Developing Products and Services Chapter 15 Chapter Objectives Be able to: Explain why product design is important to the success of a business Describe the six dimensions of product design that are of particular interest to operations and supply chain managers Describe the five phases of product and service development and explain the difference between sequential development and concurrent engineering Discuss the different roles played by areas such as engineering and accounting during the development process Describe some of the most common approaches to improving product and service designs, including the Define-Measure-Analyze-Design-Verify (DMADV) process, quality function deployment (QFD), design for manufacturability (DFM), and target costing Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - Product Design and Development  Product Design – The characteristics or features of a product or service that determine its ability to meet the needs of the user  Product Development Process– The overall process of strategy, organization, concept generation, product and marketing plan creation and evaluation, and commercialization of a new product © Product Development and Management Association Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - Four Reasons for Developing New Products and Services  New products or services can give firms a competitive advantage in the marketplace  New products or services provide benefits to the firm  Companies develop new products or services to exploit existing capabilities  Companies can use new product development to block out competitors Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - Product Design Dimensions  Repeatability  Testability  Serviceability  Product volumes  Product costs  Match between the design and existing capabilities Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - Product Design Dimensions  Repeatability  Consistent production  Tolerance to manufacturing variations (robustness)  Testability  Ease with which critical components or functions can be tested during production  Serviceability  Ease of repair, service, and evaluation Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - Product Design Dimensions  Product Volumes  Expanding firm’s operations by building facilities, hiring workers, buying new equipment, or planning with key suppliers  Product Costs  Obvious costs – Easiest to see and manage  Hidden costs – Not easy to track but can have a major impact • Number of parts in a product • Engineering changes • Transportation costs Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - Product Design Dimensions  Match with Existing Capabilities  Product design flexibility • Easy to add features? • Easy to upgrade?  Process flexibility • Share processes / parts? • Will upgrades make current operations obsolete? Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - Development Process  Concept development phase – The company identifies ideas for new or revised products and services  Planning phase – The company begins to address the feasibility of a product or service  Design and development phase – The company starts to invest heavily in the development effort and builds and evaluates prototypes Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - Development Process  Commercial preparation phase – The firms start to invest heavily in the operations and supply chain resources needed to support the new product or service  Launch phase – For products, this means “filling up” the supply chain with products For services, it means making the services available to the target marketplace Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 10 Development Process Phases Table 15.1 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 11 Sequential Development vs Concurrent Engineering  Sequential development – A process in which a product or service idea must clear specific hurdles before it can go on to the next development phase  Concurrent engineering – A process where activities in different development stages are allowed to overlap with one another, shortening the total development time Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 12 Concurrent Engineering Figure 15.1 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 13 Organizational Roles Engineering – Provide the expertise Marketing – Understanding the marketplace Accounting – Play the role of “scorekeeper.” Finance – Judge the financial impact and determine how to acquire the needed capital  Designers – Handle product design and create “identities” for companies, environments, and service experiences  Purchasing – Identify the best suppliers and sign them up early in the process Act as a consultant for materials  Suppliers – Bring opportunities for improvement, reduce financial risks, save time in development     Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 14 DMADV  Steps:  Define – Measure – Analyze – Design – Verify • Define the project goals and customer deliverables • Measure and determine customer needs and specifications • Analyze the product or process options to meet the customer needs • Design the product or process • Verify the results Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 15 Quality Function Deployment  Quality function deployment – A graphical tool used to help organizations move from vague notions of what customers want to specific engineering and operational requirements  Also called the House of Quality Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 16 Quality Function Deployment  QFD Matrix:  Left side: Shows customer requirements and their relative importance to target customers  Along the top: Lists specific product characteristics  Main body: Shows how each of the product characteristics does or does not support the customer requirements  Roof: Shows synergies between some of the features Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 17 Quality Function Deployment QFD Matrix for a Cell Phone Figure 15.2 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 18 Quality Function Deployment Using QFD Matrices to move from Customer Requirements to Process Specifications Figure 15.3 Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 19 Computer-Aided Systems  Computer-aided design (CAD) – An information system that allows engineers to develop, modify, share, and even test designs in a virtual world  Computer-aided design/computer-aided manufacturing system (CAD/CAM) – An extension of CAD where CAD-based designs are translated into machine instructions, which are then fed automatically into computer-controlled manufacturing equipment Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 20 Design for… Approaches  Design for manufacturability (DFM)  Considering manufacturing issues in design and development • Parts standardization, modular architecture  Design for maintainability (DFMt) –  Considering maintainability issues over the product’s projected life cycle during the design and development process Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 21 Design for… Approaches  Design for Six Sigma (DFSS)  Considering achieving Six Sigma quality levels in product and process design  Design for the environment (DFE)  Considering environmental, safety, and health issues over the product’s projected life cycle during the design and development process Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 22 Target Costing and Value Analysis  Target costing – The process of designing a product to meet a specific cost objective  Setting the planned selling price and subtracting the desired profit as well as marketing and distribution costs  Value analysis – The process of examining all elements of a component, an assembly, an end product, or a service to make sure it fulfills its intended function at the lowest total cost  Value = function/cost Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 23 Developing Products and Services Case Study Design for Supply Chain Programs Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 24 All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher Printed in the United States of America Copyright © 2013 Pearson Education, Inc publishing as Prentice Hall 15 - 25 ... invest heavily in the operations and supply chain resources needed to support the new product or service  Launch phase – For products, this means “filling up” the supply chain with products For... interest to operations and supply chain managers Describe the five phases of product and service development and explain the difference between sequential development and concurrent engineering... Prentice Hall 15 - 14 DMADV  Steps:  Define – Measure – Analyze – Design – Verify • Define the project goals and customer deliverables • Measure and determine customer needs and specifications