service Design

Product Life Cycle

Saturation

Maturity
Demand

Decline
Growth

Introduction

Time
 STANDARDIZATION
• Standardization
– Extent to which there is an absence of variety in a
product, service or process
• Standardized products are immediately
available to customers.
 STANDARDIZATION
Laptop is the best example of a standardized product.
There are many different brands of laptops, but they all
perform the same function. Additionally, all laptops have
standardized features, such as a screen and a keyboard.
Except for the Mac laptop, most of these machines run on
a Windows operating system.
Also, all laptops have a
standard bag used to store
and carry them.
 Advantages of Standardization
• Fewer parts to deal with in inventory & manufacturing
• Design costs are generally lower
• Reduced training costs and time
• More routine purchasing, handling, and inspection
procedures
• Orders fillable from inventory
• Opportunities for long production runs and automation
• Need for fewer parts justifies increased expenditures
on perfecting designs and improving quality control
procedures
 Disadvantages of Standardization
• Designs may be frozen with too many
imperfections remaining.
• High cost of design changes increases
resistance to improvements.
• Decreased variety results in less consumer
appeal.
 MASS CUSTOMIZATION
• Mass customization:
– A strategy of producing standardized goods or
services, but incorporating some degree degree of
customization
 DELAYED DIFFERENTIATION
• Delayed differentiation is a postponement
tactic
– Producing but not quite completing a product or
service until customer preferences or
specifications are known.
Example : Automobile manufacturers that mass
produce base models and add minor customizations when
the car is actually ordered. In many cases, customizations
such as audio systems may be installed at the dealership.
DELAYED DIFFERENTIATION
Example: PAINT
For example, you offer an item in red, orange, green, black,
and white. If you’re using delayed differentiation, you can,
instead of ordering 100 items of each color to keep in your
inventory, order only white ones to keep in stock. Then,
when a customer orders ten green items, you take ten of
your white items, turn them green, and ship them to your
customer. In this way, you pay for less inventory, most likely
waste fewer items, save room in the warehouse to store
other necessities, etc. It also reduces the need to have very
specific demand forecasting, as speculating which colors
will be the most popular is nearly impossible.
 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
 MODULAR DESIGN
• Modular design is a design approach that
creates things out of independent parts with
standard interfaces. This allows designs to be
customized, upgraded, repaired and for parts
to be reused. A well know example of module
design are LEGO plastic construction toys.
Snap Jack Table
 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 item’s reliability is
specified
 RELIABILITY
• Certain products function only once such as
fuse in a electrical or electronic circuit
• Certain products possess a long life but if they
fail cannot be maintained/repaired
• A product if not used properly or if it is not
well maintained its useful life may be
shortened and its reliability may decrease
 IMPROVING RELIABILITY
• Component design
• Production/assembly techniques
• Testing
• Redundancy/backup
• Preventive maintenance procedures
• User education
• System design
 PRODUCT DESIGN
• Product Life Cycles
• Robust Design
• Concurrent Engineering
• Computer-Aided Design
• Modular Design
 ROBUST DESIGN
• Design that results in products or services
that can function over a broad range of
conditions.
Example: An automobile manufacturer wants to improve
the quality of the painted surface of its cars. Quality is
measured by the gloss reading of the surface. The
manufacturer wants the painted surface to have a higher
gloss reading (i.e., maximize the response) and to be robust
against the environment. Environmental factors,
particularly temperature and humidity, are known to affect
the painted surface. Thus, a robust design will be used here.
 CONCURRENT ENGINEERING
• method of designing and developing products,
in which the different stages run
simultaneously, rather than consecutively. It
decreases product development time and also
the time to market, leading to improved
productivity and reduced costs.
 CONCURRENT ENGINEERING
• A famous example of concurrent engineering is the
development of the Boeing 777 commercial aircraft. The
aircraft was designed and built by geographically distributed
companies that worked entirely on a common product
database of C A TIA without building physical mock-ups but
with digital product definitions. They further allowed airlines
(i.e., customers) to participate and reflect their ideas in the
development process.
 CAD-Computer Aided Design
• is the use of computer software to facilitate
the generation, modification, and optimization
of a part or a compilation of parts.
 IV. ENVIRONMENTAL FACTORS
• SUSTAINABILITY- producing a good or service
that is not harmful to the environment.
• Sustainable business or green business is an
enterprise to be that has minimal negative
impact on the global or local environment,
community or society.
 ENVIRONMENTAL FACTORS
• Key aspects of sustainability include:
-Life cycle assessment. The assessment of
environmental impact of a product or service
throughout its useful life (from cradle to grave)
-Reduction of costs and materials used
through value analysis
-Reuse of parts of returned products through
remanufacturing
-Recycling, recovering materials for future use
• Eco-Design- is an approach that aims to
reduce a product’s environmental impact
through it’s life cycle.